07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. G
07 CFR 1944.183 Exhibit G -- Legal Service Agreement
Agreement made this -------------------- day of ------------------ ,
19 ----
between the ------------------ ,
hereinafter called the owners, and ------------ ,
hereinafter called the attorney, witnesseth:
Whereas the owners intent to form a corporation, hereinafter called
the corporation, to construct and operate a labor housing project in
Town
County
State
and to obtain a loan from the Farmers Home Administration to finance
the construction, and the attorney agrees to perform all legal services
necessary to incorporate the Corporation, and to perform all other
customary legal services necessary to the organization, financing,
construction, and initial operation of the proposed rural rental housing
project, such services to include but not to be restricted to the
following:
1. Prepare and file necessary incorporating papers and supervise and
assist in taking other necessary or incidental actions to create the
Corporation and authorize it to finance, construct, and operate the
proposed housing project.
2. Prepare for, and furnish advice and assistance to the owners, and
to the Board of Directors and officers of the Corporation, in connection
with (a) notices and conduct of meetings; (b) preparation of minutes of
meetings; (c) preparation and adoption of necessary resolutions in
connection with the authorization, financing, construction, and initial
operation of a rural rental housing project; (d) necessary construction
contracts; (e) preparation of adoption of bylaws and related documents;
(f) any other action necessary for organizing the Corporation or
financing, constructing, and initially operating the proposed housing
project.
3. Review of construction contract, bid-letting procedure, and surety
and performance bonds.
4. Examination of real estate titles and preparation, review, and
recording of deeds and any other instruments.
5. Cooperation with the architect employed by the owners or the
Corporation in connection with preparation of survey sheets, easements,
and any other necessary title documents, construction contracts, and
other instruments.
6. Rendering of legal opinions as required by the owners or the
Corporation or the Farmers Home Administration, United States Department
of Agriculture.
7. Owners agree to pay to the attorney for professional services in
accordance with this agreement, as follows:
The fees to be payable in the following manner and at the following
times:
The attorney states and agrees that of the above total fees,
-------------------- represents fees for services in connection with the
organization and incorporation of the Corporation.
The owners and the attorney further covenant and agree that, if upon
organization and incorporation the Corporation fails or refuses to adopt
and ratify this Agreement by appropriate resolution within ------ days,
this Agreement shall terminate and owners shall be liable only for
payment for legal services rendered in connection with such organization
and incorporation.
Signed this -------------------- day of -------------------- , 19
---- .
Attorney:
Owners:
(44 FR 59199, Oct. 15, 1979)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. H
07 CFR 1944.183 Exhibit H -- Information Pertaining to Preparation of
Notes or Bonds and Bond Transcript Documents for Public Body Applicants
This Exhibit includes information for use by public body applicants
in the preparation and issuance of evidences of debt (''bonds'' or
''debt instruments''). This information is made available to applicants
as appropriate for application processing and loan docket preparation.
(1) Policies. (i) This Exhibit outlines the policies of the Farmers
Home Administration (FmHA) with respect to preparation and issuance of
evidences of debt (hereinafter sometimes referred to as ''bonds'' or
''debt instruments'').
(ii) Preparation of the bonds and the bond transcript documents will
be the responsibility of the applicant. Public body applicants will
obtain the services and opinion of recognized Bond Counsel with respect
to the validity of a bond issue. The applicant normally will be
represented by a local attorney who will obtain the assistance of a
recognized Bond Counsel firm which has had experience in municipal
financing with such investors as investment dealers, banks, and
insurance companies.
(iii) At the option of the applicant for issues of $250,000 or less,
Bond Counsel may be used for the issuance of a final opinion only and
not for the preparation of the other documents and of the bond docket
when the applicant, FmHA, and Bond Counsel have agreed in advance as to
the method of preparation of the bond transcript documents. Under such
circumstances the applicant will be responsible for the preparation of
the bond transcript documents.
(iv) At the option of the applicant and with the prior approval from
the National Office of FmHA, for issues of $50,000 or less, the
applicant need not use Bond Counsel if:
(A) The amount of the issue does not exceed $50,000 and the applicant
recognizes and accepts the fact that processing the application may
require additional legal and administrative time.
(B) There is a significant cost saving to the applicant particularly
with reference to total legal fees after determining what Bond Counsel
would charge as compared with what the local attorney will charge
without Bond Counsel.
(C) The local attorney is able and experienced in handling this type
of legal work.
(D) The applicant understands that, if it is required by FmHA to
refinance its loan pursuant to the statutory refinancing requirements,
it will probably have to obtain at its expense a Bond Counsel's opinion
at that time.
(E) All bonds will be prepared in accordance with this regulation and
will conform as nearly as possible to accepted methods of preparation of
similar bonds in the area.
(F) Many matters necessary to comply with FmHA requirements such as
land rights, easements, and organizational documents will be handled by
the applicant's local attorney. Specific closing instructions in
addition to any requirements of Bond Counsel will be issued by the
Office of the General Counsel of the U.S. Department of Agriculture for
the guidance of FmHA.
(2) Bond transcript documents. Any questions with respect to FmHA
requirements should be discussed with local FmHA representatives. Bond
Counsel is required to furnish at least two complete sets of the
following to the applicant, who will furnish one complete set to FmHA:
(i) Copies of all organizational documents.
(ii) Copies of general incumbency certificate.
(iii) Certified copies of minutes or excerpts therefrom of all
meetings of the applicant's governing body at which action was taken in
connection with the authorization and issuance of the bonds.
(iv) Certified copies of documents evidencing that the applicant has
complied fully with all statutory requirements incident to calling and
holding of a favorable bond election, if such an election is necessary
in connection with bond issuance.
(v) Certified copies of the resolutions or ordinances or other
documents, such as the bond authorizing resolution or ordinance and any
resolution establishing rates and regulating the use of the improvement,
if such documents are not included in the minutes furnished.
(vi) Copies of official Notice of Sale and affidavit of publication
of Notice of Sale where a public sale is required by State statute.
(vii) Specimen bond, with any attached coupons.
(viii) Attorney's no-litigation certificate.
(ix) Certified copies of resolutions or other documents pertaining to
the bond award.
(x) Any additional or supporting documents required by Bond Counsel.
(xi) For loans involving multiple advances of FmHA loan funds, a
preliminary approving opinion of Bond Counsel if a final unqualified
opinion cannot be obtained until all funds are advanced. The
preliminary opinion for the entire issue shall be delivered on or before
the first advance of loan funds and state that the applicant has the
legal authority to issue the bonds, construct, operate and maintain the
facility, and repay the loan subject only to changes during the advance
of funds such as litigation resulting from the failure to advance loan
funds, and receipt of closing certificates.
(xii) Preliminary approving opinion, if any, and final unqualified
approving opinion of recognized Bond Counsel including opinion regarding
interest on bonds being exempt from Federal and any State income taxes.
On approval of the Administrator, a final opinion may be qualified to
the extent that litigation is pending relating to Indian claims that may
affect title to land or validity of the obligation.
(3) Interim financing from commercial sources during construction
period for loans of $50,000 or more. In all cases where it is possible
for funds to be borrowed at reasonable interest rates on an interim
basis from commercial sources, such interim financing will be obtained
so as to preclude the necessity for multiple advances of FmHA funds.
(4) Permanent instruments for FmHA loans to repay interim commercial
financing. Such loans will be evidenced by one of the types of
instruments in the order of preference shown in paragraph (a)(5) of this
Exhibit.
(5) Multiple advances of FmHA funds using permanent instruments.
Where interim financing from commercial sources is not available, FmHA
loan proceeds will be disbursed on an ''as needed by borrower'' basis in
amounts not to exceed the amount needed during 30-day periods. FmHA
loans will be evidenced by the following types of instruments chosen in
accordance with the following order of preference:
(i) First preference -- Form 1944-52. If legally permissible, use
Form FmHA 1944-52, ''Multiple Family Housing Promissory Note.''
(ii) Second preference -- single instrument with amortized
installments. If Form FmHA 1944-52 is not legally permissible, use a
single instrument showing on the face the full amount of the loan and
providing for amortized installments with provisions for entering the
date and amount of each FmHA advance on the reverse thereof or an
attachment to the instrument. Form FmHA 1944-52 should be followed to
the extent possible. The first amortized payment will be due one
amortized payment period following the AED.
See the FMI for Form FmHA 1944-52 for specific instructions.
(iii) Third preference -- single instrument with installments of
principal plus interest. If a single amortized installment instrument
is not legally permissible, use a single instrument providing for
specified installments of principal plus accrued interest. The
principal should be in an amount best adapted to making principal
retirement and interest payments which closely approximate equal
installments of combined interest and principal as required by the first
two preferences.
(A) The repayment terms described in paragraph (a)(5)(ii) of this
Exhibit ''Second preference'' apply.
(B) The instruments shall contain in substance the following
provisions:
(1) A statement of principal maturities and due dates.
(2) Payments made on indebtedness evidenced by this instrument,
regardless of when made, shall be applied first to interest due through
the date of payment and next to principal except that payments made from
security depleting sources shall, after payment of interest to the
payment date, be applied to the principal last to become due under the
instrument and shall not affect the obligation of the borrower to pay
the remaining installments as scheduled.
(iv) Fourth preference. If instruments described under the first,
second, and third preferences are not legally permissible, use serial
bonds with a bond or bonds delivered in the amount of each advance.
Bonds will be delivered in the order of their numbers. Such bonds will
conform with the minimum requirements of paragraph (7) of this Exhibit.
Rules for application of payments on serial bonds will be the same as
those for principal installment single bonds as set out in the preceding
paragraph (5)(iii) of this Exhibit.
(6) Multiple advances of FmHA funds using temporary debt instrument.
When none of the instruments described in paragraph (5) of this exhibit
are legally permissable or practical, a bond anticipation note or
similar temporary debt instrument may be used. The debt instrument will
provide for multiple advance of FmHA loan funds and will be for the full
amount of the FmHA loan. The instrument will be prepared by Bond
Counsel and approved by the State Director and OGC. At the same time
FmHA delivers the last advance, the borrower will deliver the permanent
bond instrument to FmHA to replace the temporary debt instrument and the
canceled temporary instrument will be delivered to the borrower. The
approved debt instrument will show at least the following:
(i) The date from which each advance will bear interest.
(ii) The interest rate.
(iii) A payment schedule providing for interest on outstanding
principal at least annually.
(iv) A maturity date which shall be no earlier than the anticipated
issuance date of the permanent instrument(s).
(7) Minimum bond specifications. The provisions of paragraph (7) are
of this Exhibit minimum specifications only, and must be followed to the
extent legally permissible.
(i) Type and denominations. Bond resolutions or ordinances will
provide that the instrument(s) be either a bond representing the total
amount of the indebtedness or Serial bonds in denominations customarily
accepted in municipal financing (ordinarily in multiples of not less
than $1,000). Single bonds may provide for either repayment of
principal plus interest or amortized installments; amortized
installments are preferable from the standpoint of FmHA. Coupon bonds
will not be used unless required by statute.
(ii) Bond registration. Bonds will contain provisions permitting
registration as to both principal and interest. Bonds purchased by FmHA
will be registered in the name of ''United States of America, Farmers
Home Administration,'' and will remain so registered at all times while
the bonds are held or insured by the United States. The address of FmHA
for registration purposes will be that of the FmHA Finance office.
(iii) Size and quality. Size of bonds and coupons should conform to
standard practice. Paper must be of sufficient quality to prevent
deterioration through ordinary handling over the life of the loan.
(iv) Date of bonds. Bonds will be dated as of the day of delivery.
(v) Payment date. Insofar as loan payments are consistent with
income availability, applicable State statutes, and commercial customs
in the preparation of bonds or other evidence of indebtedness, they
should be scheduled on a monthly basis either in the bond or other
evidence of indebtedness or through the use of a supplemental agreement.
Such requirements will be accomplished not later than the time of loan
closing. When monthly payments are required, such payments will be
scheduled beginning one full month following the date of loan closing or
the end of any approved deferment period. Subsequent monthly payments
will be scheduled each full month thereafter. In those cases where
evidence of indebtedness calls for annual or semiannual payments, they
will be scheduled beginning six or twelve full months, respectively
following the date of loan closing or the end of any approved deferment
period. Subsequent payments will be scheduled each sixty or twelfth
full month respectively, thereafter. When the evidence of indebtedness
is dated the 29th, 30th, or 31st day of a month, the payment date will
be scheduled the 28th day of the month. Borrowers scheduled to make
monthly payments will be given a monthly payment card jacket at the time
of loan closing. These borrowers will submit payment directly to the
Finance Office.
(vi) Place of payment. Payments on bonds purchased by FmHA should be
submitted to the FmHA Finance Office by the borrower.
(vii) Redemptions. Bonds should contain customary redemption
provisions, subject, however, to unlimited right of redemption without
premium of any bonds held by FmHA except to the extent limited by the
provisions under the ''Third Preference'' and ''Fourth Preference'' in
paragraph (5) of this Exhibit.
(viii) Additional revenue bonds. Parity bonds may be issued to
complete the project. Otherwise, parity bonds may not be issued unless
the net revenues (that is, unless otherwise defined by the State
statute, gross revenues less essential operation and maintenance
expense) for the fiscal year preceding the year in which such parity
bonds are to be issued were 120 percent of the average annual debt
service requirements on all bonds then outstanding and those to be
issued; provided, that this limitation may be waived or modified by the
written consent of bondholders representing 75 percent of the then
outstanding principal indebtedness. Junior and subordinate bonds may be
issued without restriction.
(ix) Scheduling of FmHA payments when joint financing is involved.
In all cases in which FmHA is participating with another lender in the
joint financing of the project to supply funds required by one
applicant, the FmHA payments of principal and interest should
approximate amortized installments.
(x) Precautions. The following types of provisions in debt
instruments should be avoided.
(A) Provisions for the holder to manually post each payment to the
instrument.
(B) Provisions for returning the permanent or temporary debt
instrument to the borrower in order that it, rather than FmHA, may post
the date and amount of each advance or repayment on the instrument.
(8) Bidding by FmHA. Where a public bond sale is required by State
statutes, FmHA will not normally submit a bid at the advertised sale
unless State statutes require a bid to be submitted. Preferably FmHA
will negotiate the purchase with the applicant subsequent to the
advertised sale if no acceptable bid is received. In those cases where
FmHA is required to bid, the bid will be made at the applicable FmHA
interest rate.
(44 FR 59199, Oct. 15, 1979, as amended at 50 FR 8593, Mar. 4, 1985)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. I
07 CFR 1944.183 Exhibit I -- Guide Letter for Use in Informing Interim
Lender of FmHA's Commitment
Name and Address of Private Lender
Dear ------------------------ :
Reference is made to a request from the (Smith Housing Assoc.)
through (John Smith) its President, for interim financing from your firm
to construct a rental housing facility at the interest rate and terms
and conditions agreed upon as reflected in the attached letter.
Reference is made to a request from (John Jones) for interim
financing from your firm to construct a rental housing facility at the
interest rate and terms and conditions agreed upon as reflected in the
attached letter.
This letter is to confirm certain understandings on behalf of the
Farmers Home Administration (FmHA).
Final drawings, specifications, and all other contracts documents
have been prepared and approved, and the applicant is prepared to
commence construction. It has been determined by the applicant and the
Farmers Home Administration that the conditions of loan closing can be
met. Funds have been obligated for the project, as evidenced by the
attached copy of Form FmHA 1944-57, 'Multiple Family Housing
Acknowledgement of Obligated Funds/Check Request.
The applicant has been required by FmHA to deposit $ ------------
with your firm to be utilized prior to any interim loan funds. The
applicant has proposed and FmHA has agreed that you may first advance
any applicant funds on deposit, and then advance the proceeds of the
interim loan in accordance with the terms and conditions stated in your
attached letter, as needed to pay for construction and other authorized
and legally eligible expenses incurred by the applicant. It is
understood, however, that advances of both the applicant's funds and the
interim loan funds will be made only upon presentation of proper
statements and partial payment estimates prepared by the builder, and
approved for payment by the consulting architect, the applicant, and the
FmHA District Director.
We have scheduled the Farmers Home Administration loan to be closed
when construction to be financed with loan funds is substantially
complete in accordance with the FmHA approved contract documents,
drawings and specifications (except for minor punch list items), and the
applicant provides evidence indicating that there are no unpaid
obligations outstanding in connection with the project. At that time,
funds not exceeding the FmHA loan amount will be available to pay off
the amount of loan advances your lending institution has made for
authorized approved purposes, including accrued interest to the date of
closing.
FmHA cannot provide you with an unconditional letter of commitment
guaranteeing FmHA loan closing. Factors such as noncompletion, default,
unacceptable workmanship, and marked deviation from approved drawings
and specifications could prevent the FmHA loan from being closed.
These problems can be minimized by making a thorough review of the
(contract documents,)* drawings and specifications, evaluating the
qualifications and past performance of the builder, and obtaining an
adequate corporate surety bond guaranteeing both payment and
performance.
The following are additional safeguards to help assure FmHA loan
closing:
1. We invite you or your representatives to accompany FmHA personnel
during construction inspections so that at least 3 or 4 joint
inspections at critical points during construction (including the final
inspection), can be made to help assure that construction is proceeding
in accordance with the FmHA approved drawings and specifications.
2. FmHA will maintain its commitment in the amount of the obligated
loan funds for a reasonable period of time after the expiration of any
specified completion dates, provided work on the project is progressing
satisfactorily and any identified problems have been resolved.
3. FmHA will not arbitrarily abandon your lending institution in the
event of default. Should the contractor default, FmHA will attempt to
provide financial assistance to the applicant in accordance with our
administrative procedures and lending requirements, provided a new
contractor can complete the project for a total cost within the security
value of the project. If this is not possible, or should the FmHA loan
applicant become unable or unwilling to continue with the project, FmHA
also will attempt to provide financial assistance to any eligible
applicant (subject to the availability of funds, our administrative
procedures, and our lending requirements), to purchase the completed
project from your lending institution.
4. FmHA is aware that circumstances, such as subsurface ground
conditions and change orders necessitated by required changes in the
work to be performed, may cause cost increases after FmHA loan approval
and the obligation of FmHA loan funds. It is a general practice for
FmHA to make subsequent loans when necessary to help cover these
eligible costs, provided additional loan funds are available, the change
orders were approved by FmHA, the increased costs are legitimate and are
for authorized loan purposes, and the total cost of the project is
within its security value.
Your assistance to the applicant is appreciated.
Sincerely,
State Director.
(44 FR 59199, Oct. 15, 1979, as amended at 50 FR 8593, Mar. 4, 1985)
07 CFR 1944.183 Subpart E -- Rural Rental and Rural Cooperative Housing
Loan Policies, Procedures, and Authorizations
Source: 53 FR 2159, Jan. 26, 1988, unless otherwise noted.
07 CFR 1944.201 General.
This subpart sets forth the policies and procedures and delegates
authority for making Rural Rental Housing (RRH) and Rural Cooperative
Housing (RCH) loans under sections 515 and 521 of the Housing Act of
1949.
(56 FR 2232, Jan. 22, 1991)
07 CFR 1944.202 Objective.
The basic objective of RRH and RCH loans is to provide eligible
persons with economically designed and constructed rental or cooperative
housing and related facilities suited to their living requirements.
(56 FR 2232, Jan. 22, 1991)
1944.203 -- 1944.204 (Reserved)
07 CFR 1944.205 Definitions.
Accessible. When used in respect to the public and common use area of
a building containing covered multi-family dwellings, means that these
areas of the building can be approached, entered, and used by
individuals with handicaps.
Adviser to the board. An individual or organization who will work
with and provide guidance to a cooperative board.
Amortization effective date (AED). A date established by the
accounting system on which advanced principal and any accrued interest
is combined and amortized to establish a schedule of payments. This
date is always the first day of a month.
Articles of incorporation. A document filed with a government agency
containing information about the organization's structure and operation.
Board and directors. The governing body and members of the governing
body of an organization.
Bylaws. Rules adopted by an organization to govern the conduct of its
affairs.
Community. Cities, towns, boroughs, villages and unincorporated
places which have the characteristics of an incorporated area and are
easily identifiable as established concentrations of inhabited dwellings
located in rural areas as defined in 1944.10 of subpart A of this part
1944.
Congregate housing. Housing that affords an assisted independent
living environment that offers the elderly, handicapped or disabled
person who may be functionally impaired or socially deprived, but in
good health (not acutely physically ill), the residential
accommodations, central dining facilities, related facilities, and
support service(s) required to achieve, maintain, or return to a
semi-independent lifestyle and prevent premature or unnecessary
institutionalization as he/she grows older.
Consumer cooperative. A corporation which: (1) Is organized under
the cooperative laws of a State or federally recognized Indian tribe;
(2) Will own and operate the housing on a cooperative basis solely
for the benefit of the members;
(3) Will operate at cost and, for this purpose, any patronage refunds
accruing to members in accordance with 1944.215(i) to this subpart will
not be considered gains or profits; and
(4) Will restrict membership in the housing to eligible persons and,
to any extent the cooperative and FmHA permit, to others in special
circumstances.
Dealer-contractor. A person, firm, partnership or corporation in the
business of selling and servicing manufactured homes and developing
sites for manufactured homes for persons who purchase such homes for
purposes other than resale. Dealer-contractors will be qualified as
shown in paragraphs IX and X of Exhibit F of subpart A of this part
1944, except all processing will be handled by the District Director
rather than the County Supervisor.
Development cost. The cost of constructing, purchasing, improving,
altering, or repairing housing and related facilities and the value or
cost of purchasing and improving the necessary land. Costs that can be
paid for with RRH and RCH loan funds are detailed in 1944.212 of this
subpart.
Disabled. (See Exhibit B of subpart C of part 1930 of this chapter)
Dwelling unit. A residence for a family of one or more persons, and
includes, in addition to those that would normally come to mind, units
in which sleeping accommodations are provided but toileting or cooking
facilities are shared, such as dormitories or shelters for the homeless.
Elderly (Senior Citizen). A person who is at least 62 years old.
The term elderly (senior citizen) also means persons with handicaps or
disabilities, regardless of age as defined herein.
(a) Disabled person with disability. A person who is considered
disabled if the person meets the criteria of either of the following:
(1) The person has an inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which:
(i) Has lasted or can be expected to last for a continuous period of
not less than 12 months, or which can be expected to result in death,
(ii) Substantially impedes the ability to live independently,
(iii) Is of such a nature that such ability could be improved by more
suitable housing conditions, or
(2) In the case of a blind person who is at least 55 years old
(within the meaning of blindness as determined in section 223 of The
Social Security Act), is unable, because of the blindness, to engage in
substantial gainful activity in which he/she has previously engaged with
some regularity over a substantial period of time.
Note: Receipt of veteran's benefits for disability, whether service
oriented or otherwise, does not automatically establish disability.
(b) The person has a developmental disability; a severe, chronic
disability which:
(1) Is attributable to a mental or physical impairment or combination
of mental or physical impairment;
(2) Was manifested before age 22;
(3) Is likely to continue indefinitely;
(4) Results in substantial functional limitations in three or more of
the following areas of major life activity:
(i) Self-care.
(ii) Receptive and expressive language.
(iii) Learning.
(iv) Mobility.
(v) Self-direction.
(vi) Capacity for independent living.
(vii) Economic self-sufficiency.
(5) Reflects the person's need for a combination and sequence of
special, interdisciplinary or generic care, or treatment, or for other
services which are of lifelong or extended duration and are individually
planned and coordinated.
(c) Handicapped person is a person with a physical or mental
impairment that:
(1) Is expected to be of long-continued and indefinite duration;
(2) Substantially impedes the person's ability to live independently
and could be improved by more suitable housing conditions;
(3) Is of such a nature that the person's ability to live
independently could be improved by more suitable housing conditions.
(d) The term handicapped (or handicap) further means, with respect to
a person, a physical or mental impairment which substantially limits one
or more major life activities; a record of such an impairment; or
being regarded as having such an impairment. This term does not include
current illegal use of or addiction to a controlled substance. As used
in this definition, physical or mental impairment includes:
(1) Any physiological disorder or condition, cosmetic disfigurement,
or anatomical loss affecting one or more of the following body systems:
Neurological; musculoskeletal; special senses organs; respiratory;
including speech organs; cardiovascular; reproductive; digestive;
genito-urinary; hemic and lymphatics; skin; and endocrine; or
(2) Any mental or psychological disorder, such as mental retardation,
organic brain syndrome, emotional or mental illness, and specific
learning disabilities. The term ''physical or mental impairment''
includes, but is not limited to, such diseases and conditions as
orthopedic, visual, speech and hearing impairments, cerebral palsy,
autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart
disease, diabetes, mental retardation, emotional illness, drug addiction
(other than addiction caused by current, illegal use of a controlled
substance) and alcoholism.
(e) Major life activities means functions such as caring for one's
self, performing major tasks, walking, seeing, hearing, speaking,
breathing, learning and working.
(f) Has a record of such an impairment means has a history of, or has
been misclassified as having a mental or physical impairment that
substantially limits one or more of major life activities.
(g) Is regarded as having an impairment means:
(1) Has a physical or mental impairment that does not substantially
limit one or more major life activities but that is treated by another
person as constituting such a limitation;
(2) Has a physical or mental impairment that substantially limits one
or more major life activities only as a result of the attitudes of
others toward such impairment; or
(3) Has one of the impairments defined in paragraph (d)(1) and (d)(2)
of this definition but is treated by another person as having such an
impairment.
Elderly family. A household where the tenant or co-tenant is at
least 62 years old or is disabled or handicapped as defined in this
section. An elderly family may include a person(s) younger than 62
years of age who is essential to the care of the disabled and/or
handicapped person's care and well being. (To receive an elderly family
deduction, the elderly, disabled or handicapped person must be the
tenant or co-tenant.)
Elderly household. A household where the tenant or co-tenant is at
least 62 years of age, handicapped, or disabled as defined in
1944.205(h) of this subpart. An elderly household may include a
person(s) younger than 62 years of age who is essential to the elderly,
handicapped, or disabled person's care and well-being. (To receive an
elderly household deduction, the elderly, handicapped, or disabled
person must be the tenant or co-tenant.)
Eligible tenants or cooperative members. Elderly, handicapped, or
disabled persons and very low-, low-, or moderate-income households or
any combination thereof as planned for the project and shown on the
applicant's loan resolution or loan agreement and who meet the
eligibility requirements of Exhibit B to subpart C of part 1930 of this
chapter. In the case of cooperative housing projects, all members must
have a very low, low, or moderate income except that any member who is
admitted as an eligible member of the cooperative may not subsequently
be deprived of his/her membership or tenancy by reason of no longer
meeting the income eligibility requirements as outlined in Exhibit C of
subpart A of this part 1944 (available in any FmHA office).
Familial status. One or more individuals (who have not attained the
age of 18) being domiciled with:
(1) A parent or another person having legal custody of such
individual or individuals; or
(2) The designee of such parent or other person having such custody,
with the written permission of such parent or other person, or a person
who is pregnant or is in the process of securing legal custody of any
individual who has not attained the age of 18 years.
Gains or profits. For the purpose of the patronage capital refund,
gains and profits do not include dividends payable on stock which is
nonvoting, limited as to the amount of dividends that can be paid
thereon and limited as to liquidation value in the event of corporate
dissolution.
Group home. Housing that is occupied by elderly, handicapped or
disabled tenants sharing living space within a rental unit in which a
resident assistant may be required. A group home is generally designed
as a single household dwelling but can be a multi-unit structure.
Handicap. See definition of ''Elderly.
Household. One or more persons who maintain or will maintain
residency in one rental or cooperative unit, but not including a
resident assistant or chore service worker.
Individual. A natural person.
Initial operating capital. Cash or a pledge, in the form of an
irrevocable letter or credit to provide cash to pay for costs such as
property and liability insurance premiums, fidelity bond premiums if an
organization, utility hook up deposits, maintenance equipment, movable
furnishings and equipment, printing lease forms and other initial
operating expenses. The initial operating capital will be at least 2
percent of the total development cost of the project.
Interested parties. Any person who has or will have a pecuniary
interest in the project or activities for which the applicant is seeking
assistance. Persons with a pecuniary interest in the project or
activity shall include but not be limited to any developers,
contractors, and consultants involved in the application for assistance
under this title or the planning, development, or implementation of the
project or activity. Residency of an individual in housing for which
assistance is being sought shall not, by itself, be considered a
pecuniary interest.
Irrevocable letter of credit. Is a commerical banking instrument
used as an unencumbered and standby liquid asset in lieu of cash. Guide
letter 1944-E-6 may be used, and a copy may be obtained from any FmHA
Field Office.
Limited equity. The amount of funds which have accumulated in the
cooperative member's partronage capital account and as further described
in subpart E to this part 1944.
Limited partnership. A partnership consisting of one or more general
partners who are jointly and severally responsible for conducting the
business of the partnership, and one or more special partners
contributing cash in a specific amount as capital to the common stock,
who are not liable for the debts for the partnership beyond the funds
contributed.
Limited profit basis. An individual or organization applicant who,
in order to obtain interest credit assistance, will agree to limit the
amount of profit to be obtained. Applicants operating on this basis
will be permitted to receive a return on their initial investment in
accordance with the requirements outlined in 1944.215 of this subpart.
The applicant will legally obligate itself to regulate rents, charges,
rate or return, and methods of operation.
Low-income household. A household having an adjusted annual income
within the maximum low-income limit stated in Exhibit C of Subpart A of
this part 1944 (available in any FmHA office).
Management Reserve. That portion of the cooperative occupancy charge
which is designated for payment of professional management services.
Manufactured home (unit). A dwelling unit which is built to conform
with the Federal Manufactured Home Construction and Safety Standards and
Farmers Home Administration (FmHA) thermal requirements. Manufactured
homes are described further in Exhibit J of subpart A of part 1924 of
this chapter.
Manufactured home project. A parcel(s) of land located in the same
community which contain two or more manufactured home units one each
parcel for rental or cooperative member occupancy and operated under one
management plan with one loan agreement/resolution. For a cooperative
housing project, the parcels of land must be in the same neighborhood
and in a clustered configuration.
Maximum debt limit (MDL). The maximum amount that FmHA will lend for
a project based on the lesser of appraised value or total development
cost multiplied by 97 percent for a limited profit operation or 102
percent for a nonprofit operation.
Member. A person who has executed documents pertaining to a
cooperative housing type of living arrangement and has committed
himself/herself to upholding the cooperative concept.
Moderate-income household. A household having an adjusted annual
income within the maximum moderate-income limit stated in Exhibit C of
supart A of this Part 1944 (available in any FmHA office).
Modification. Any change to the public or common use areas of a
building or any change to a dwelling unit to comply with handicap
accessibility.
Occupancy agreement. A contract setting forth the rights and
obligations or the cooperative member and the cooperative, including the
amount of the monthly occupancy charge and the other terms under which
the member will occupy the housing. An example of the agreement is in
Exhibit J of this subpart.
OGC. The Regional Attorney or the Attorney in Charge in the field
office of the Office of the General Counsel (OGC) of the United States
Department of Agriculture.
Organization. A private nonprofit corporation, profit corporation,
consumer cooperative, association, State, or local public agency, trust,
partnership, or limited partnership.
Other government assistance. Any related assistance from the Federal
Government, a State, or a unit of general local government, or any
agency or instrumentality thereof. Such related assistance shall
include but not be limited to any loan, grant, guarantee, insurance,
payment, rebate, subsidy, credit, tax benefit, or any other form of
direct or indirect assistance.
Owner-builder. A qualified builder-applicant who has experience and
has demonstrated the ability and capability to build a RRH project.
Patronage capital refund. Amounts received by the cooperative in
excess of operating costs and expenses which have been assigned to
members' patronage capital accounts each year of membership in the
cooperative.
Pecuniary Interest. Financial concern or financial gain.
Private nonprofit corporation. A corporation which:
(1) Is controlled by private persons or interests;
(2) Is organized and operated for purposes other than making gains or
profits for the corporation or its members;
(3) Is legally precluded from distributing to its members any gains
or profits during its existence; and
(4) In the event of its dissolution, is legally bound to transfer its
net assets to a nonprofit corporation of a similar type or to a
municipal corporation which will operate the housing for the same or
similar purposes.
Project. The total number of rental or cooperative housing units that
are operated under one management plan with one loan
agreement/resolution.
Public use areas. Interior or exterior rooms or spaces of a building
that are made available to the general public.
Resident assistant. A person(s) residing in a housing unit who is
essential to the well-being and care of the elderly, handicapped, or
disabled person(s) residing in the unit and who is not related by blood,
marriage, or operation of the law to these tenants or members. The
resident assistant is not considered to be part of the household and is
not subject to the eligibility requirements of a tenant or member. The
resident assistant receives compensation from sources other than FmHA.
A resident assistant is not a chore service worker as defined in Exhibit
B of subpart C of part 1930 of this chapter.
Rural area. Open country or rural places as defined in 1944.10 of
subpart A of part 1944 of this chapter.
Rural rental housing. Structures in a rural area which are or will
be suitable for, and available to, eligible tenants on a rental basis
for dwelling use. The structures may include related facilities where
appropriate.
Security value. The present market value of the real estate offered
as security for the loan as determined by the loan approval official
less the unpaid principal balance plus past due interest on any other
liens against it. Other liens will include any prior liens and Junior
liens to be or likely to be taken or subordinated at or immediately
after loan closing.
Service agreement. A written agreement between the borrower and the
congregate or group home service provider detailing the specific service
to be provided, the cost of the service and length of time the service
will be provided.
Service plan. A written plan describing how services will be
provided to congregate housing or group home projects. At a minimum,
the plan must specify the services to be provided, the frequency of the
services, who will provide the services, how tenants will be advised of
the availability of services, and the staff needed to provide the
services.
State Agency. The Agency within a State that has been given the
responsibility to allocate low-income tax credits.
Subscription agreement: The initial contract between the prospective
cooperative member and the cooperative specifying the terms of
application for membership and the amount of the membership fee
contributed by the member. An example of the agreement is in Exhibit I
of this subpart.
Very low-income household. A household having an adjusted annual
income within the maximum very low-income limit stated in Exhibit C of
subpart A of this part 1944 (available in any FmHA office).
(56 FR 2232, Jan. 22, 1991; 56 FR 47376, Sept. 19, 1991, as amended
at 56 FR 66960, Dec. 27, 1991)
Effective Date Note: At 56 FR 66960, Dec. 27, 1991, 1944.205 was
amended by revising the definition of ''State Agency'', effective
January 27, 1992. For the convenience of the user, the superseded text
follows:
1944.205 Definitions.
State agency. This is the Housing Finance Agency within a State that
has been given the responsibility to allocate low-income tax credits.
1944.206 -- 1944.210 (Reserved)
07 CFR 1944.211 Eligibility requirements.
(a) Eligibility of applicant. To be eligible for an RCH or RCH loan,
the applicant must:
(1) Be a citizen of the United States or a legally admitted alien for
permanent residence in the United States; an organization as defined in
1944.205 of this subpart; or an American Indian tribe, band, group, or
nation (including Alaskan Indians, Aleuts, Eskimos, and any Alaskan
native village), which is considered an eligible recipient under the
Indian Self-Determination and Education Assistance Act (Pub. L. 93-638)
or under the State and Local Fiscal Assistance Act of 1972 (Pub. L.
92-512).
(2) With the exception of a State or local public agency, be unable
to obtain the necessary credit from private or cooperative sources on
terms and conditions that allow the establishment of rent or occupancy
charges within the payment ability of eligible tenants or members.
(i) For an individual, the assets of both the applicant and spouse
will be considered.
(ii) For nonprofit organizations, the assets of the individual
members will not be considered.
(3) Have the ability and intention to maintain and operate the
housing for the purposes for which the loan is made.
(4) With the exception of a nonprofit organization, consumer
cooperative or public body, have or be able to obtain the 3 percent
borrower contribution required by 1944.213(a)(2) of this subpart. This
contribution must be in the form of cash, land, or a combination
thereof.
(5) Own the housing and related land or become the owner when the
loan is closed. In addition to the owner of full marketable title, an
owner may be a lessee of a tract of land owned by a nonpublic body,
State, political subdivision, public body, or public agency, or American
Indian tribal lands which are not available for purchase. The State
Director must determine that leaseholds are fully marketable in the
area. The following conditions must be met when considering leasehold
interests:
(i) A recorded mortgage constituting a valid and enforceable lien on
the applicant's leasehold will be given as security.
(ii) The amount of the RRH or RCH loan against the property will not
exceed the estimated market value determined in accordance with subpart
B of part 1922 of this chapter (available in any FmHA office).
(iii) The unexpired term of the lease on the date of loan approval
must be at least 25 percent longer than the repayment period of the loan
and rent charged for the lease does not exceed the rate being paid for
similar leases in the area.
(iv) The borrower's interest must not be subject to summary
foreclosure or cancellation.
(v) The lease must:
(A) Not restrict the right to foreclose the RRH or RCH mortgage or to
transfer the lease.
(B) Permit FmHA to bid at a foreclosure sale or to accept voluntary
conveyance of the security in lieu of foreclosure.
(C) Permit FmHA to occupy or sublet the property and sell the
leasehold for cash or credit if the leasehold is acquired through
foreclosure (or voluntary conveyance in lieu of foreclosure), or if the
borrower abandons the property.
(D) Permit the borrower, in the event of default or inability to
continue with the lease and the loan, to transfer the leasehold, subject
to the RRH or RCH mortgage, to a transferee with the assumption of the
RRH or RCH debt.
(vi) The advice of OGC will be obtained as to legal sufficiency of
the lease. When the State Director is uncertain as to whether a loan
can be made on a leasehold, he/she should request National Office
evaluation and instruction.
(6) Have or be able to obtain the initial operating capital and other
assets needed for a sound loan. Loans made to nonprofit organizations,
consumer cooperatives, and to State or local public agencies may include
up to 2 percent of the development cost for initial operating expenses.
(i) If initial operating expenses are expected to be greater than 2
percent of the development cost, the initial operating capital will be
increased accordingly.
(ii) Initial operating capital can be provided both in cash and in
the form of an irrevocable letter of credit or a combination of both.
If all operating capital is to be provided by a letter of credit, the
applicant must indicate how start-up costs will be paid. It is
expected, however, that most applicants will select a combination of
cash and a letter of credit.
(A) Funds provided in cash will be deposited into the general
operating account in accordance with the provisions of the loan
agreement or loan resolution prior to the start of construction or loan
closing (whichever is first) and will be used for authorized purposes
only.
(B) If provided as an irrevocable letter of credit it must:
(1) Be unconditional;
(2) Be from a Federally Insured Financial Entity and show the Issuing
Bank's name, document control number, issuance and expiration date;
(3) Be addressed to the project owner/entity and specifically refer
to the proposed project;
(4) Be for a term of at least one year, contain an automatic renewal
clause, and require a minimum of 30 days notice of expiration if the
issuing bank elects not to renew the Letter of Credit;
(5) Be free of any deposit and/or reserve restrictions and may not be
secured by the FmHA financed project;
(6) Be provided prior to the start of construction or when interim
financing of funds are obtained or loan closing (whichever occurs
first);
(7) Contain the statement ''This Letter of Credit is issued to Name
of Entity in the interest of the Name of Project, Location -- Street,
City, State, for satisfaction of Initial Operating Capital required in a
loan agreement with the Farmers Home Administration.''
(C) If provided as a combination:
(1) The cash and letter of credit, added together, must equal the
required initial operating capital;
(2) They must be provided prior to the start of construction or loan
closing (whichever is first);
(3) The cash portion will be handled according to paragraph
(a)(6)(ii)(A) of this section and the letter of credit must meet all
requirements of paragraph (a)(6)(ii)(B) of this section.
(iii) When the applicant is to provide other movable equipment and
furnishings, the initial capital will be increased sufficiently to cover
the cost of these items.
(iv) If the borrower provided the initial 2-percent operating capital
from its own funds, the State Director may authorize the borrower to
make a one-time withdrawal from project funds after two, but before five
5 full borrower fiscal years of operation, in accordance with Subpart C
of Part 1930 of this chapter.
(7) Possess the ability, experience, and the legal and financial
capacity to incur and carry out the obligations required for the loan.
(8) Agree to comply with all FmHA requirements, such as those set
forth in the loan resolution, loan agreement, the form of note, the
mortgage and FmHA regulations.
(9) Provide necessary management to assure the successful operation
of the project. Management services may be provided by the applicant, a
management firm or an agent. Management will be handled in accordance
with Exibit B to Subpart C of Part 1930 of this chapter.
(10) In the case of a private nonprofit organization:
(i) If operating in one community and its trade area, meet the
following additional requirements for an RRH loan:
(A) The organization must maintain a broadly-based membership
reflecting a variety of interests in the community. The organization
should have at least 25 members. The number of members may be decreased
for projects with less than 25 units.
(B) Each member must be limited to one vote in the affairs of the
organization.
(C) A majority of the members must reside in the community or the
trade area where the housing will be located.
(D) At least five of the members must be recognized as leaders in
civic, governmental, fraternal, religious, and other community
organizations of the community where the housing will be located.
(E) There must be at least five people on the board of directors and
they must be selected by a procedure that insures that the interests of
minorities and women are adequately represented.
(F) The directors must be members of the organization.
(G) The organization should adopt articles of incorporation and
bylaws substantially conforming to the model articles and bylaws set
forth in Exhibits C and D, modified as appropriate in accordance with
State law. The State Director, with the assistance of OGC, may develop
a model set of articles of incorporation and bylaws for the State which
are consistent with Exhibits C and D and publish an appropriate State
supplement.
(ii) If operating in more than one community or on a county or
regional basis and providing or planning to provide rental housing in
more than one community, meet the following requirements in addition to
those in paragraph (a)(9)(i) except for (a)(9)(i)(C) of this section:
(A) The membership base should be representative of the area being
served with at least five members representing a variety of interests
from each community where the housing will be located.
(B) The organization's articles of incorporation and bylaws must
include the requirements outlined in paragraph (a)(9)(ii)(A) of this
section.
(11) In the case of a cooperative:
(i) Each member must be limited to one vote in the affairs of the
Cooperative.
(ii) The number of directors must not be less than 5, or whatever is
allowable under State law.
(12) In the case of a limited partnership:
(i) The general partners must be able to meet the financial
requirements of 1944.211(a)(4) of this subpart if the partnership is
not able to when the preapplication is filed.
(ii) The general partners must maintain a minimum 5 percent financial
interest in the partnership. For this purpose, the minimum 5 percent
requirement will be deemed to have been met if the general partner has a
minimum 5 percent interest in the residuals or refinancing proceeds.
The general partner will not be required to have a minimum 5 percent
interest in current profits, losses, and cash distributions of the
partnership. For example, an agreement where the general partners have
such a 5 percent interest in a limited partnership and receive only 1
percent of the profits while the limited partners receive 99 percent of
the profits would be allowable.
(iii) The partnership must agree that new general partners can be
brought into the organization only with the prior written consent of
FmHA.
(13) Be willing to honor the long-term commitment associated with
receipt of a Section 515 loan. Borrowers or principals of borrower
organizations who sell or transfer loans less than 5 years old will not
be considered eligible for further participation in the program as
borrowers or principals (i.e., a general partner in a limited
partnership) for at least 5 years from the date of the loan or
assumption closing. The State Director may make an exception to this
provision only if the transfer or sale meets the hardship provisions of
1965.65(a)(4) of Subpart B of Part 1965 and the applicant meets all
other eligibility requirements.
(b) Authorized representative of an applicant. FmHA will deal only
with the applicant or its authorized representative and the
representative's technical advisers. An authorized representative of a
nonprofit applicant must have no pecuniary interest in the award of the
architectural or construction contracts, the purchase of equipment or
the purchase of the land for the housing site.
(53 FR 2159, Jan. 26, 1988, as amended at 53 FR 7491, Mar. 9, 1988;
54 FR 14336, Apr. 11, 1989; 56 FR 2235, Jan. 22, 1991)
07 CFR 1944.212 Loan purposes.
RRH and RCH loans may be made to qualified applicants to:
(a) Construct new housing.
(b) Purchase and rehabilitate existing buildings only when moderate
or substantial modifications, repairs or improvements to the structures
are necessary to meet the requirements of decent, safe, and sanitary
living units.
(1) All rehabilitation work to be performed must be classified as
either moderate or substantial rehabilitation as defined in Exhibit K of
Subpart A to Part 1924 of this chapter.
(2) The structure to be rehabilitated must be physically and
structurally sound enough to afford maximum safety (including fire
safety) to the residents of the structure after rehabilitation.
(3) Rehabilitation must be planned and accomplished so that the
resulting housing will:
(i) Meet the applicable development standards as provided for in
1924.5(d)(1) of Subpart A of Part 1924 of this chapter and any
applicable historic preservation requirements.
(ii) Create a suitable and appealing living environment and be
substantially equivalent to new construction in quality and livability.
(4) The applicant must submit complete plans and specifications for
rehabilitation for FmHA's review and acceptance.
(5) The rehabilitated project must generally meet the provisions of
1944.215(b) of this subpart.
(6) When the downtown location of a rehabilitation project dictates
such, a portion of the structure (such as part of the ground floor and
basement) can be designated for commercial use on a lease basis. Loan
funds, however, cannot be used to finance any cost associated with the
commercial space. In order to determine the correct loan amount for the
residential portion of such a structure, the following guidelines will
apply:
(i) The applicant must supply a complete cost breakdown for
purchasing and rehabilitating the entire structure into its joint
residential/commercial use.
(ii) The costs that can be easily and appropriately identified as
being part of either the commercial or residential portion of the
structure should be separated.
(iii) The costs which cannot be easily and appropriately isolated
(such as the cost associated with repair or renovation of a boiler, the
value of the structure ''as is,'' and certain mechanical or electrical
components that will benefit both commercial and residential tenants or
members will be prorated between the two uses based on the percentage of
equipment load (example -- central boiler or air conditioning) which
would be necessary for each portion of the structure.
(iv) For the purposes of the loan limitations in 1944.213(b) (1) and
(2) of this subpart, the term ''development cost'' means the development
costs associated with or prorated to the residential use of the
structure, and the term ''security value'' is the security value of the
project exclusive of the value contributed to the land and structure(s)
by the commercial space. The capitalization approach to value is one
means by which FmHA may establish the value contributed by the
commercial space.
(v) The applicant must rely on other sources of financing for all
costs associated with or prorated to the commercial space, given the
FmHA security requirements of 1944.221 of this subpart.
(7) The applicant may not lease any authorized commercial space
without the prior written consent of the State Director. Prior to loan
closing, the advice of OGC will be obtained as to any modifications
needed in the mortgage, loan agreement or loan resolution to enforce
this requirement. The State Director may not consent to any lease
unless:
(i) The lease contains a provision by which the lessee agrees to
vacate the premises if FmHA withdraws its consent to the lease.
(ii) The proposed use of the leased space has a mutually supportive
relationship to the needs of the residential tenants or member and to
the use of the residential portion of the structure.
(iii) The terms of the lease and the proposed use of the leased space
do not jeopardize the interests of the tenants or members of the project
or the continued use of the residential portion of the structure.
(iv) The lease has been reviewed by OGC and found to be legally
sufficient and in compliance with the requirements of this subpart.
(c) Purchase and improve the necessary land on which the housing will
be located.
(1) Loan funds used to purchase land may not exceed the estimated
market value of the site in its present condition as shown by a current
appraisal in accordance with Subpart B of Part 1922 of this chapter
(available in any FmHA office). Purchase price in excess of estimated
market value will not be used in determining the applicant's initial
investment.
(2) Loan funds will not be used to buy land from an applicant or a
member of an applicant/organization or from another organization in
which any member of the applicant/organization has an interest except
that, with prior approval of the State Director, loan funds may be used
to buy land from a member of a broadly-based nonprofit
applicant/organization.
(3) Loan funds may be used to acquire land in excess of that needed
for the housing, including related facilities, only when:
(i) The applicant cannot acquire only the needed land at a fair
price, can justify the acquisition, agrees to sell the land as soon as
practicable and apply proceeds on the loan, and has legal authority to
acquire and administer the land; and
(ii) The cost of the excess land is a reasonable portion of the loan.
(d) Develop and install streets, a water supply, and sewage disposal,
heating, cooling, and light systems necessary in connection with the
housing. If the facilities are located offsite, the following
requirements must be met:
(1) The applicant will hold the title to the facility or have a legal
right to use the facility for a period of at least 25 percent longer
than the life of the loan and the title or right can be transferred to
any subsequent owner of the site.
(2) The facilities are provided for the exclusive use of the project
or funds are limited to the prorated part of the total cost of the
facility according to the use and benefits to the project. The
applicant will agree in writing to the application, as extra payments on
the loan, of any subsequent collection by the borrower from other users
or beneficiaries of the facility.
(3) Adequate security can be obtained with or without a mortgage
based on the offsite facilities.
(e) Develop other related facilities in connection with the housing
such as:
(1) Maintenance workshop and storage facilities.
(2) Recreation center when the project is large enough to justify the
facility. In all projects, passive recreation (such as outdoor seating)
for elderly rental projects and active facilities (such as tot lots) for
family projects will be provided.
(3) Central cooking and dining in congregate and group living housing
when the project is large enough to justify them to supplement the
kitchen facilities in each unit. All equipment purchased with loan
funds for the central cooking and dining facilities, such as stoves,
refrigerators, ovens, dish washing machines and steam tables, should be
attached to the land or buildings in a manner regarded in law as part of
the real estate.
(4) Space for a small infirmary for emergency care only when
justified by the size of the project. An infirmary will not be
justified if facilities for emergency care expected to be needed by the
tenants are readily accessible elsewhere.
(f) Construct office and living quarters for the resident manager and
other operating personnel if the facilities would be to the advantage of
the project and the Government. The State Director should make a
determination and the justification will be included in the docket.
(g) Purchase and install ranges, refrigerators, drapes, drapery rods
and clothes washers and dryers. Laundry facilities are required in all
projects and clothes washers and dryers should be provided in a central
laundry room. Normally, a minimum of one washer and dryer should be
provided for every 8 to 12 units in a project. Clothes washers and
dryers may not be installed in individual units if the installation is
not customary in the area for the size of project and type of housing
involved. In any case, both central and individual laundary facilities
will not be provided in a single project.
(h) Provide landscaping, seeding or sodding of lawns, and other
necessary facilities related to buildings such as walks, yards, fences,
parking areas, and driveways.
(i) Pay related costs such as fees and charges for market studies,
tax credit fees, and legal, archeological, architectural, engineering,
environmental and other appropriate technical and professional services.
The fees and charges may be paid to an applicant or officer, director,
trustee, stockholder, member or agent of the applicant provided those
fees and charges are reasonable and typical for the area and are earned.
Legal, technical, and professional fees do not include the costs
incurred in the formation or incorporation of the limited profit
applicant, costs of syndication, or the payment of a loan packaging or
development fee.
(j) Provide loan funds to enable a nonprofit group or public body to
pay fees, for technical assistance received from a nonprofit
organization, with housing and/or community development experience, to
assist it in the formation or incorporation and development and
packaging of its loan docket and project, as well as any legal,
technical, and professional fees incurred in the formation or
incorporation of the applicant entity.
(1) Fees can also be provided to pay the nonprofit applicant entity
for packaging of its loan docket and project, but not to include the
formation and incorporation of the entity.
(2) The amount to be paid for packaging of the loan docket and
project should not exceed 1% of the FmHA loan or whatever is reasonable
and typical for the area.
(3) Related project costs as listed in 1944.222 of this subpart are
not included as a part of the fee for packaging of the loan docket and
project.
(k) Provide loan funds to pay for the cost of educational programs
for the board of directors both before and after incorporation of the
cooperative.
(l) Pay construction interest as follows:
(1) In the case of multiple advances, loan funds will not be used to
pay construction interest. Accrued interest during construction will be
capitalized when construction is substantially complete, loan funds are
fully advanced and the project is ready for full operation or when
advances plus accrued interest reach the maximum debt limit (MDL). When
requested by the borrower, each month the District Director will provide
the borrower monthly computations of the amount of interest that is
accruing during the construction period.
(2) In the case of interim financed construction, interest accrued
and customary charges necessary to obtain interim financing may be
included in the loan amount.
(m) Purchase housing from an interim lender that holds fee simple
title to an RRH project upon which construction commenced pursuant to
1944.235(c)(1) and after issuance of a letter of commitment to the
interim lender in accordance with Exhibit B of this subpart, when all of
the following conditions exist.
(1) The interim lender holds title to the property because the
original RRH applicant for whom funds were obligated will not or cannot
continue with the project after a letter such as that shown in Exhibit B
to this subpart was issued.
(2) The owner of the property is the interim lender to whom FmHA
issued a letter such as that shown in Exhibit B to this subpart for the
construction of the project.
(3) The project is substantially complete (see 1944.235(c)(1)(vi) of
this subpart), all work has been satisfactorily completed in a
workmanlike manner in accordance with the originally approved drawings,
specifications and contract documents, and is in compliance with
Subparts A and C of Part 1924 of this chapter.
(4) There are no unpaid obligations outstanding in connection with
the project.
(5) All other requirements of this subpart have been met.
(n) Pay for related costs incurred in compliance with the Uniform
Relocation Assistance and Real Property Acquisition Act of 1970 and in
accordance with 1944.215(t) of this subpart.
(o) Contruct demonstration projects involving innovative housing
units and systems which do not meet existing published standards, rules,
regulations, or policies, but do meet the intent of providing decent,
safe, and sanitary rural housing. Only the Administrator may authorize
loan funds to be used for this purpose.
(p) Finance the conversion of section 502 units in inventory to a
section 515 project, in accordance with requirements of this subpart and
subpart C of part 1955 of this chapter. Loans for this purpose can be
made only to public agencies and private nonprofit organizations. Units
should be repaired or rehabilitated prior to conversion to section 515
housing. To facilitate a cooperative's self-maintenance plan, the use
of 502 inventory houses will be considered only if the units are located
in the same subdivision and in a clustered configuration.
(53 FR 2159, Jan. 26, 1988, as amended at 54 FR 14336, Apr. 11, 1989;
55 FR 26644, June 29, 1990; 55 FR 29560, July 20, 1990; 56 FR 2235,
Jan. 22, 1991; 56 FR 66960, Dec. 27, 1991)
Effective Date Note: At 56 FR 66960, Dec. 27, 1991, 1944.212 (n)
was amended by changing the reference 1944.215(t) to 1944.215(v),
effective January 27, 1992.
07 CFR 1944.213 Limitations.
(a) Loan Limits. The State Director must certify that assistance
provided any housing project is not more than is necessary to make the
project affordable. The applicant must disclose, at all times,
beginning with the preapplication package, other Government assistance,
as defined in 1944.205 of this subpart, proposed for the project. At
the time of loan approval, the State Director will take into account any
other such assistance when determining the FmHA loan amount to be
granted. SF 424.2, ''Application for Federal Assistance (For
Construction)'' will be used by an applicant to disclose all assistance
being sought.
(b) State Director's loan limitation. The amount of the RRH loan(s)
on each project is limited to the maximum amount of the state Director's
loan approving authority unless the National Office provides prior
written authorization. All RCH loans will require National Office
authorization. To request authorization, the state Director must submit
the preapplication, detailed information of the need and market for the
project, and his/her recommendations. This must be done before Form
AD-622, ''Notice of Preapplication Review Action,'' or any other notice
is given to the applicant indicating that the loan has been determined
eligible. Additional RRH loans to the same applicant entity may be made
on the same or contiguous site without regard to this limitation if the
previous project is completed and is being successfully operated. A
clear market demand must be evidenced for any additional units to be
provided. Each loan will also be subject to the following additional
requirements:
(1) For nonprofit corporations, consumer cooperatives, and State or
local public agencies, the amount of the loan(s) will be limited to the
development cost or the security value of each project, whichever is
less, plus the 2 percent initial operating capital and/or the relocation
costs incurred as indicated in 1944.215(v) of this subpart.
(2) For all other applicants, the amount of the RRH loan(s) will be
limited to no more than 97 percent of the development cost or 97 percent
of the security value of each project, whichever is less.
(3) For all applicants, the amount of the loan after capitalized
construction interest is considered will not exceed the loan limits in
paragraphs (b) (1) and (2) of this section. However, Predetermined
Amortization Schedule System (PASS) loans closed with multiple advances
may exceed that amount when an additional amount is permitted to allow
interest to be capitalized to the first of the following month.
(4) All borrowers must agree in writing to provide funds from their
own resources to pay any cost for completing planned construction after
the MDL is reached.
(c) Limitations on use of loan funds. Loans will not be made for:
(1) Specialized equipment for training and therapy.
(2) Commercial facilities except essential service-type facilities
for tenants or members when such facilities are not conveniently
available.
(3) Housing to serve primarily temporary and transient residents.
(4) Nursing homes, special care facilities, or institutional-type
homes.
(5) Nonessential facilities such as fireplaces, saunas, whirlpools,
gyms, and swimming pools.
(6) Refinancing debts of the applicant except:
(i) As authorized in 1944.235(c) and 1944.213(d)(1) of this
subpart; or
(ii) When a nonprofit organization or a State or local public agency
applicant already owns land on which a lien exists and a subordination
or release cannot be obtained and the applicant does not have the
financial resources necessary to obtain a release of the existing
lien(s). In this situation, loan funds may be used to obtain a release
of the land needed for the site of the proposed project. The amount of
funds used for such purposes will be limited to the amount necessary to
obtain the release but will not exceed this ''as is'' value of the land
as determined in accordance with FmHA Instruction 1922-B (available in
any FmHA office).
(7) Payment of any fee, charge or commission to any broker,
negotiator or other person for the referral of a prospective applicant
or solicitation of a loan.
(8) Payment of any fee, salary, commission, profit, or compensation
to an applicant or to any officer, director, trustee, stockholder,
member, or agent of an applicant except as provided in 1944.212(j) of
this subpart.
(9) Land which the applicant or a member of an applicant/organization
owns or land which is owned by any other organization in which any
member of the applicant/organization has an interest, except as
authorized in 1944.212(c)(2).
(10) Compensation to an applicant for value of land contributed in
excess of the initial 3 percent contribution.
(11) Payment of fees charged by a commercial banking institution for
granting a letter of credit.
(d) Obligations incurred before loan closing. When an applicant
files a preapplication for a loan, the District Director will advise the
applicant not to start construction or incur any indebtedness until the
loan is closed, except for those cases involving interim financing; the
guidelines outlined in 1944.235(c)(1) of this subpart will then apply.
During the period of preapplication review and processing, applicants
will not take any actions with respect to their applications which would
have an adverse impact on the environment or limit the choice of
reasonable alternatives. This requirement does not preclude the
applicant from developing preliminary plans or designs or performing
other work necessary to support an application for Federal, State, or
local permits or assistance. If the applicant incurs debts for work,
materials, land purchase, or other authorized fees and charges before
the loan is closed, the State Director may authorize the use of loan
funds to pay the debts when all of the following conditions exist:
(1) The debts were incurred:
(i) After the applicant filed a written preapplication for a loan
with FmHA;
(ii) Prior to the date of application as part of a predevelopment
loan specifically intended as temporary financing from a public agency
or nonprofit organization and the State Director secures prior
concurrence from the National Office; or
(iii) Prior to the date of application as part of a development loan
made to a State or local public agency specifically intended as
temporary financing and the State Director secures prior concurrence
from the National Office.
(2) The applicant is unable to pay the debts from its own resources
or to obtain credit from other sources and failure to authorize the use
of loan funds to pay the debts would impair the applicant's financial
position.
(3) The debts were incurred for eligible loan purposes.
(4) Contracts, materials, construction, and any land purchased meet
FmHA standards and requirements.
(5) Payment of the debts will remove any liens which have attached
and any basis for liens that may attach to the property on account of
such debts.
(e) Limitations on cost increases. After loan approval of a project
involving new construction or major rehabilitation:
(1) No increase in per unit development cost will be approved,
whether the circumstance causing the cost increase occurs before,
during, or after the construction period, unless these conditions were
unforeseen factors beyond the owner's control, such as:
(i) Design changes required by FmHA or State or local government
having jurisdiction over the development of the project; or
(ii) Changes in financing approved by FmHA.
(2) Any cost increase which cannot be approved for funding by FmHA
must be satisfied by the owner from its own resources. Whenever there
is doubt as to the resulting effect of a cost increase upon per unit
development cost, the cost increase request may be conditionally
approved provided:
(i) The owner agrees in writing to provide any funds necessary in
excess of its initial contribution and the loan amount to complete the
project; and
(ii) The owner furnishes surety that guarantees payment under the
assurance agreement in the form of a surety bond, unconditional and
irrevocable letter of credit or cash which is put into an interest or
noninterest bearing supervised bank account. Such funds will not result
in a lien on the project or its operating income.
(3) Under no circumstances will a cost increase request be approved
without concurrent agreement between FmHA and the applicant/borrower as
to how the cost increase will be funded.
(53 FR 2159, Jan. 26, 1988, as amended at 53 FR 7491, Mar. 9, 1988;
54 FR 14337, Apr. 11, 1989; 55 FR 26644, June 29, 1990; 55 FR 29558
and 29561, July 20, 1990; 56 FR 2236, Jan. 22, 1991; 56 FR 66960, Dec.
27, 1991)
Effective Date Notes: 1. At 56 FR 66960, Dec. 27, 1991, 1944.213
was amended by revising paragraph (a) and by changing the reference in
paragraph (b)(1) from ''1944.215(w)'' to ''1944.215(v)'', effective
January 27, 1992. For the convenience of the user, the superseded text
follows:
1944.213 Limitations.
(a) Loan limits. The Department of Housing and Urban development
Reform Act of 1989, Public Law 101-235 requires that the Secretary
certify that assistance provided any housing project is not more than is
necessary to make the project affordable. Pursuant to this Act the
applicant must disclose, with the preapplication package, other
Government assistance as defined in 1944.250 of this subpart proposed
for the project. The aggregate amount of assistance with be taken into
account when determining the FmHA loan amount to be granted. Exhibits
A-7 and A-9 provide for required documentation regarding assistance
being sought for the proposed project. Additionally, SF 424.2,
''Application for Federal Assistance (for Construction),'' requires that
the applicant/entity disclose all assistance being sought.
07 CFR 1944.214 Rates and terms.
(a) Interest. Upon request of the borrower, the interest rate
charged by FmHA will be the lower of the interest rates in effect at the
time of loan approval or loan closing. If an applicant does not
indicate a choice at the time of loan approval, the loan will be closed
at the interest rate in effect at the time of loan approval. Interest
rates are specified in Exhibit B of FmHA Instruction 440.1 (available in
any FmHA office).
(b) Amortization period. Each loan will be scheduled for payment
within a period that is necessary to assure that the loan will be
adequately secured, taking into account the probable depreciation of the
security. The payment period will not exceed 50 years from the date of
the note, except as provided in 1944.223 for manufactured housing.
07 CFR 1944.215 Special conditions.
(a) Cost containment. To help assure low affordable rental and
occupancy rates, projects must be economical in construction and not of
elaborate design or materials. Cost containment is not to be
interpreted as accepting poor design or cheap construction. Projects
must provide the features and amenities necessary for the lifestyles of
the tenants and members. Consideration must be given to the
cost/benefit ratio when evaluating, recommending or requiring specific
design features or construction techniques. The following guidelines
should be followed when developing projects:
(1) Each State architect/engineer (A/E) should compile and maintain
data or spreadsheets on cost/sq. ft., cost/unit, and cost/acre, A/E
fees, etc., which are reasonable and customary for the State. Any
proposal that exceeds these costs should be carefully evaluated for
possible cost reductions. Final determinations must be realistic,
interrelated to maintenance and operation costs, and based upon local
conditions and common sense. The Building Cost Tracking System may
prove helpful.
(2) The elimination or reduction of unnecessary delays in application
processing can contribute to cost containment through lower interest and
other business expenses on land, inventory, tests, design studies, etc.
When reasonable processing timeframes are established, known and
followed, appropriate time can be planned for preparing quality
application and construction documents. This can result in better
instructions to the builder, fewer errors and lower construction costs.
(3) Most materials and systems are available in a range of qualities
and prices. The construction documents should be carefully reviewed for
specifications that require qualities or grades higher than necessary.
These specifications should be accepted only if fully justified and no
reasonable alternatives are available.
(4) Designs which encourage standard building material dimensions and
reduce waste will be used as much as possible.
(5) State Directors should encourage the use of sites that require a
minimum amount of site development. State Directors should also
encourage projects with a minimum of 14 units per acre unless the
applicant provides documentation supporting a change, such as local
zoning requirements requiring a different density.
(6) Items such as covered parking and garages can be included in the
FmHA loan only when they are required by local codes or ordinances.
(7) Sound judgment and common sense must also be used in construction
inspections and final acceptance of projects. Field staff involved in
these activities must be careful not to impose additional or
unreasonable requirements on the builder that will increase construction
costs.
(8) When evaluating projects, life cycle costs will be considered.
These costs include: Initial costs, future replacement costs and
operation and maintenance costs. The economic lives of alternative
designs and materials will be considered. Reductions in initial costs
may result in higher life cycle costs.
(9) Management, maintenance and community rooms should not exceed the
limitations described in the FmHA Manual of Acceptable Practices
(available in any FmHA office). Laundry rooms should be no larger than
necessary to accommodate equipment, circulation and areas for sorting
and folding clothes.
(b) Type of housing. All housing should be designed to:
(1) Be economically constructed and not of elaborate design or
materials. All new construction will conform with the applicable
development standards of 1924.5(d)(1) of subpart A of part 1924 of this
chapter. As a general rule, the gross square foot living area of new
units and related facilities to be constructed with loan funds will be
within the ranges listed below. Living area does not include outdoor
storage space when unfinished or space for heating and cooling
equipment.
(i) An additional 100 to 120 square feet of living area may be added
to the 4-bedroom unit guideline for each bedroom in excess of 4.
(ii) In townhouse units where living area is on two floor levels of
the unit, the maximum gross square footage of living area may be
exceeded by up to 70 square feet, but only to the extent necessary to
accommodate interior stairways.
(iii) Room sizes must be in compliance with the applicable
development standard. Minimum room sizes may be determined by the
minimum areas in Guide 2 of subpart A of part 1924 of this chapter.
(iv) Additional area to accommodate energy conserving and solar
heating elements such as vestibules, heat sinks, solar greenhouses,
solar heat storage devices and the like may be allowed in excess of the
stated maximum size guidelines. However, such devices, if included,
must be justified on a cost effective basis.
(2) Consist of multi-unit type housing with two or more units and
appropriate related facilities except for the conversion of section 502
inventory housing as covered in 1944.212(o) of this subpart,
manufactured homes and group homes. Single family structures may be
considered for cooperative housing projects if economically feasible.
(3) Be residential in character and be designed to meet the needs of
eligible tenants or members. Generally, structures should not be more
than three stories high. However, low-rise structures with elevators
can be considered when the following conditions exist:
(i) There is a serious shortage of suitable building sites, the
number of units needed cannot be built due to lack of space on available
suitable sites and other building sites are not available.
(ii) Land costs are such that one- to three-story construction would
result in a unit cost and rental/occupancy rates in excess of what
eligible tenants and members can afford.
(iii) The number of stories proposed for the structure is compatible
with other rental structures in the community. If there are no other
low-rise rental structures in the community, the proposed structure must
be in character with surrounding structures.
(iv) The cost of the units should compare favorably with one- to
three-story construction financed with RRH loans. If the costs are
higher, the loan will not be approved until the FmHA State architect or
engineer has reviewed the plans, specifications and cost data to assure
that further cost savings cannot be achieved without sacrificing the
quality and serviceability of the housing.
(v) Elevators will be provided in accordance with the applicable
development standards. If elevators are included, the subsoil
conditions of the site must be adequate for the installation of
elevators and sufficient service personnel must be available in the area
for service and repair work.
(4) Provide kitchen and bath facilities consistent with the size of
the unit. For example, units with three or less bedrooms typically can
be designed with one bath. However, townhouse units with three or more
bedrooms where living area is on two floors may contain bath facilities
on both levels. Kitchen facilities are required in all units; however,
in congregate housing, some or all of the units may have limited
facilities, such as a cooktop with a small oven and refrigerator.
(5) Give maximum consideration to energy conservation. To keep
operating costs at a minimum, units should be individually metered for
utilities unless adequate justification is provided to show that it
would be infeasible.
(6) Meet the needs of handicapped tenants in rental projects. At
least 5 percent of the units in the project or one unit, whichever is
greater, must be accessible to or adaptable for physically handicapped
persons. The percentage of the units provided may be modified if an
applicant shows, through information obtained from a State, local or
independent agency or organization serving handicapped people, that a
different percentage of accessible or adaptable units is appropriate.
However, at least one accessible unit will be provided. Adaptable units
must be constructed in accordance with the Uniform Federal Accessibility
Standards, sections 4.34.3 through 4.34.6.
(7) For covered dwellings, handicap accessibility requirements will
be met as set forth in section 504 of the Rehabilitation Act of 1973 and
the Fair Housing Amendments Act of 1988.
(c) Deferred principal payments. (1) When construction is funded by
multiple advances from FmHA, principal payments on the loan will be
deferred for the period of construction.
(2) When an interim financed loan is closed other than the first day
of the month, principal payments will be deferred for the remaining
period of the month in which the loan is closed.
(3) When construction is substantially complete and the project is
ready for full operation, or the total of principal advances plus
accrued interest reaches the MDL, interest on the advances will be
accrued to the Amortization Effective Date (AED) and will be
capitalized, establishing a new principal (loan) amount.
(4) At loan obligation, the MDL will be established according to
1944.213(a) of this subpart. When the final advance on the loan is
issued or the MDL is reached, the Finance Office will:
(i) Accrue interest on all advances through the last day of the month
and capitalize the interest as of the AED. When there is a remaining
obligation balance, it will be canceled by the Finance Office.
(ii) Establish the new loan amount and the borrower's monthly
payments computed over the remaining term of the loan.
(5) The District Office will:
(i) Contact the applicant and complete Form FmHA 1944-52, ''Multiple
Family Housing Promissory Note.''
(ii) Implement Form FmHA 1944-7, ''Interest Credit and Rental
Assistance Agreement,'' at AED or when the project is substantially
complete and ready for full operation, whichever is later.
(d) Refinancing Loans. Each borrower, except those borrower(s) whose
loans were made pursuant to contracts entered into on or after December
15, 1989, must agree to refinance the unpaid balance of the loan when
requested by the Agency. The rates and terms of the refinanced loan
must be considered reasonable by the Agency to enable the borrower to
offer the units to eligible tenants and members at rates within their
payment ability. The refinancing of a loan must comply with the
restrictions indicated in 1944.236(b)(5) of this subpart and subpart F
of part 1951 of this chapter.
(e) Loan resolution or loan agreement. The loan resolution or loan
agreement contains provisions of policy and procedure which should be
carefully read and fully understood by the applicant. If any provisions
are not appropriate to a particular case, proposed substitute language
must be approved by FmHA and OGC. Subpart C of Part 1930 provides for
the maintenance of certain accounts and the pledge of housing income as
security. It contains regulatory provisions governing and giving FmHA
power to impose requirements regarding the housing and related
operations of the applicant. All sections and requirements determined
applicable by OGC will form part of any other loan resolution or
agreement that may be submitted by the applicant. These are:
(1) Form FmHA 1944-33, ''Loan Agreement.''
(2) Form FmHA 1944-34, ''Loan Agreement.''
(3) Form FmHA 1944-35, ''Loan Resolution.''
(f) Cooperative management. Consideration must be given to the
special conditions of a cooperative housing structure concerning
management. The following forms of management will be recognized for
cooperative housing.
(1) Self-management. The primary management objective for small
housing cooperatives. To achieve this, education and training efforts
should be an on-going part of their early years of operation.
Accordingly, modest educational costs will be permitted in the budget as
a subheading under management expenses. It is understood that, in the
beginning, it may be necessary to obtain some outside services, such as
a bookkeeper. If so, then partial self-management can be considered.
It will be necessary for a qualified nonmember (individual or
organization) to advise the board during the formative years of the
cooperative. Exhibits F and G to this subpart will be used as a guide
for determining the qualifications of the adviser.
(2) Partial self-management. Certain management and/or supervisory
services contracted from a technical service organization, housing
authority, or management firm, etc. If this additional assistance does
not enable the cooperative to manage itself, then the ultimate solution
will have to be contract management.
(3) Contract management. Professional services contracted for the
day-to-day supervision of cooperative operations. The board of
directors would develop the policies which would then be administered by
the management agent.
(g) Cooperative membership fee. Cooperative housing is a form of
homeownership. In order to promote a commitment from prospective
members, cooperatives will require a membership fee. The membership fee
established by the board of directors will be equal to one month's
occupancy charge. Once the fee has been established, that amount will
be uniformly applied to all members. Members unable to pay a cash
membership fee should be permitted to make monthly payments without
interest, until the membership fee is paid; however, a cash payment of
at least $25 should be required at occupancy. The period of payment on
the membership fee should not exceed 12 months.
(h) Cooperative limited equity. (1) RCH loans will only be made to
cooperatives which limit the accumulation of equity. The limitations
are designed to maintain unit availability for low-income people. In
addition, all prospective members must have received, prior to becoming
an actual member, a statement of the objectives of the cooperative,
debts and a declaration describing limited equity and what it will mean
to them. Exhibit H of this subpart will be used for this purpose.
Limited equity is further described in What is Cooperative Housing?
Which is to be given to prospective members.
(2) Inflation equity which accrues on cooperative property is not
considered part of members' limited equity and will not be taken from
the project when a member vacates the project.
(i) Interest credits and rental assistance (RA). (1) Borrowers may
receive interest credits if they meet the requirements outlined in
exhibit B of subpart C to part 1930 of this chapter.
(2) RA may be provided to eligible tenants and members in eligible
projects in accordance with exhibit E to subpart C of part 1930 of this
chapter.
(3) At least 95 percent of RA units available for newly constructed
projects must be used to assist very low-income tenants and members. Up
to 5 percent can be used for low-income tenants and members.
(4) Cooperative members must have sufficient incomes to pay their
management reserve charge. RA will not be used for this purpose.
Management reserve charge is further described in exhibit A to this
subpart.
(j) Nondiscrimination in use and occupancy. The borrower will not
discriminate or permit discrimination by any agent, lessee or other
operator in the use or occupancy of the housing or related facilities
because of race, color, religion, age, sex, marital or familial status,
handicap or national origin, in accordance with title VIII of the Civil
Rights Act of 1968, as amended.
(k) Eligibility for occupancy. Loans will be made on the basis of
the housing being occupied by eligible tenants and members as defined in
1944.205 of this subpart. Eligible tenants and members must meet the
requirements of exhibit B of subpart C of part 1930 of this chapter.
(l) Tenant and member certification. Initial certification and
recertifications will be executed on Form FmHA 1944-8, ''Tenant
Certification,'' in accordance with exhibit B to subpart C of part 1930
of this chapter.
(m) Supervision of borrowers. Supervision will be provided borrowers
under subpart C of part 1930 and subpart B of part 1965 of this chapter.
(n) Establishing profit base on initial investment. Applicants
agreeing to operate on a limited profit basis will be permitted a return
not to exceed 8 percent per annum on their initial investment determined
at the time of loan approval. This amount will be reflected in the loan
agreement or loan resolution and will not be changed once it is
determined. The initial investment may exceed the required 3 percent in
1944.213(b)(2) of this subpart and may include the following:
(1) Cash contributions made by the applicant which, when added to the
FmHA loan amount, are not in excess of the security value of the
project.
(2) The value of the building site or essential related facilities
contributed by the applicant up to the amount which, when added to the
FmHA loan amount, is not in excess of the security value of the project.
An appraisal will be done by an FmHA employee authorized to make
appraisals or an FmHA authorized representative in accordance with
applicable FmHA regulations. Value of the applicant's contribution will
be determined on an ''as is'' basis less any amount owed on the
property.
(o) Intergovernmental review. FmHA will consider comments received
in accordance with 7 CFR part 3015, ''Intergovernmental Review of
Department of Agriculture Programs and Activities,'' when making
decisions on loan applications. (See FmHA Instruction 1940-J, available
in any FmHA office.)
(p) Guidelines for preparing environmental assessments and
environmental impact statements. All projects will comply with subpart
G of part 1940 of this chapter.
(q) National flood insurance. The provisions of the National Flood
Insurance Act of 1968, as amended by the Flood Disaster Protection Act
of 1973 and Executive Order 11988, are applicable to FmHA authorities
permitting financing of housing now located in, or to be located in,
special flood or mudslide-prone areas as designated by the Federal
Emergency Management Administration (FEMA). Subpart B of part 1806 of
this chapter (FmHA Instruction 426.2) and subpart G of part 1940 of this
chapter will apply.
(r) Location of housing. (1) The location of the project should
expand the supply of decent, safe, and sanitary housing for very low-,
low- and moderate-income elderly persons and families in a
nondiscriminatory way. The location should promote a greater choice of
housing opportunities in the housing market area.
(2) Project locations should promote an equal opportunity for the
inclusion of all groups regardless of race, color, religion, sex,
national origin, age, marital status or physical or mental handicap
thereby opening up nonsegregated housing opportunities for minorities.
(3) Except as otherwise permitted by paragraph (s)(6) of this
section, housing projects must be located in residential areas as part
of established rural communities where essential public facilities (such
as schools, hospitals and generally central water and sewer systems) and
services (such as shopping, medical, and pharmaceutical) are readily
available in close and convenient proximity to the site. Public
facilities and services must be adequate to support the needs of the
tenants and members and the housing project. (See FmHA Instruction
1922-B.)
(4) In order to provide housing at the lowest cost possible,
preference will be given to loan requests in which specific tracts of
land will be donated by States, units of local government, public bodies
and nonprofit organizations. The land must be suitable for the proposed
housing and meet all FmHA site criteria. In addition, affording such
preference must be cost effective.
(5) Noncontiguous rental sites. (i) Noncontiguous sites within the
same community may be considered if feasible. Each site must meet all
FmHA site criteria and an appraisal must be made on each site in
accordance with subpart B to part 1922 of this chapter (available in any
FmHA office). The units must be managed under one management plan with
one loan agreement/resolution.
(ii) If a small community cannot support a project containing enough
units to make it cost effective or in cases involving conversion of 502
inventory units, FmHA will consider a project which includes more than
one site in the same or different communities. The State Office and
applicant must mutually agree that the location of the sites will not
adversely effect the efficiency of management and servicing of the
projects. The requirements of paragraph (r)(5)(i) of this section will
also apply.
(6) FmHA will consider financing new construction or the purchase and
rehabilitation of existing structures (in accordance with 1944.212(b)
of this subpart) located in the downtown business areas of rural
communities that have established a comprehensive strategy for meeting
their community development and housing needs. That strategy must
include the redevelopment, rehabilitation, restoration or revitalization
of the downtown business area. The proposed project site must be
located within the downtown business redevelopment/revitalization area
and the following conditions must be met:
(i) Essential public facilities (such as schools, hospitals and
generally central water and sewer systems) and services (such as
shopping, medical and pharmaceutical) must be readily available in close
and convenient proximity to the site and must be adequate to support the
needs of the tenants and members and the housing project.
(ii) The community must have an official short-term community
development and housing plan which sets forth its comprehensive strategy
for meeting identified community development and housing needs. The
plan will include the need for eliminating and preventing economic
decay, slums or blight; the need of benefiting the lower-income
population; or other community development needs having a particular
urgency. The strategy should include a community-wide component which
describes the development strategy of the governing body, the major
objectives the governing body seeks to accomplish, the priorities it has
established, the factors taken into account in selecting areas for
treatment and the anticipated public and private sources of funds
necessary to conduct the treatment of each area selected. In addition,
the plan should contain the following component strategies:
(A) Neighborhood revitalization: The strategy for alleviating
physical deterioration, maintaining viable neighborhoods and stimulating
investment to upgrade neighborhoods affected by blight and
deterioration.
(B) Housing: The community-wide strategy to improve housing
conditions and to meet the housing assistance needs that have been
identified. Reference to any current Department of Housing and Urban
Development approved housing assistance plan would be helpful as part of
this component strategy.
(C) Economic development: The strategy for attracting private
investment in the business community and for solving the critical
problems which may be the result of a stagnating or declining tax base
or from population outmigration.
(iii) Evidence must be presented from the local governing body
verifying that the community has adopted, through resolution or other
official act, the community development and housing plan referenced in
paragraph (r)(6)(ii) of this section. A copy of the adopted plan should
be made available to FmHA. While it is not necessary that the downtown
redevelopment/revitalization area be formally designated as an urban
renewal or other similar area, evidence supporting a local determination
that the downtown business area meets the criteria established in the
community development and housing plan must be maintained in the
locality's records. Documentation received from the local governing
body must also identify the site or structure involved in the
applicant's proposal as part of or essential to the downtown
redevelopment/revitalization area.
(iv) Evidence must be presented to FmHA verifying the intended
commitment of public and private resources which will be available for
completing any other integrally related redevelopment/revitalization
activities being undertaken in the downtown business area along with the
applicant's proposed project.
(v) Prior review and concurrence must be received from the National
Office before the State Director or District Director authorizes the
applicant to develop a complete application. All of the information
required in paragraph (r)(6) of this section must be provided by the
applicant before National Office review.
(7) The property for which a loan is made must be located in a rural
area as defined in 1944.10 of subpart A of part 1944 of this chapter.
However, if the area where the site is located has changed from rural to
nonrural in accordance with the most current official census figures,
preapplications received before the date the area was determined
nonrural will be processed as expeditiously as possible and loans closed
if the applicants are otherwise eligible.
(s) Clean Air Act and Water Pollution Control Act Requirements. When
the contract exceeds $100,000, the contractor will comply with all
applicable standards, orders or requirements issued under section 306 of
the Clean Air Act (42 U.S.C. 1857(h)), section 508 of the Clean Water
Act (33 U.S.C. 1368), Executive Order 11738, and Environmental
Protection Agency (EPA) regulations 40 CFR part 15 which prohibit the
awarding of nonexempt Federal contracts, grants or loans to facilities
included on EPA's list of violating facilities. The contractor will
report violations to the EPA.
(t) Concurrence with construction contracts. A construction contract
between the borrower and contractor for development of a project will
contain a provision that it is not in full force and effect until the
State Director concurs in writing in the form, content and execution of
the contract. Before loan closing or before the start of construction,
whichever occurs first, the State Director or his/her delegate will
concur with the contract form, content and execution by including the
following paragraph at the end of the contract:
''The Farmers Home Administration, as a potential lender or insurer
of funds to defray the costs of this contract, and without liability for
any payments thereunder, hereby concurs with the form, content, and
execution of this contract.''
Date
Farmers Home Administration
By:
Title:
(u) Historic preservation requirements. The District Director must
take the necessary action to assure that the applicant will comply with
the provisions of subpart F of part 1901 of this chapter. This
regulation concerns compliance with the National Historic Preservation
Act of 1966, the Archeological and Historic Preservation Act of 1974
(Public Law 93-291), and Executive Order 11593 dated May 13, 1971.
(v) Uniform Relocation Assistance and Real Property Acquisition Act
of 1970. Public bodies and agencies which have the power of eminent
domain and/or condemnation must comply with the requirements of this
Act. The applicant must provide assistance for relocation of displaced
persons from a site on which a project will be located. FmHA loan funds
may be increased over and above the appraised value of the property to
cover costs incurred in the relocation of displaced persons. Until
instructions are published by the National Office, the Department
regulations found at part 21 of this title should be followed and the
National Office should be consulted for guidance in developing an RRH or
RCH loan for a project affected by this Act. Generally, if there are
alternative sites of equal quality which meet the Agency's requirements,
the site with the least relocation impact will be selected.
(w) Rental assistance (RA) and market feasibility. (1) As evidence
of market feasibility, an applicant that proposes a project which is
expected to use FmHA RA units will only be required to demonstrate that
a market exists for tenants or members eligible for the RA.
(2) To evidence market feasibility for projects which are expected to
use RA from sources other than FmHA, applicants will be required to
demonstrate that:
(i) The assistance will be provided for at least 5 years.
(ii) A market exists for persons and families eligible for the
assistance. The amount of the RA to be provided must be considered when
determining the number of families that would be income eligible for the
project.
(iii) For the term of the loan remaining after RA is no longer
available, an adequate rental market exists for the project without the
assistance.
(iv) During the term of the RA contract, the provider will make
available the amounts required at least annually.
(x) Accountability. Applicants should be made aware of the
accountability requirements of persons paid to influence the making of
an FmHA housing loan and/or grant as described in subpart S of part 1940
of this chapter.
.56 FR 65981, Dec. 20, 1991)
1944.216-1944.220 (Reserved)
07 CFR 1944.221 Security.
(a) Mortgage. Each loan will be secured in a manner that adequately
protects the financial interest of the Government. A first mortgage,
except as indicated in paragraphs (a)(1) and (3) of this section, will
be taken on the property purchased or improved with the loan.
(1) A second mortgage will be taken on a site developed with prior
loan(s) when a subsequent loan is made to complete or finish out units
on the site or when a second initial loan is made to develop units on a
contiguous site.
(2) Personal liability will not be required for the members or
stockholders of any corporation or trust or any partners in a limited
partnership. Personal liability will be required of all members of
other partnerships. For limited partnerships, the State Director will
obtain the advice of the Regional Attorney as to any modifications
needed in the promissory note and mortgage.
(3) If it is impossible or inadvisable for an applicant which is a
public or quasi-public organization to give a real estate mortgage, the
security to be taken will be determined by the National Office upon the
recommendation of the State Director. The State Director should consult
OGC as to whether the proposed security is legally permissible.
(b) Financing statement. To secure the FmHA loan, each borrower will
execute Form FmHA 440-25, ''Financing Statement,'' and a security
agreement at loan closing pledging all revenue from the housing project.
This includes any FmHA RA payments State or private RA payments and/or
rent or occupancy payments.
(c) If a bond is used in lieu of a promissory note to evidence a
loan, it must be sent to the National Office for review prior to loan
closing. OGC must also review the proposed bond.
(53 FR 2159, Jan. 26, 1988, as amended at 56 FR 2238, Jan. 22, 1991)
07 CFR 1944.222 Technical, legal, and other services.
(a) Appraisals. When real estate is taken as security, the property
will be appraised without regard to such factors as race, color,
religion, sex, handicap, marital or familial status, or National origin,
and it is unlawful to use an appraisal where the person knows, or
reasonably should know, that the appraiser improperly took into
consideration the factors indicated above. Appraisals for FmHA will be
done by the multiple housing appraiser or a designated contract
appraiser authorized to make real estate appraisals. If security
involves two or less units, the property will be appraised under subpart
C of part 1922 of this chapter. For security involving more than two
units, the appraisal will be made under subpart B of part 1922 of this
chapter (available in any FmHA office). Form FmHA 1922-7, ''Appraisal
Report for Multi-Unit Housing,'' will be completed to show the
depreciated replacement value of all the buildings existing or to be
constructed on the property to be taken as security.
(b) Architectural and engineering services. (1) Housing and related
facilities will be planned and developed in accordance with subparts A
and C of part 1924 of this chapter. The housing will be designed to
meet the needs of the types of persons who will likely occupy it.
(2) A written contract for architectural services will be required as
outlined in Subpart A of Part 1924 of this chapter.
(c) Construction and development policies. Construction and
development will be performed in accordance with Subpart A of Part 1924
of this chapter (FmHA Instruction 1924-A), available in any FmHA office.
(d) Compliance with Federal, State and local codes, regulations and
ordinances. Planning, construction and operation of housing financed
with an RRH or RCH loan will conform with applicable laws, ordinances,
codes and regulations (including any licensing required governing such
matters as construction, heating, plumbing, electrical installation,
fire prevention, health, sanitation, use and occupancy).
(e) Contracts for legal services. On projects requiring extensive
legal services, the applicant must have a written contract if loan funds
will be use for these services. All contracts will be subject to review
and concurrence by FmHA and should be submitted to FmHA before execution
by the applicant. Contracts will provide for the types of services to
be performed and the amount of the fees to be paid, either in lump-sum
on the completion of all services or in installments as services are
performed.
(f) How to apply for a rural rental or rural cooperative housing
loan. Exhibit A may be used as a guide for applicants applying for
loans. Extra copies may be obtained from FmHA.
(g) Optioning of land. If a loan includes funds to purchase real
estate, the applicant must obtain an option on the parcel to be
purchased. Form FmHA 440-34, ''Option to Purchase Real Property,'' or
other option form with provisions acceptable to FmHA and the applicant
may be used. When an option form other than Form FmHA 440-34 is used, a
provision should be included indicating that it is contingent upon FmHA
making a loan to the buyer. After the loan is approved, the District
Director will have Form FmHA 440-35, ''Acceptance of Option,'' or other
appropriate form of acceptance completed, signed and mailed to the
seller.
(h) Title clearance and legal services. When the applicant is an
organization or an individual with special title or loan closing
problems, title clearance and legal services will be obtained in
accordance with instructions from OGC. In other cases, the provisions
of Subpart A of Part 1944 and Part 1807 of this chapter (FmHA
Instruction 427.1) regarding title clearance and legal services will
apply.
(i) Use of and accountability for loan funds. Loan funds and any
funds furnished by the borrower for eligible loan purposes may be
deposited in accordance with the loan agreement or loan resolution and
the provisions of Subpart A to Part 1902 and Subpart C to Part 1930.
Collateral for deposit of funds will be pledged in accordance with
1902.7 of Subpart A of Part 1902 of this chapter. Funds furnished by
the borrower for the purchase of special equipment and furnishings to be
used in connection with the project, for which loan funds cannot be
used, should not be deposited in the supervised bank account with loan
funds. Withdrawals of funds from the supervised bank account may be
made only for eligible loan purposes.
(j) Insurance. The loan approval official will determine the minimum
amounts and types of insurance the applicant will carry.
(1) Fire and extended coverage will be required on all buildings
included in the security for the loan in accordance with Subpart A of
Part 1806 of this chapter (FmHA Instruction 426.1) and Subpart C of Part
1930 of this chapter.
(2) Suitable worker's compensation insurance will be carried by the
applicant for all its employees.
(3) The applicant will be advised of the possibility of incurring
liability and encouraged or required, when appropriate, to obtain
liability insurance.
(4) Flood insurance will be required on all buildings located in or
to be located in special flood or mudslide prone areas in accordance
with Subpart B of Part 1806 (FmHA Instruction 426.2).
(k) Bonding. (1) The provisions of subpart A of part 1924 of this
chapter pertaining to surety bonds are applicable to RRH and RCH loans.
When interim financing is used during the construction period, the
decision concerning whether or not to require surety bonds is the
interim lender's. If the interim lender decides not to require surety
bonds, a bond waiver is not required from the National Office.
(2) If the applicant is an organization, it will provide fidelity
bond coverage for the officials, employees and/or management agents
entrusted with the receipt, custody and disbursement of its funds and
the custody of any other negotiable or readily salable personal
property. The amount of the bond will be at least equal to the maximum
amount of money that the applicant will likely have on hand at any one
time exclusive of loan funds deposited in a supervised bank account.
The United States will be named co-obligee in the bond if not prohibited
by State law. Form FmHA 440-24, ''Position Fidelity Schedule Bond,''
may be used if permitted by State law.
(l) Previous participation certification. All principals and
affiliates are required to submit a properly completed Form
HUD-2530/FmHA 1944-37, ''Previous Participation Certification.''
Architects and attorneys who have any interest in the project other than
an arms length fee arrangement for professional services are also
considered principals. The forms will be completed and processed in
accordance with instructions attached to the form.
(53 FR 2159, Jan. 26, 1990, as amended at 55 FR 6245, Feb. 22, 1990;
55 FR 26644, June 29, 1990; 55 FR 35895, Sept. 4, 1990; 56 FR 2238,
Jan. 22, 1991)
07 CFR 1944.223 Supplemental requirements for manufactured home project
development.
This section includes additional provisions that apply to the making
of loans for manufactured home rental and cooperative project
development. This section will apply in addition to all other
applicable requirements contained elsewhere in this subpart. All
references in this subpart to projects and housing for rent to eligible
tenants will also mean the rental of sites with manufactured homes
within a rental project development.
(a) Eligible projects. When a loan is closed on a manufactured home
project, the borrower will have constructed and completed, pursuant to a
commitment given in accordance with 1944.235(c)(2) of this subpart,
such project designed principally for rental or cooperative use for
manufactured homes, and conforming to the development, installation and
set-up requirements of Exhibit J to subpart A of part 1924 of this
chapter.
(1) The borrower must be the first owner purchasing the manufactured
homes for purposes other than resale.
(2) The project must include two or more continguous sites with
dwelling units. Each manufactured home unit must not have been
previously occupied as a residence or for any other purpose and be less
than 1 year old from date of manufacture.
(3) A project is not eligible if the purpose of the loan is to
refinance the project, except as provided in 1944.212(l) of this
subpart.
(4) A loan may be made to rehabilitate manufactured home units of an
existing project only if the units to be rehabilitated are currently
financed by FmHA under this subpart.
(5) An eligible project may include the purchase of the real property
of an existing project which will be redeveloped with the placement of
new, previously unoccupied, manufactured homes conforming to the
development, installation and set-up requirements of Exhibit J to
Subpart A of Part 1924 of this chapter.
(b) Loan limitations. The maximum loan amount will be determined in
accordance with 1944.213 of this subpart as applicable.
(c) Rates and terms. The amortization period of each loan will not
exceed the economic life of the security, taking into account probable
depreciation. However, under no circumstance will the amortization
period for a loan made under this section exceed 30 years from the date
of the promissory note.
(d) Security. A mortgage or deed of trust will be taken on the
entire property purchased or improved with the loan. The encumbered
property must be covered under a standard real estate title insurance
policy or attorney's title opinion that identifies the project
(including the manufactured homes) as real property and insures or
indemnifies against any loss if the manufactured home is determined not
to be part of the real property. The property must be taxed as real
estate by the jurisdiction where the project is located if such taxation
is permitted under applicable law when the loan is closed.
(e) Property requirements. (1) Construction and development of the
project, including related facilities constructed or erected on the
security property, will be in accordance with 1944.222(d) of this
subpart and Exhibit J to Subpart A of Part 1924 of this chapter.
(2) Manufactured home projects will be designed to provide for a
desirable residential environment. Innovative and imaginative design is
encouraged. Stylized patterns and monotony will be avoided. All
property improvements will relate to the individual characteristics of
the land. The project, including structures, streets, and all site
improvements, should be harmoniously, efficiently and conveniently
arranged in relation to the topography and the shape of the property.
(3) The borrower will not use or permit the use of any portion of the
security property for demonstrating mobile home models for sale
promotion purposes.
(4) The manufactured home, when placed on site, will have floor space
area of not less than 400 square feet, and a width of 12 feet or more
for single wide and 20 feet or more for a double wide unit. The unit
must:
(i) Be placed on a site-built permanent foundation that meets or
exceeds applicable requirements of the FmHA adopted standards which are
identified in Exhibit J to Subpart A of Part 1924 of this chapter or
other building codes approved by FmHA.
(ii) Be permanently attached to the foundation by anchoring devices
adequate to resist all loads identified in Exhibit J to Subpart A of
Part 1924 of this chapter or other building codes approved by FmHA.
(iii) Be constructed in compliance with FmHA thermal performance
construction standards as specified in Exhibit D to Subpart A of Part
1924 of this chapter. The unit must have an affixed label as specified
in paragraph XIV(c)(3) of Exhibit F to Subpart A of Part 1944 of this
chapter indicating that the unit is constructed to FmHA thermal
requirements for the appropriate winter degree days.
(iv) Be constructed in compliance with applicable standards and
manuals adopted by FmHA as evidenced in Part A, paragraph V of Exhibit J
to Subpart A of Part 1924 of this chapter. All units must conform to
the HUD ''Federal Manufactured Home Construction and Safety Standards,''
and be identified by an affixed certification label according to Exhibit
J to Subpart A of Part 1924 of this chapter.
(f) Special warranty requirements. The general contractor or
dealercontractor, as applicable, must provide a warranty in accordance
with the provisions of 1924.9(d) of Subpart A of Part 1924 of this
chapter.
(1) The warranty will provide that the manufactured homes,
foundations, positioning and anchoring of the units to their permanent
foundations, and all contracted improvements are constructed in
substantial conformity with applicable approved plans and
specifications.
(2) The warranty will also include provisions that the manufactured
homes sustained no hidden damage during transportation and, for
double-wide units, that the sections were properly joined and sealed.
(3) The general contractor or dealer-contractor must warrant that the
manufacturer's warranty is in addition to and not in derogation of all
other warranties, rights and remedies that the borrower may have.
(4) The seller of the manufactured homes will deliver to the borrower
the manufacturer's warranty. The warranty will identify the units by
serial number.
(53 FR 2159, Jan. 26, 1988, as amended at 55 FR 29561, July 20, 1990;
56 FR 2239, Jan. 22, 1991)
07 CFR 1944.224 Supplemental requirements for congregate housing and
group homes.
This section includes additional provisions that apply to the making
of loans for congregate housing and group homes. It will apply in
addition to all other applicable requirements contained elsewhere in
this subpart. Congregate housing and group homes are types of section
515 RRH that require a broader commitment from applicants to ensure that
needed and desired services will be provided to prospective tenants.
The concept may not be desired or feasible in all market areas.
Congregate housing is unique and has many components. It is not merely
an elderly housing project with services. It must be designed and
managed to meet the needs of aging tenants. The management of
congregate housing requires supervision of support services and more
interaction and oversight of tenants. We strongly recommend that
applicants who have not dealt with this type of housing obtain
assistance from organizations or individuals who have experience in
planning and designing congregate housing.
(a) Congregate housing. Congregate housing will create an
environment that will enable fully independent individuals to maintain
their independence longer by making available nutritious meals and other
services that can enhance their independence. Congregate housing will
also help people who need some services to extend an independent
lifestyle.
(1) Eligible tenants. Eligible tenants are described in 1944.205 of
this subpart and paragraph V A of exhibit J of subpart C of part 1930 of
this chapter. Tenants who need the services to remain independent may
meet the tenant eligibility requirements contained in paragraph VI B 1 i
of exhibit B of subpart C of part 1930 of this chapter by taking the
services provided by the project. Fully independent tenants who do not
want to participate in the services may be more suitable for
noncongregate elderly projects.
(2) Design criteria. Applicants must pay particular attention to the
layout of the structure and the effect of design elements on project
management and ongoing operations. Applicants should engage the
services of an architect experienced in congregate design. The initial
planning of congregate housing should include input on design
considerations from project management to prevent the potential
long-term affects of poorly conceived design on operations. Congregate
housing must be planned and developed in accordance with subparts A and
C of part 1924 of this chapter. In addition, it must meet the following
design criteria:
(i) Applicants must pay particular attention to the site requirements
contained in 1944.215(o) of this subpart. Congregate housing should be
located as close to services and shopping as possible, considering the
availability of affordable residential sites. The time it takes to
reach services is also important especially when considering potential
medical emergencies.
(ii) Facilities needed to accommodate the services described in
1944.224 (a)(5) of this subpart must be designed in accordance with
acceptable practices. Specific design guidelines are provided in
chapter 1 of Guide 2 of subpart A of part 1924 of this chapter. These
facilities may be larger than necessary to meet the tenants'
requirements if they are needed in the community and other sources of
funds are available to pay a pro rata share of the cost.
(iii) The decreasing physical and mental capabilities of the tenants
must be considered in the design. The walkways and corridors between
living units and the support service facilities must be safe,
comfortable and minimal in length. Handrails that comply with the
Uniform Federal Accessibility Standards must be provided on at least one
side of all public corridors.
(iv) Areas used by the tenants will be separated as much as possible
from areas needed for delivery of food and supplies and other building
services. Interior spaces and finish materials must be residential in
character and designed to help prevent tenants from becoming disoriented
within the building(s).
(v) Emergency lighting must be provided in every public space,
corridor, stairway, elevator and other means of egress.
(vi) The entrances to all living units must be on a route accessible
to the physically handicapped. Living units accessible only via
exterior steps or interior stairs will not be acceptable.
(vii) The size of rooms and spaces in the living units must be
comparable to units provided in other housing for the elderly. Kitchen
facilities must be provided in all living units and include, as a
minimum, a cooktop, oven, sink, refrigerator and a food preparation
surface.
(viii) The bathroom and one bedroom in each living unit, and any
public toilet rooms, must be furnished with an emergency call system
that is appropriate for the size and management of the housing facility.
(3) Limitation on use of loan funds. Loan funds cannot be used for:
(i) Items which do not become affixed to the real estate security,
such as special portable equipment, furnishings, kitchen bars, dining
ware, eating utensils, movable tables and chairs, etc. Congregate
housing projects require additional items that will not become affixed
to the real estate. Developers are responsible for ensuring that these
items are made available to the project. The initial operating capital
can be used for these items in accordance with 1944.211(a)(6)(ii) of
this subpart.
(ii) Specialized equipment for training and therapy.
(iii) Operating capital for a central dining facility.
(4) Management of congregate projects. Applicants must meet the
provisions of exhibit J of subpart C of part 1930 of this chapter in
managing congregate housing. In addition to the elements of managing a
typical rural rental housing project, congregate housing requires
increased management experience and skills. Delivery of services,
oversight of tenants and the decisionmaking process of tenant selection
add a unique dimension to prudent management. The success or failure of
a project will rely heavily upon management effectiveness and delivery
of services. Applicants who are not experienced with congregate housing
must seek assistance from organizations or individuals experienced with
congregate issues in developing the management and servicing plans. A
separate plan detailing the delivery of services must be submitted with
the preapplication. If the applicant will be the service provider, it
must also submit separate budgets for operation and maintenance of the
project and services.
(5) Support services. Exhibit E of this subpart must be addressed in
planning services. Adequate services must be offered to extend the
independence of tenants and be reasonably priced to ensure affordability
by very low- and low-income tenants. A wide variety of services may be
offered; however, the following services must be provided:
(i) Meals. Since some tenants will depend on the meal service as
their only sustenance, at least one cooked meal a day, 7 days a week,
must be provided. There may be cases where the meal provider does not
furnish meals on a daily basis. On days the meal provider does not
furnish meals, an alternate source must provide meals to tenants who are
not inclined to prepare their own meals. The following conditions apply
to meals:
(A) To ensure that the meals are wholesome and meet the needs of
individual tenants, a professionally trained dietitian or nutritionist
must be involved in planning the menus.
(B) The feasibility of sustained meal service may be dependent on the
number of people who elect to use it. Congregate housing borrowers
should actively solicit tenant participation in the meal service if the
economic feasibility of the service depends on user charges.
(C) If the entity that operates the service is eligible to accept
food stamps under the regulations of the Food and Nutrition Service
(FNS) of the United States Department of Agriculture (USDA), the entity
must be authorized by FNS to accept food stamps from tenants for the
purchase of meals.
(ii) Transportation. Transportation must be provided to the project
on a fixed schedule based on tenant needs. Applicants are encouraged to
work with public and private transportation sources to develop a
dependable and economical method for providing this service. If these
sources cannot provide adequate transportation, the applicant must
develop a project-sponsored transportation system.
(iii) Housekeeping. Housekeeping services must be provided to
tenants who require assistance in keeping their units clean. Light
housekeeping tasks, such as dusting, vacuuming, floor washing, bathroom
cleaning and laundry for bedding, generally should be provided on a
weekly basis. Heavier tasks, such as oven cleaning, window cleaning and
drapery cleaning, should be provided periodically.
(iv) Personal services. Limited nonmedical personal services must be
made available to tenants who need them to remain independent. Personal
services can include such items as assistance with personal hygiene,
nutrition counseling and general health screening. They do not include
recurring medical assistance such as dispensing medication or constant
medical supervision. Space may be included in the project for a small
beauty shop and health screening area. Applicants may want to consider
contracting for personal services to assure their continued and
dependable availability to tenants.
(v) Recreation/social. Recreational and social activities must be
offered to tenants to encourage interest in a variety of areas. Areas
such as hobby and craft classes, special dinners and wellness exercise
classes could be considered.
(6) Service providers. Service must be provided at a cost that can
be afforded by very low-, low- and moderate-income tenants. Applicants
should explore as many service providers as possible to ensure services
at the most reasonable cost. Applicants must research alternative
service providers since the original provider may be unable to furnish
service in the future. If feasible, project management should be
consulted concerning alternative service providers since they may have
experience with available sources in the area. Documentation concerning
alternative services must be submitted as part of the preapplication.
Alternative sources must be documented even if the applicant plans to
use onsite personnel for services. The availability of services from
alternative sources can enhance a proposal's feasibility since long-term
services are crucial to the success of congregate housing.
(7) General service requirements. Applicants must provide a plan
which addresses the long-term availability of assistance from service
providers. As a part of the preapplication, applicants must provide a
letter of commitment from each service provider detailing its ability
and willingness to provide services. This letter must identify the
type, scope, cost, term and any licensing requirements of services that
will be provided to the project. If a local agency on aging will
provide a service, the commitment can be contingent on the agency
maintaining its level of funding. In these cases, it is imperative that
applicants document the availability of alternative sources as required
in 1944.224(a)(6) of this section. As a part of the final application,
applicants must provide a service agreement detailing the information
contained in the letter of commitment. Initial service agreements must
be effective for at least 1 year after the project becomes operational.
Subsequent agreements must be effective for at least 1 year. Applicants
should refer to paragraph IV of exhibit J of subpart C of part 1930 for
further guidance.
(8) Services provided to people who are not tenants of FmHA financed
congregate housing. If the meal facility serves people who are not
tenants of the project, the applicant must obtain a lease from the
service provider and require payment sufficient to cover the annual
operating expenses, debt service and reserve account attributable to the
portion of increased space that is in excess of the needs of tenants in
the project. In most cases, this will be a negligible amount that the
meal provider can afford to pay. Applicants should refer to paragraph
VII C of exhibit J of subpart C of part 1930 of this chapter for further
guidance.
(b) Group homes. Group homes will provide housing in a residential
environment for individuals capable of caring for themselves in the
basic functions of everyday living. Group homes may be designated for
elderly, disabled or other handicapped tenants as defined in 1944.205
of this subpart. Appropriate common areas and facilities should be
included to encourage participation by the tenants under the direction
of a staff person in sharing the meal preparation, housekeeping, social
and recreational activities within the home. It is not the goal of
group homes to provide housing for tenants requiring constant medical
attention. The following conditions are applicable to group homes:
(1) A group home is generally designed as a single household
dwelling; however, it can also be a small multi-unit structure.
Specific design guidelines are provided in chapter 1 of Guide 2 of
subpart A of part 1924 of this chapter. In addition, group homes must
meet the following design criteria:
(i) The potential decreasing physical and mental capabilities of
tenants must be considered in the design.
(ii) Interior spaces and finish materials must be residential in
character.
(iii) Emergency lighting must be provided in every corridor, stairway
and other means of egress.
(iv) The entrances to all living units must be on a route accessible
to the physically handicapped.
(2) Prospective tenants must be medically evaluated to determine
their ability to sustain independence in a group home. Applicants
should be guided by paragraph V B 1 b of exhibit J of subpart C of part
1930.
(3) A group may limit occupancy to a specific group of tenants. For
example, a group home may limit occupancy to eligible elderly tenants,
developmentally disabled people, or mentally impaired tenants. Refer to
exhibit J of subpart C of part 1930 of this chapter for additional
information.
(4) A group home may be associated with another organization, such as
a workshop for the developmentally disabled. However, it must be a
separate entity and able to function without being dependent on another
organization.
(5) Applicants must show that adequate support services needed by the
tenants will be available on a continual long range basis. Support
services can be provided by the project or by a State or local public
agency. A nonprofit organization with an estimated ongoing service
program also may be deemed capable of providing support services.
(6) Food stamps must be accepted from tenants as part of their
contribution for meals in accordance with 1944.224 (a)(5)(C) of this
section.
(7) Tenants who need services to remain independent may meet the
tenant eligibility requirements contained in paragraph VI B 1 i of
exhibit B of subpart C of part 1930 by taking the services provided by
the project.
(8) Instructions on how to determine the per unit rental rates for
group homes are stipulated in exhibit J of subpart C of part 1930 of
this chapter.
(c) Market studies for congregate housing and group homes. In
addition to the requirements of exhibit A-7 of this subpart, the
following are applicable to market studies for congregate housing and
group homes:
(1) Market studies must address the need for housing with services.
Local agencies on aging and other groups familiar with the elderly can
be a valuable source of information on the needs and wants of elderly
people in the market area. Applicants can conduct a mail-out survey to
age and income qualified elderly people if information is not available
from other sources.
(2) An expanded market area may be considered only when the
additional communities are part of the trade area and are so rural that
they cannot support development of a congregate facility. If an
expanded market area is proposed, the market study must establish
conclusively that the community will be able to draw enough tenants to
ensure feasibility of the project. The market study must clearly
identify the expanded area and contain separate information on the
additional communities. If used, mail-out surveys must clearly address
the probability of respondents relocating to the proposed site.
(3) Market studies should include income information from the local
social security office since many elderly people are dependent on social
security and/or supplemental security income. This information will
assist in determining if proposed tenants would have sufficient income
to afford the services provided by the project.
(4) Demand for congregate housing generally is displayed by elderly
people who are older than 70 years. Therefore, the market study must
contain demographic information particular to those over the age of 62
and those over 70 years old. The study must also address the growth
trends of people who are over 85 years old.
(5) Market studies must include information concerning alternative
service providers as required in 1944.224(a)(6) of this section.
(d) Compliance with other laws. Congregate housing and group homes
must meet all applicable Federal, State and local laws, statutes, codes
and/or ordinances pertaining to these types of housing and the services
provided.
(55 FR 26644, June 29, 1990)
1944.225 -- 1944.230 (Reserved)
07 CFR 1944.231 Processing preapplications.
Preapplications will be processed in accordance with this section to
assure that loan funds are used, to the extent possible, to provide
housing for eligible persons in need of adequate housing.
Preapplication information is used to determine the applicant's
eligibility, project feasibility and priority for available funds,
thereby eliminating proposals which have little or no chance for funding
in the near future. Information necessary in a preapplication consists
of SF 424.2, ''Application for Federal Assistance (For Construction),''
and all additional information and material outlined in Exhibit A-7.
Preapplications should be filed in the FmHA District Office.
(a) Actions by the District Office. (1) The District Director should
handle initial inquiries and provide basic information about the
program. He/she should provide the preapplication form SF 424.2 and
Exhibit A-6 to this subpart. The District Director may assist
applicants in completing SF 424.2 and the information required in
Exhibit A-6. He/she should advise the applicant not to prepare or
develop an application until notified by FmHA to proceed.
(2) Upon receipt of the Form SF 424.2 and all other required
information and materials, the District Director will thoroughly review
the package for completeness, accuracy, eligibility, and conformance
with program policy and regulations. A determination of eligibility,
feasibility and ranking should be sent to the applicant by issuing Form
AD-622, ''Notice of Preapplication Review Action,'' not later than 45
days after receipt of a completed preapplication. (Ranking will be in
accordance with the priority rating system). Incomplete preapplications
will be returned immediately, not later than 15 days, to the applicant
for completion. The District Director will use a check sheet and
provide written documentation regarding all information not received.
(3) In cases where the District Director determines the applicant is
not eligible, he/she will inform the applicant by issuing Form AD-622,
and include the applicants' appeal rights in accordance with subpart B
of part 1900 and the ECOA statement in subpart A of part 1910 of this
chapter. Each District Director should assure he/she does not impose
different processing conditions, standards and timeliness among
applicants when reviewing preapplications.
(4) The District Director should check the Multi-Family Housing
Information Status Tracking and Retrieval System (MISTR) to see if the
applicant has pending preapplications in other districts or States. If
so, the District Director should be sure that the applicant's pro forma
statement shows that the applicant has the financial strength to meet
the requirements of all preapplications.
(5) Processing of loan requests within annual allocations will be
based on the priority points received. The ranking criteria will not
apply to cooperative housing proposals. RCH preapplications will be
handled in accordance with paragraph (b)(3) of this section.
(i) Projects in areas or communities having a high percentage of
substandard housing. For this purpose, each State will use the county
data based on the latest published census unless better and more
specific statewide data is available. Some counties with a low
percentage of substandard housing have areas with a substantially higher
percentage of substandard housing. In these cases, you may use reliable
income data for those specific communities/areas for assigning points.
If the State mean of substandard housing exceeds 15 percent, use Chart
A. If the State mean is 15 percent or less, use Chart B. Forty points
to be distributed in the following manner:
(ii) Projects in areas or communities having the lowest median rural
household income. For this purpose, each State will use county data
based on the latest published census unless better and more specific
Statewide data is available. Some counties with high median incomes
have areas of substantially lower income. In these cases, you may use
reliable income data for those specific communities/areas for assigning
points. Thirty points to be distributed in the following manner:
Less than 75% of State household income -- 30 points
75-79 25 80-84 20 85-89 15 90-94 10 95-100 0
(iii) Projects which will serve the needs of rural communities
located a number of miles from the FmHA eligibility line around urban
areas considered ineligible for FmHA housing loans as determined by
1944.10 of Subpart A of Part 1944 of this chapter. Twenty points to be
distributed based on map mileage from project site to urban area line
over normally traveled roads in the following manner:
20 or more miles -- 20 points
15-19 15 10-14 10 5-9 5 0-4 0
(iv) Projects located in communities or market areas which do not
have subsidized rental housing in operation or authorized. Ten points
to be distributed in the following manner:
No subsidized rental housing project -- 10 points
No subsidized rental housing project of the same type (elderly,
congregate, group type living, or family) as proposed -- 5
Existing or authorized rental project of the same type as proposed --
0
(v) Projects assured of having National Office approved rental
subsidy from sources other than FmHA. Twenty points will be distributed
in the following manner:
51-100 percent of units -- 20 points
21-50 percent of units -- 15
10-20 percent of units -- 10
0-9 percent of units -- 0
(vi) Projects designed and planned for elderly persons. Ten points
will be distributed in the following manner:
Elderly projects -- 10 points
Other type projects -- 0
(vii) Projects in which specific tracts of land will be donated in
accordance with 1944.215(p)(4) of this subpart. Five points will be
distributed in the following manner:
Projects with donated land -- 5 points
Other type projects -- 0
(viii) In situations where priorities among competing loan requests
are essentially equal, preference will be given to preapplications from
public bodies and nonprofit corporations.
(ix) In other cases where requests are essentially equal, preference
will be given to preapplications based on preapplication date.
(5) The District Director must compare the rated preapplications with
other rated preapplications on hand. He/she must make a conscientious
analysis of which loans will be able to be funded and document his/her
analysis.
(6) Preapplications with an exceptionally low priority rating which
are not likely to be funded within the next 12 months will be returned
to the applicant with an indication of eligibility and informed that the
priority rating is too low for processing. The District Director may,
if appropriate, indicate ways to increase the priority rating.
(7) The District Director will fully review the remaining rated
preapplications to determine feasibility. In cases where the
application is determined to be infeasible, he/she will inform the
applicant by using Form AD-622 and include the applicant's appeal rights
in accordance with Subpart B to Part 1900 of this chapter.
(8) After determining the priority ranking of the preapplication, the
District Director should record the points earned on Form FmHA 1905-11,
''Application and Processing Card -- Association,'' in column 1
immediately following the applicant's name.
(9) After completing the review and ranking in accordance with the
priority processing system established in this subpart, the District
Director will proceed as follows based on the application processing
levels prescribed by the National Office:
(i) In States that allocate funds to districts:
(A) The District Director will select the highest ranking
preapplications up to the prescribed processing levels for the district.
Applicants having eligible preapplications that do not rank high enough
and future applicants having eligible preapplications will be notified
using Form AD-622 of their eligibility but advised that processing
priorities and current funding levels will not permit further processing
of their preapplication at this time. These preapplications will be
ranked numerically based on their rating. As applications are approved,
withdrawn or rejected and/or annual allocations increased which permit
further authorizations, the applicant having the preapplication with the
next highest numerical ranking will be contacted. If the factors
supporting the ranking still exist, authorization to develop an
application will be given.
(B) Preapplications within the District Director's approving
authority will be reviewed in accordance with the provisions in
1944.231(a) of this subpart. Applicants with the selected
preapplications will be notified using Form AD-622 of their eligibility
and feasibility and advised to develop an application. At this point,
the District Director should provide the applicant with a copy of the
Multiple Housing Management Handbook, Exhibit B of Subpart C of Part
1930 of this chapter.
(C) After a preapplication is determined eligible, feasible and ranks
high enough for funding in the current fiscal year, if applicable, a
copy of the AD-622 and related documentation will be forwarded to the
State Agency in accordance with Exhibit A-10 of this subpart or any
State supplement.
(D) After a preapplication is determined eligible, feasible and ranks
high enough for funding in the current fiscal year, if applicable, a
copy of the AD-622 and related documentation will be forwarded to the
State Agency in accordance with exhibit A-10 of this subpart or any
State supplement.
(ii) In States that do not allocate funds to districts:
(A) The District Director will assemble the preapplication in a case
file and forward the following to the State Director:
(1) SF 424.2.
(2) All information and material listed in Exhibit A-6.
(3) Original and one copy of Form FmHA 1940-21, ''Environmental
Assessment for Class I Action'' or Exhibit H of Subpart G of Part 1940,
dependent on whether the assessment is a Class I or Class II Action in
accordance with Subpart G of Part 1940 of this chapter. This is only
required at this stage for preapplications that will be submitted to the
National Office for concurrence.
(4) The District Director's comments on eligibility and his/her
recommendations.
(5) Comments and recommendations concerning the proposed project site
resulting from an onsite visit to determine its overall desirability and
conformance with the site location requirements indicated in
1944.215(r) of this subpart.
(6) An updated copy of Form FmHA 1905-11.
(B) No Form AD-622 will be issued by the District Director until
notified by the State Director.
(C) After a preapplication is determined eligible, feasible and ranks
high enough for funding in the current fiscal year, if applicable, a
copy of the AD-622 and related documentation will be forwarded to the
State Agency in accordance with Exhibit A-10 of this subpart or any
State supplement.
(b) Actions by the State Office. (1) Unless the applicant is an
individual or an organization adopting without change the articles and
bylaws prescribed by Exhibits C and D of this subpart or by State
supplements or has received clearance from OGC for the same type of
financing, the documentation necessary to make an eligibility
determination and any questions or comments of the State Director will
be submitted to OGC for a preliminary opinion as to whether the
applicant and the proposed loan meet or can meet the requirements of
State law and this subpart.
(2) The State Director will evaluate the preapplication and the
District Director's written and detailed eligibility and feasibility
determination and recommendation. The evaluation will include a review
of the proposed project by the State Office Architect and an in depth
review by the rural housing staff in accordance with documentation
submitted as required by Exhibit A-6 of this subpart.
(3) Selected preapplications that exceed the State Director's
approving authority will be sent to the National Office for evaluation,
authorization and guidance. All cooperative housing loan
preapplications, regardless of the amount, are to be submitted to the
National Office. Funding for RCH loans will be handled in accordance
with subpart L of part 1940 of this chapter. When preapplications are
submitted to the National Office, the following information must be
included in the submission:
(i) The complete and properly assembled preapplication case file.
(ii) The schematic or preliminary drawings and specifications,
together with the architectural comments and recommendations of the
State Office architect.
(iii) The information required by 1944.213(b) of this subpart.
(iv) The District Director's comments and recommendations.
(v) The State Director's comments and recommendations.
(vi) Original and one copy of Form FmHA 1940-21, ''Environmental
Assessment for Class I Action'' or Exhibit H of Subpart G of Part 1940,
dependent on whether the assessment is a Class I or Class II Action in
accordance with Subpart G of Part 1940 of this chapter.
(4) In States that allocate funds to districts, the State Director
will notify the District Director of the review results. The State
Director will return the preapplication to the District Office with
authorization for the District Director to prepare and issued Form
AD-622.
(5) In States that do not allocate funds to districts, the State
Director should proceed as follows:
(i) After reviewing the priority rating of the RRH preapplication,
the State Director should rank and record the points earned on Form FmHA
1905-11. This form will be maintained in the State Office.
(ii) The State Director will select the highest ranking RRH
preapplications up to the prescribed processing levels for the State.
Applicants having eligible preapplications that do not rank high enough
and future applicants having eligible preapplications will be notified
through the District Office, using Form AD-622, of their eligibility but
advised that processing priorities and current funding levels will not
permit further processing of their preapplications at this time. These
preapplications will be ranked numerically based on their rating. As
applications are approved, withdrawn or rejected and/or annual
allocations increased which permit further authorizations, the applicant
having the preapplication with the next highest numerical ranking will
be contacted. If the factors supporting the ranking still exist,
authorization to develop an application will be given.
(iii) The State Director will return the preapplication and the
review results to the district office. For selected preapplications,
the State Director will execute authorization for the District Director
to prepare and issue Form AD-622.
(c) Summary. The District Director will prepare Form AD-622, stating
the results of the review. The original will be signed and delivered to
the applicant, with a copy to the applicant's case file and a copy to
the State Director.
(1) Applicants with preapplications which are not favorably
considered will be notified in writing of the reasons why the request
was not favorably considered and informed in accordance with Subpart B
of Part 1900 of this chapter that they may request a further review of
this decision.
(2) Applicants whose preapplications cannot be further processed
because they lack sufficient priority, or because RCH funds are not
available, will be so notified. Applicants should be advised that their
preapplication will be retained and considered for future funding based
on its rating. If funding is not authorized within one year from the
date of the Form AD-622, applicants will be notified in writing that
their preapplication will no longer be considered unless it is
resubmitted or updated. In addition, until loan funds are available,
applicants will be advised against incurring obligations for legal,
architectual and engineering work, perfecting interests in land rights
and inviting construction bids or making other commitments which cannot
be fulfilled without loan funds.
(3) When an applicant is notified to proceed with an application, the
District Director should establish specific deadlines for developing the
proposal to avoid unreasonable delays by applicants not prepared to
proceed. In addition, the following paragraph should be contained on or
attached to Form AD-622:
(i) ''The review action taken by FmHA is based on representations
made in your preapplication presented to FmHA. Any changes in
approximate project costs, size or scope of the project, rental (or
occupancy) rates to the tenants (or members) or subsidy costs to the
Government, scope of services, sources of funds, or any other
significant changes in the project or applicant must be reported to and
approved by FmHA in writing.''
(ii) ''Any changes not approved by FmHA will be cause for FmHA to
discontinue processing the application.'' All applicant requesting
changes will be required to give full justification for each change and,
if FmHA approval is not given, written reasons should be provided along
with a 30-day negotiation period to resolve the differences.''
(iii) ''This action is not to be considered as loan approval or as a
representation of the availability of funds.''
(iv) ''The loan docket may be completed on the basis of a loan not to
exceed the amount on Form AD-622.''
(v) ''If a complete application has not been developed in approvable
condition by the date specified on Form AD-622, FmHA reserves the right
to discontinue processing the application.''
(vi) In cases not receiving a National Office review, the following
statement must be added: ''You are advised against taking any actions
or incurring any obligations which would either limit the range or
alternatives to be considered, or which would have an adverse effect on
the environment. Satisfactory completion of the environmental review
process in accordance with Subpart G of Part 1940 of this chapter must
occur prior to loan approval. The issuance of this review action does
not constitute site approval.''
(53 FR 2159, Jan. 26, 1988, as amended at 53 FR 36268, Sept. 19,
1988; 55 FR 13503, Apr. 11, 1990; 55 FR 29561, July 20, 1990; 56 FR
2239, Jan. 22, 1991; 56 FR 66960, Dec. 27, 1991)
Effective Date Note: At 56 FR 66960, Dec. 27, 1991, 1944.231 was
amended by redesignating paragraph (a)(9)(iii) as paragraph
(a)(9)(ii)(C), by revising paragraph (a)(9)(i)(D) and newly redesignated
paragraph (a)(9)(ii)(C), and by changing the reference in paragraph
(a)(9)(ii)(A)(5) from '' 1944.215(p)'' to read '' 1944.215(r)'',
effective January 27, 1992. For the convenience of the user, the
superseded text follows:
1944.231 Processing applications.
(a) * * *
(9) * * *
(i) * * *
(D) In accordance with Exhibit A-9 of this subpart, a copy of AD-622
and related documentation is to be sent to the State Agency for all
proposals determined eligible and ranked high enough for current year
funding.
(iii) In accordance with Exhibit A-9 of this subpart, after a
preapplication is determined eligible, feasible and ranks high enough
for funding in the current fiscal year, a copy of the AD 622 and
attchments is to be forwarded to the State Agency.
07 CFR 1944.232 Rental assistance (RA) from sources other than FmHA.
RA from sources other than FmHA may be used in new or existing RRH or
RCH projects. It may be used alone or may be combined with FmHA RA.
(a) Provisions of memorandum of understanding. FmHA will consider
entering into a memorandum of understanding with other providers of RA,
such as State or local public entities, profit or nonprofit
organizations, individuals or other providers acceptable to FmHA. The
memorandum of understanding will be executed between FmHA and the
provider prior to the State Director issuing Form AD-622 for new
projects. At a minimum, the memorandum of understanding must contain
the following provisions:
(1) The dollar amounts of RA per unit and the length of time of RA
will be provided.
(2) A copy of the proposed RA agreement, which is the instrument of
agreement involving the tenants or members, owner and provider of
assistance. FmHA will not be a party to the RA agreement nor have any
responsibilities under the agreement. The RA agreement must state that:
(i) The payments should be paid directly to the tenants or the owner,
who must advise the tenants of the amount and source of the assistance
through the lease or a supplement to the lease. Payments should be paid
directly to members or to the board of directors of a cooperative in
accordance with the amount required by the occupancy agreement.
(ii) Sufficient funds will be set aside in a way that assures
availability of RA for the life of the RA agreement, which must be for
at least 5 years. The method of supplying the funds must be clearly set
forth.
(b) FmHA will provide reasonably required information including the
tenant or member eligibility certification needed to execute the
provisions of the RA agreement and the memorandum of understanding.
(c) The memorandum of understanding (including the RA agreement) must
be submitted by the State Director to the National Office for
concurrence prior to execution with the provider of the RA. If the
memorandum of understanding encompasses multiple projects and/or
multiple borrowers, you must request blanket authorization for all
projects covered by the memorandum of understanding instead of
submitting each preapplication to the National Office.
(53 FR 2159, Jan. 26, 1988, as amended at 56 FR 2240, Jan. 22, 1991)
1944.233 -- 1944.234 (Reserved)
07 CFR 1944.235 Actions subsequent to loan approval.
(a) Precommitment or closing actions. After loan approval, the loan
docket will be processed to the stage where a construction loan would
normally be closed prior to the start of construction. During this
processing, the following actions should be taken:
(1) The applicant must execute the appropriate loan agreement or loan
resolution required in accordance with 1944.215(f) of this subpart.
(2) FmHA will obtain closing instructions from OGC in accordance with
the requirements of subpart B of part 1927 of this chapter and
1944.236(a) and 1944.236(b)(4) of this subpart.
(3) Unless initial operating capital is included in the loan, the
applicant will furnish evidence that the initial operating capital is in
place. If cash is being used, evidence of a deposit to the general
operating account will be provided. If an irrevocable letter of credit
is being used, the original Letter of Credit must be presented and
maintained in the District Office with the casefile.
(4) The applicant will provide evidence indicating the terms and
final arrangements for interim financing.
(5) The applicant will certify as to the availability or non
availability of other government assistance as defined in 1944.205 of
this subpart immediately prior to loan closing. If other government
assistance becomes available prior to loan closing, the loan amount will
be decreased in accordance with paragraph (e)(3) of this section.
(b) Transfer of obligations. The transfer of fund obligations may
occur only when:
(1) Organizational entity remains the same. The entity remains
legally the same but a substitution of the members occurs. All or part
of the membership may change as long as eligibility is not affected.
The project site location and market must remain the same.
(2) Organizational entity changes. The membership and their
interests remain identical, the project site location and market are the
same, but the legal entity changes.
(c) Financing during the construction period -- (1) Interim
financing. When the amount of the loan exceeds $50,000, the applicant
should obtain interim financing from commercial or public sources for
the construction period if it can be obtained at reasonable interest
rates. Interim financing will be obtained to preclude the necessity for
multiple advances of FmHA funds. Interim financing will be used subject
to the following:
(i) FmHA will proceed as if FmHA funds had been advanced from the
standpoint of approving construction contracts, inspection of
construction and assuring compliance with applicable equal opportunity
and nondiscrimination.
(ii) The guide letter shown as Exhibit B of this subpart will be used
to inform a proposed interim lender that a specified amount of funds
have been obligated and will be available to retire the interim
financing if the applicant complies with the approval conditions, the
builder's performance is acceptable and all construction bills are paid.
(iii) Since FmHA's commitment to the applicant is contingent upon
acceptable performance by the builder and payment of all construction
bills, the interim lender should be advised of the additional risk
involved if the builder is unable to provide, or the interim lender does
not require a payment and performance bond. Although partial payments
to the builder constructing the project by the contract method of
construction must be made in accordance with the approved construction
contract, the interim lender should not be permitted to make
disbursements of more than 90 percent of the value of acceptable work in
place.
(iv) Any cash for land purchase or development that is to be
furnished by the applicant in fulfillment of the applicant's
contribution requirement in 1944.213(b)(2) of this subpart must be
placed on deposit with the interim lender and disbursed prior to any
disbursement of interim loan funds. Obligations incurred prior to loan
closing and the start of construction will be handled in accordance with
1944.213(d).
(v) A supervised bank account need not be established for funds
obtained through interim financing except for any small amounts held to
complete construction so loan funds can be fully advanced and AED can be
established. However, in order to assure that funds are requested and
used for authorized purposes, requests for partial payments will be
submitted through the District Director on Form FmHA 1924-18, ''Partial
Payment Estimate,'' or other professionally recognized form containing
the certifications of the architect, applicant and FmHA representative
shown on Form FmHA 1924-18. For recordkeeping purposes, Form FmHA
402-2, ''Statement of Deposits and Withdrawals,'' should be used to
record the deposit of applicant funds for construction with the interim
lender and payments of estimates where FmHA has approved the estimate.
(vi) When the project is substantially complete, the FmHA loan may be
scheduled for closing. A project is substantially complete when it is
possible, in accordance with any contract documents, applicable State or
local codes or ordinances and the FmHA approved drawings and
specifications, to permit safe and convenient occupancy and use of the
buildings. Upon substantial completion, the owner's architect must
issue a dated and signed statement certifying to substantial completion.
The owner's architect will also prepare and verify a punch list of any
minor items of development that need to be corrected and completed.
(vii) The FmHA loan may be closed, permanent instruments issued to
evidence the FmHA indebtedness and FmHA loan funds used to retire the
interim indebtedness when the project is substantially complete and all
bills have been paid. To evidence that there are no unpaid obligations
outstanding in connection with the project, the applicant must submit to
the District Director, at or prior to loan closing, signed statements
from the contractor, architect, engineer and attorney indicating that
obligations for material, labor or services have been paid in full in
accordance with their contracts or other agreements, less any funds
withheld for minor punch list items. Form FmHA 1924-10, ''Release by
Claimants,'' or other similar form may be used for this purpose. If
these statements cannot be obtained, the loan may be closed if all of
the following can be met:
(A) Statements to the extent possible are obtained.
(B) The interests of FmHA can be adequately protected and its
security position is not impaired.
(C) Adequate provisions are made for paying the unpaid accounts by
withholding or escrowing sufficient funds to pay such claims or
obtaining a release bond.
(2) Multiple advances of loan funds. If interim financing is not
available and the applicant supplies such evidence, multiple advances
will be used subject to the following:
(i) In cases where relatively large amounts of funds are to be
expended for purchases of real estate or for other reasons at the time
of closing, separate checks for these purposes may be ordered and
endorsed by the borrower to the seller or other appropriate party. This
will preclude the necessity for depositing these loan funds in the
supervised bank account and reduce the amount of required collateral.
(ii) Except as indicated in paragraph (c)(2)(i) of this section,
advances will be made only as needed to cover disbursements required by
the borrower for a 30-day period. Normally, there should be no more
than 24 advances. These advances should generally be used within 2
years of loan closing. The retained percentage withheld from the
contract to assure that construction will be completed in accordance
with the contract documents will ordinarily be included in the last
advance. Advances will be requested in sufficient amounts to insure
that ample funds will be on hand to pay costs of construction, land
purchase, legal, engineering or architectural costs, interest and other
expenses as needed. The borrower will prepare Form FmHA 440-11,
''Estimate of Funds Needed for 30-day Period Commencing XXXXXXX,''
modified as needed, to show the amount of funds required during the
30-day period. This form will be approved by the District Director or
his/her designee.
(iii) After it is determined that the estimate prepared by the
borrower is adequate, the advance will be requested through field office
terminals in accordance with the MFH user procedure. As an example, for
a loan of $100,000, the advances may be made as follows: Assuming that
the loan will be closed on July 1, the borrower will complete Form FmHA
440-11 in sufficient time so that the funds will be available on the day
of loan closing. The estimates should be broken down for the first
advance in a manner similar to the following:
An advance of $40,000 would then be available on July 1, the date of
loan closing.
(iv) The second advance is also based on the borrower's estimate
prepared on Form FmHA 440-11 which must be prepared in sufficient time
so that the estimated amount of funds will be available on August 1.
This estimate of funds might be broken down as follows:
(v) When the project is substantially complete in accordance with
1944.235(c)(i)(vi), schedule final payment to the contractor for
disbursement. Withhold funds over the amount needed to cover the costs
for correcting or completing the minor items identified from the
contractor's final payment in accordance with the requirements of
Subpart A to Part 1924 of this chapter until full performance. Any
funds withheld should be deposited in the supervised bank account so the
loan can be fully advanced and AED can be established.
(vi) If funds remain after the loan is fully disbursed and AED has
been reached, they must be put into a supervised bank account. The
funds cannot be returned on the loan to be drawn later since AMAS will
treat as a refund.
(vii) Any deviation from the multiple advance procedure must have the
prior approval of the National Office.
(d) Requesting the check. When loan approval conditions can be met,
including any real estate lien required, and a date for FmHA loan
closing has been agreed upon, the District Director will determine the
amount of funds needed in accordance with paragraph (c)(1) or (c)(2) of
this section. The District Director or his/her designee will then order
the loan check through field office terminals so that it will be
available on or just before the date set for loan closing.
(e) Increase or decrease in the amount of the loan.
(1) If it is necessary to increase the amount of the loan within the
same fiscal year but before loan closing, the loan approving official or
District Director will request that all distributed docket forms be
returned to the district office. The loan docket will be revised
accordingly and reprocessed provided no funds have been disbursed. The
State Office, through a field office terminal, must deobligate the
existing obligation and enter the new amount to be obligated.
(2) If it is necessary to increase the amount of the loan in the next
fiscal year but before loan closing, the District Director must process
a subsequent loan for the amount of increase.
(3) If it is necessary to decrease the amount of the loan before
closing, the deobligation will be processed through field office
terminals.
(f) Cancellation of the loan. Loans may be canceled after approval
and before loan closing in accordance with instructions on the Form
Manual Insert (FMI) for Form FmHA 1944-53, ''Multiple Family Housing
Cancellation of U.S. Treasury Check and/or Obligation.''
(1) Treasury check method. If the loan check is received in the
District Office, the District Director will return the check as
prescribed in FmHA Instuction 102.1 (available in any FmHA office),
except if the check was issued by the National Finance Center (NFC). If
the check was issued by NFC, cancel under FmHA Instruction 2024-P
(available in any FmHA office).
(2) Notification. Notify all interested parties of cancellation as
provided in subpart B of part 1927 of this chapter.
(g) Handling the loan check. The loan check will be handled in
accordance with paragraph IV of FmHA Instruction 102.1 (available in any
FmHA office and Subpart A of Part 1902 of this chapter.
(h) Prerent-up or preoccupancy conference. To promote proper
planning for initial rent-up and occupancy, the District Director will
meet with the applicant and management firm, if any, soon after loan
approval. Among the items that should be discussed are the
advertisement of available units, the affirmative fair housing marketing
practices, tenant eligibility and tenant selection criteria. The same
effort to achieve adequate marketing results will be required for RCH
loans except that its completion will be necessary at the preapplication
stage.
(1) The District Director will review the applicant's marketing plan
to determine that it is complete and all supplemental information is
provided. If the plan needs to be modified before marketing activity
begins, approval must be granted from the official authorized to approve
the loan. The District Director will review the approved operating
budget to determine if it is still adequate for the initial operating
period. If it is not adequate, a change in the rent or occupancy charge
will be made according to Exhibit C of subpart C to part 1930 of this
chapter.
(2) The District Director should be assured that the applicant will
sincerely direct marketing activity in an effort to attract applications
for housing from all groups in the market area. If it is anticipated
that applications for housing may result in a concentration of occupancy
by race, color, religion, sex or national origin, outreach efforts will
be extended to persons who would not be expected to apply for the
housing. The efforts will be conducted for a reasonable period of time
prior to the normal period for receipt of applications and commencing
not less than 90 days prior to project completion.
(3) Prior to initial occupancy by any person, the District Director
and the applicant will reconvene to assess implemented marketing
activity by thoroughly reviewing the marketing plan, anticipated
occupancy results and the extent of achievement of plan objectives. If
original marketing concepts prove to be less than effective and/or if
there are changes in the housing market, the applicant may be required
to modify the marketing plan for the project. If the District Director
determines that the applicant is in noncompliance with the plan and a
modification to the plan is not warranted, the matter will be referred
to the FmHA Administrator, attention Equal Opportunity Staff Director,
through the State FmHA compliance officer.
(53 FR 2159, Jan. 26, 1988, as amended at 53 FR 26590, July 14, 1988;
54 FR 14337, Apr. 11, 1989; 54 FR 39728, Sept. 28, 1989; 55 FR 29561,
July 20, 1990; 56 FR 2240, Jan. 22, 1991; 56 FR 67483, Dec. 31, 1991)
Effective Date Note: At 56 FR 67483, Dec. 31, 1991, 1944.235 was
amended by revising paragraphs (a)(2) and (f)(2), effective January 30,
1992. For the convenience of the user, the superseded text follows:
1944.235 Actions subsequent to loan approval.
(a) * * *
(2) FmHA will obtain closing instructions from OGC in accordance with
the requirements of Part 1807 of this chapter (FmHA Instruction 427.1)
and 1944.236(a) and 1944.246(b)(4) of this subpart.
(f) * * *
(2) Notification. Notify all interested parties of cancellation as
provided in Part 1807 of this chapter (FmHA Instruction 427.1). Unless
the cancellation of the loan is by mutual agreement, notify the
applicant that the decision may be appealed in accordance with Subpart B
to Part 1900 of this chapter.
07 CFR 1944.236 Loan closing.
(a) Applicable regulations. RRH loans will be closed in accordance
with subpart B of part 1927 of this chapter and any State supplements.
Loan dockets for organizations and, in special cases, dockets for
individuals will be sent through the State Office to OGC for closing
instructions. A profit or limited profit organization or individual
applicant may use any designated attorney or title insurance company to
close the loan in accordance with the applicable loan closing
instructions if the attorney or title insurance company and its
principals or employees are not members, officers, directors, trustees,
stockholders or partners of the applicant entity. Nonprofit
organizations may use a designated attorney who is a member of their
organization if the cost is in accordance with 1944.212(j) of this
subpart.
(b) Mortgage. Unless OGC determines the Form to be inappropriate,
Form FmHA 1927-1 (state), ''Real Estate Mortgage for XXX,'' will be
used. For loans to organizations, Form FmHA 1927-1 will be modified as
prescribed by or with the advice of OGC with respect to the name,
address, and other identification of the borrower, the style of
execution and the acknowledgement.
(1) The mortgage or other instrument will contain the following
covenant:
The property described herein was obtained or improved through
Federal financial assistance. This property is subject to the
provisions of Title VI of the Civil Rights Act of 1964 and the
Rehabilitation Act of 1973 and the regulations issued pursuant thereto
for as long as the property continues to be used for the same or similar
purpose for which financial assistance was extended or for as long as
the purchaser owns it, whichever is longer.
(2) When a loan resolution or loan agreement is used, include an
additional paragraph in the mortgage to read as follows:
This instrument also secures the obligations and convenants of
borrower set forth in borrower's Loan Resolution (Loan Agreement) of
(Date), which is hereby incorporated herein by reference.
(3) For a loan to an individual when a loan agreement is not used,
additional paragraphs will be included in the mortgage to read as
follows:
(i) ''Occupancy of the housing and related facilities on the property
will be limited to eligible tenants as defined in the regulations of the
Farmers Home Administration unless the Government gives prior written
approval to other occupancy.''
(ii) ''As required by the Government: Borrower will permit the
Government to inspect and examine the operation of the housing and the
books, records, and operations of borrower; submit regular and special
reports pertinent to the purpose of the loan or the Government's
financial interest; subject rents and charges and other terms of rental
agreements with tenants of the housing, and compensation to employees
connected with its operation, to prior approval by the Government, or to
adjustment at the direction of the Government when necessary in its
judgment to carry out the purpose of the loan or protect its financial
interests; and comply with any other requirements which in the
discretion of the Government are reasonably appropriate to the purpose
of the loan or protection of the Government's interests. Revenue from
the housing will be first used to pay operation and maintenance costs of
such housing and to make adequate provision to meet required payments as
they become due on the FmHA rural rental housing loan.''
(4) For a loan to a limited partnership, the following nonrecourse
language should be inserted, subject to modification by the OGC:
No partner, either general or limited, will have any personal
liability for the payment of all or any part of the indebtedness.
(5) For all section 515 RRH and RCH loans, made pursuant to a
contract entered into prior to December 15, 1989, the following language
will be included in the mortgage:
''The borrower and any successors in interest agree to use the
housing for the purpose of housing people eligible for occupancy as
provided in section 515 of Title V of the Housing Act of 1949 and FmHA
regulations then extant during this (15 years for unsubsidized and 20
years for subsidized loans) year period beginning (the date of last loan
on the project is closed). No person occupying the housing will be
required to vacate prior to the close of such (15 years for unsubsidized
and 20 years for subsidized loans) year period because of early
repayment. The borrower understands that should an unsubsidized project
be converted to subsidized within 15 years from the date the last loan
on the project is closed, that the period will be increased by 5 years.
The borrower will be released during such period from these obligations
only when the Government determines that there is no longer a need for
such housing or that Federal or other financial assistance provided to
the residents of such housing will no longer be provided. A tenant may
seek enforcement of this provision as well as the Government.''
(6) For all section 515 RRH and RCH loans made pursuant to a contract
entered into on or after December 15, 1989, the following language will
be included in the mortgage:
''The borrower and any successors in interest agree to use the
housing for the purpose of housing people eligible for occupancy as
provided in section 515 of title V of the Housing Act of 1949, and FmHA
regulations then extant during the full term of this mortgage. No
eligible person occupying housing will be required to vacate nor any
eligible person denied occupancy for housing prior to the close of such
period because of a prohibited change in the use of the housing. A
tenant may seek enforcement of this provision as well as the
Government.''
(c) Promissory note. (1) Form FmHA 1944-52, ''Multiple Housing
Promissory Note,'' will be used. Regular amortized payments for
principal and interest will be scheduled on a monthly basis.
Instruction for preparation in the FMI for the note will be followed.
(2) The amount to be shown on the note will be obligated amount as
shown on Form FmHA 1944-51, ''Multiple Family Housing Obligation-Fund
Analysis.'' The note will be dated the date of loan closing except as
authorized in subpart B of part 1927 of this chapter. If the first day
of the month falls on Saturday, Sunday or a holiday, the note may be
dated the first, loan closing will be the last working day prior to the
first and the closing documents will be filed on the first working day
following the first.
(3) Payments on loans will be scheduled on the note in accordance
with the FMI and as provided in 1944.215(d) of this subpart.
(4) The note(s) will be signed in accordance with the FMI and subpart
B of part 1927 of this chapter.
(5) All loans will be closed on PASS as described in Subpart K of
Part 1951 of this chapter. If the loan is a subsequent loan, all other
loans on the project must be converted to PASS.
(6) All loans to be secured by revenue bonds or other forms of
security other than a real estate mortgage or deed of trust will be sent
to the National Office prior to loan approval with all necessary
information for review and further instructions.
(d) Recorded mortgage. When the real estate mortgage is returned by
the recording official, the District Director will retain the original
in the borrower's case folder. If the original is retained by the
recording official for the county records, a conformed copy, including
the recording data showing the date and place of recordation and book
and page number, will be prepared and filed in the borrower's case
folder. A copy of the mortgage, conformed as to all matters except the
recording date, will be delivered to the borrower.
(e) Date of closing -- establishment of account.
(1) A loan is considered closed when the security instrument is filed
of record or, if no security instrument is record, when the loan funds
are deposited in the supervised bank account or otherwise made available
to the borrower after the borrower executes and delivers the note any
and other required instruments.
(2) After the loan is closed, the account and case folder will be
established at the district office following the requirements of FmHA
Instructions 1905-A and 2033-A (available in any FmHA office).
(53 FR 2159, Jan. 26, 1988, as amended at 55 FR 29561, July 20, 1990;
56 FR 2240, Jan. 22, 1991; 56 FR 67483, Dec. 31, 1991)
Effective Date Note: At 56 FR 67483, Dec. 31, 1991, 1944.236 was
amended by revising the first sentence of paragraph (a), the
introductory text of paragraph (b), the second sentence of paragraph
(c)(2) and paragraph (c)(4), effective January 30, 1992. For the
convenience of the user, the superseded text follows:
1944.236 Loan closing.
(a) Applicable regulations. RRH and RCH loans will be closed in
accordance with part 1807 of this chapter (FmHA Instruction 427.1) and
any State supplements. * * *
(b) Mortgage. Unless OGC determines the form to be inappropriate,
Form FmHA 427-1 (State), ''Real Estate Mortgage for XXXXXX,'' will be
used. For loans to organizations, Form FmHA 427-1 will be modified as
prescribed by or with the advice of OGC with respect to the name,
address and other identification of the borrower, the style of execution
and the acknowledgment. * * *
(c) * * *
(c)(2) * * * The note will be dated the date of loan closing except
as authorized in Part 1807 of this chapter (FmHA Instruction 427.1). * *
*
(4) The note(s) will be signed in accordance with the FMI and Part
1807 of this chapter (FmHA Instruction 427.1).
07 CFR 1944.237 Subsequent loans.
(a) A subsequent loan is made to an applicant/borrower to complete,
improve, repair, make modifications and/or expand the project initially
financed by FmHA, or for equity and/or other purposes when authorized by
the provisions of subpart B of part 1965 of this chapter to avert
prepayment. All subsequent loans made pursuant to a contract entered
into on or after December 15, 1989, cannot be prepaid.
(b) If the designation of an area changed from rural to nonrural
after the initial FmHA loan was made, a subsequent loan can be made,
only to make necessary improvements and repairs to the property or for
equity and other purposes when necessary to avert prepayment.
(c) In case where the loan is to complete the original housing under
the initial FmHA loan:
(1) If the applicant/borrower provided an initial investment greater
than required under the intial FmHA loan, the excess may be credited
toward the required 3 percent initial investment of the subsequent loan;
the applicant/borrower should only be required to put up additional
funds for this purpose if needed. The same applies to initial O and M
requirements.
(2) If the initial investment and 2 percent O and M amounts are
sufficient to cover only the initial FmHA loan, the applicant/borrower
must provide the additional 3 and 2 percent amounts to cover the
subsequent loan. The 2 percent O and M amount can be in the form of
cash or an irrevocable letter of credit as described in 1944.211 (a)(6)
of this subpart.
(d) If the loan is to repair and/or improve an existing project which
has been in operation for some time, then:
(1) The applicant/borrower should not be required to provide the
initial 2 percent O and M amount since its purpose is to cover project
start-up costs.
(2) The applicant/borrower must provide the initial 3 percent
investment unless it provided more than the required initial investment
when the initial loan was made. When the applicant/borrower has more
than required amount invested in the initial loan, the excess may be
credited toward the required 3 percent investment for the subsequent
loan. The applicant/borrower should be required to contribute
additional funds only if needed. The applicant/borrower will not be
given consideration for any increased equity or value that the property
may have since the date of the initial FmHA loan.
(e) A subsequent loan will be subject to the restrictive use
provisions cited in 1944.236(b)(5) of this subpart except when the loan
is made for equity and other purposes to avert prepayment. In the
latter case, the provisions of Exhibits E-3 and E-4 of Subpart B of FmHA
Instruction 1965 will be used, as appropriate. The cited language for
the subsequent loan only must be appended to the mortgage referencing
all notes for a term beginning on the date of loan closing. The advice
of OGC should be sought in carrying out the provisions of this
paragraph.
(53 FR 2159, Jan. 26, 1988, as amended at 53 FR 7492, Mar. 9, 1988;
53 FR 13245, April 22, 1988; 54 FR 14337, Apr. 11, 1989; 55 FR 6246,
Feb. 22, 1990; 55 FR 29562, July 20, 1990; 56 FR 2241, Jan. 22, 1991)
07 CFR 1944.238 Prohibition against prepayment.
The Agency shall not accept an offer to prepay, or request
refinancing of any loan made or insured under section 515 pursuant to a
contract entered into on or after December 15, 1989. For purposes of
this requirement, the date a ''contract is entered into'' is the date on
which the Form FmHA 1944-51 is mailed or delivered to the
applicant/borrower.
(55 FR 29562, July 20, 1990)
07 CFR 1944.239 Complaints regarding discrimination in use and
occupancy of RRH and RCH.
Any tenant/member or prospective tenant/member seeking occupancy or
use of RRH, RCH or related facilities who believes he/she has been
discriminated against because of age, race, color, religion, sex,
marital or familial status, handicap or national origin may file a
complaint in person with, or by mail to the Office of Fair Housing and
Equal Opportunity, Department of Housing and Urban Development (HUD),
Washington, DC, 20410, or any HUD office, or to the Secretary of
Agriculture, Washington, DC 20250. If a complaint is made to an FmHA
County, District or State Office, it must be directed to the Director of
Equal Opportunity Staff, National Office, by the FmHA employee in charge
of that office. When a complaint is sent to FmHA-EOS by a county or
district office, the State Director will be made aware of the complaint.
(a) Personnel in FmHA field offices will provide assistance to the
aggrieved party when filling out required forms and filing a complaint.
(b) Each complaint must contain the following information:
(1) The name and address of the respondent.
(2) The name and address of the aggrieved person.
(3) A description and the address of the dwelling which is involved,
if appropriate.
(4) A concise statement of the facts, including pertinent dates,
constituting the alleged discriminatory housing practice.
(c) Participants in FmHA's housing program failing to comply with the
requirements of title VIII, as amended by the Civil Rights Act of 1968,
and the respective Affirmative Fair Housing Marketing Plan will make
themselves liable to sanction authorized by law, regulations,
agreements, rules and/or policies governing the program pursuant to
which the application was made.
(56 FR 2241, Jan. 22, 1991)
07 CFR 1944.240 Exception authority.
The Administrator may, in individual cases, make an exception to any
requirements of this subpart not required by the authorizing statute if
he/she finds that application of such requirement would adversely affect
the interest of the Government or adversely affect the accomplishment of
the purposes of the program or result in undue hardship by applying the
requirement. The Administrator may exercise the authority at the
request of the State Director. The State Director will submit the
request supported by data that demonstrates the adverse impact, citing
the particular requirement involved and recommending proper alternative
course(s) of action, and outlining how the adverse impact could be
mitigated. Exception to any requirement may also be initiated by the
Assistant Administrator for Housing.
(56 FR 2241, Jan. 22, 1991)
1944.241 -- 1944.245 (Reserved)
07 CFR 1944.246 Loan approval.
(a) Authority. Loans will be approved in accordance with this
subpart and subpart A of part 1901. The State Director may redelegate
loan approving authority in writing to State Office employees.
(b) Loan approval action -- (1) Responsibilities of loan approving
official. The loan approving official is responsible for reviewing the
docket to determine that the proposed loan complies with established
policies and all pertinent regulations. In making this review, the loan
approving official will determine that:
(i) The applicant is eligible and has legal authority to contract for
a loan and enter into the required statements.
(ii) The location of the housing meets the requirements outlined in
1944.215(p) of this subpart.
(iii) The funds are requested for authorized purposes.
(iv) The proposed loan is sound.
(v) The security is adequate.
(vi) All preapproval requirements have been met, including the
applicant's execution of Form FmHA 400-4.
(vii) For projects with four or less units, the State Director has
taken the necessary action to comply with 1944.406 of subpart I of part
1940 of this chapter.
(viii) All other requirements will be met.
(2) Approval or disapproval of a loan -- (i) Approval. Before the
loan approving official executes documents evidencing loan approval, a
complete review of the proposed management and rental procedures must be
made to assure compliance with title VI of the civil Rights Act of 1964
and the Rehabilitation Act of 1973. If the loan approving official is
assured of compliance, he/she may execute the loan approval documents.
When a loan is approved, Form FmHA 1944-51 will be completed according
to the instructions on the Forms Manual Insert. The approving official
will insert a statement in block 48 of Form FmHA 1944-51 advising the
applicant that the amount of the loan may decrease if other government
assistance as defined in 1944.205 of this subpart becomes available to
the applicant before loan closing.
(ii) Disapproval. If a loan is disapproved after the docket has been
developed, the reason for the action will be shown on the original Form
FmHA 1944-51 and the form will be initialed and dated. The District
Director will notify the applicant of the reasons for disapproval. The
disapproved docket will then be handled in accordance with subpart A of
part 2033 of this chapter. If disapproval is not at the applicant's
request or by mutual agreement, the applicant will be notified that it
may request a further review of the decision in accordance with subpart
B of part 1900 of this chapter.
(3) OGC closing instructions. For a loan to an organization, or an
individual in special cases, the approved docket, including any title
evidence, will be sent through the State Office to OGC for preparation
of closing instructions and any special legal documents required for
closing. A certified copy of a loan resolution or the original executed
witnessed loan agreement must be supplied by the applicant in time to be
included in the docket. No docket will be considered which does not
include the required resolution or agreement. The OGC will route the
docket, including closing instructions and any legal documents, to the
District Office through the State Office.
(55 FR 29562, July 20, 1990)
1944.247 -- 1944.249 (Reserved)
07 CFR 1944.250 OMB control number.
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 0575-0047. Public reporting
burden for this collection of information is estimated to vary from 15
minutes to 40 minutes per response, with an average of 6.4 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. Send comments regarding
this burden estimate or any other aspect of this collection of
information, including suggestions for reducing this burden, to the
Department of Agriculture, Clearance Officer, OIRM, room 404-W,
Washington, DC 20250; and to the Office of Management and Budget,
Paperwork Reduction Project (OMB 0575-0047), Washington, DC 20503.
(56 FR 2241, Jan. 22, 1991)
07 CFR 1944.250 Exhibits to Subpart E
07 CFR 1944.250 Pt. 1944, Subpt. E, Exh. A
07 CFR 1944.250 Exhibit A -- How To Bring Rental and Cooperative
Housing to Your Town
I. Introduction II. Applying for a Loan III. Review of the
Preapplication IV. Developing the Loan Docket V. Review of the
Complete Docket VI. Construction VII. Open House VIII. Exhibits
A-1 Legal Service Agreement
A-2 Survey of Existing Rental Housing
A-3 Rental Housing Survey
A-4 Cooperative Housing Survey
A-5 Housing Survey Summary
A-6 Housing Allowances for Utilities and Other Public Services
A-7 Information to be Submitted with Preapplication for a Rural
Rental Housing (RRH) and a Rural Cooperative Housing (RCH) Loan
A-8 Outline of Professional Market Study
A-9 Administrative Process for Combining FmHA Assistance with
Low-Income Housing Tax Credits
A-10 Information to be Submitted with Application for a Rural Rental
Housing (RRH) and a Rural Cooperative Housing (RCH) Loan.
A. Most areas in rural America need more adequate rental housing.
Some people with modest incomes live in impoverished housing that is
cold in the winter and hot in the summer because adequate housing at a
reasonable rent is not available. Other households that prefer to rent
have the choice of either commuting many miles to work or living in the
substandard rental housing that is available in small rural communities.
To help reduce this rental housing shortage, the Farmers Home
Administration (FmHA) finances rental housing in rural communities.
B. To augment the choice of living accommodations available to modest
income persons, FmHA also provides financing for cooperative-type
housing units. Although this kind of housing units is appropriate only
to a particular group of persons, it also serves to help reduce the
existing housing shortage in rural communities. Nonprofit
organizations, other types of organizations and individuals may qualify
for these housing loans. Information about the loans is available at
the local FmHA office.
C. This handbook will assist interested persons and groups in
applying for a rural rental or cooperative housing loan. It also
briefly explains requirements regarding the construction and operation
of the housing.
D. The basic guidelines in this handbook apply to all applicants;
however, some procedural requirements will vary depending on the size of
the project being proposed and the type of applicant/borrower. However,
in no instance will different policies, practices or procedures be
utilized in the evaluation or in determination of the creditworthiness
of any organization or person(s) in connection with the provision of any
RRH or RCH loan or other financial assistance for a project or other
financial assistance which is secured by residential real estate because
of race, color, religion, sex, handicap, marital or familial status,
age, or National origin.
E. The objective of the FmHA housing loan program is to provide
credit for housing that serves the needs of eligible very low-, low-,
and moderate-income permanent residents.
F. Successful housing depends on the existence of the following three
important conditions:
1. There must be a need for the housing to be built.
2. The housing must fit the needs of prospective tenants or
cooperative members from the standpoint of location, design and cost.
3. The applicant for a loan must provide adequate information to FmHA
to show that these basic conditions can be met.
A. An individual, organization or group organization to provide
housing may apply for a loan through the local FmHA District Director
serving the area where the housing will to be located.
B. The applicant should read FmHA Instruction 1944-E before applying
for a loan. The applicant also should discuss the proposed housing with
the District Director before completing a preapplication.
C. Applying for a loan begins with SF 424.2 (for preapplication
submission). Included with the preapplication form should be the
supporting material or information listed in Exhibit A-7. This
information will enable FmHA to determine:
1. The eligibility of the applicant;
2. The feasibility (economic, environmental and architectural) of the
proposed housing; and
3. That prospective cooperative members have read and understand
their responsibilities as outlined in What is Cooperative Housing?
(available in any FmHA office) before agreeing to a cooperative housing
project.
4. The suitability of prospective members to cooperative life; and
5. Whether the proposed housing can appropriately be financed by
FmHA.
D. This information usually can be furnished by the applicant without
hiring extensive professional services. It should be factual and
specific based on objective investigations and realistic estimates.
A. If the proposal exceeds the District Director's approval
authority, he/she will submit the docket to the FmHA State Director for
consideration. If the proposal exceeds the State Director's approval
authority, he/she will send the docket, including comments and
recommendations of the District and State Office staffs, to the FmHA
National Office in Washington, D.C. for review. All cooperative housing
proposals will be sent to the National Office for review.
B. The completeness and accuracy of information submitted with the
preapplication is especially important when reviews are necessary by
FmHA offices remote to the proposed site and without direct knowledge of
conditions and circumstances involved with the project. The description
of the planned housing must be clear, complete and concise to ensure
timely reviews by FmHA.
C. When the reviews are completed, the District Director will notify
the applicant, using Form AD-622, ''Notice of Review of Preapplication
Action,'' of FmHA's decision.
If it appears a loan can be made, the District Director will explain
the additional steps that will be required. If favorable action cannot
be taken on the preapplication, the District Director will explain why
and may be able to suggest changes to permit a loan to be made.
A. When an applicant is authorized to submit a formal application,
the District Director will review the items required in Exhibit A-9.
The amount of information required will vary based on the complexity and
size of the proposed project. The District Director will also provide
forms and guides to assist the applicant in recording required
information. Some of the guides are included as exhibits in this
handbook. The applicant is responsible for providing the information
required. The District Director will assemble this information and
complete the docket.
B. The following information will be helpful in developing a loan
docket. The first two items are applicable only to nonprofit
organizations. The other items apply to any applicant. In addition,
the requirements of Exhibit A-7 of this subpart must be met when
developing a preapplication and the requirements of Exhibit A-9 must be
met when developing an application.
1. Getting organized if applicant is a nonprofit organization and has
not adopted articles of incorporation and bylaws. a. Steering committee
or sponsor. The group may choose a steering committee or, in the case
of a cooperative, a sponsor to act for it. An attorney will usually be
required to advise the organization on incorporation and assist in
developing the loan application. The steering committee, or sponsor,
should select an attorney who is interested in the proposed housing and
will render the necessary services promptly for a reasonable fee.
b. Articles of incorporation and bylaws. FmHA has developed model
articles of incorporation and bylaws for nonprofit organizations. The
steering committee, or sponsor, should arrange for the District Director
to meet with the attorney. The District Director will give the attorney
copies of the FmHA model articles of incorporation and bylaws and
explain FmHA requirements. Separate bylaws have been developed for
cooperatives and for rental housing organizations.
c. Attorney's fees. Reasonable attorney's fees may be included in
the FmHA loan. A written agreement between the applicant and attorney
is required. See Exhibit A-1 for a sample copy of an agreement.
d. Board of directors. The steering committee, or sponsor, usually
selects the incorporators for the corporation. The board of directors
is responsible for conducting the corporation's business, including
obtaining the loan and providing overall management after the housing is
completed.
2. Obtaining broadly based membership for rental housing. a. A
nonprofit corporation applying for a loan must have and maintain a
broadly based local membership, including leaders in the community,
representing a variety of interests in the community. The members may
be individuals or organizations but each member is limited to one vote.
b. The purpose of the broadly based membership requirement is to
obtain community support, provide enough members to be able to rotate
officers and members of the board of directors, protect the Government's
financial interest as mortgagee and provide assurance that the housing
will be a success and the purpose of the loan carried out.
c. In RRH loans made to nonprofit organizations and public bodies,
there is no profit incentive. The term of the loan may be for as long
as 50 years. Therefore, factors such as the prospect for continuous
competent management and supervision, maintenance and adequate community
support for the housing project over the expected life of the loan are
important.
d. A membership list showing the names and addresses of each member
should be maintained by the secretary of the organization.
(1) Number of members required. The organization should have at
least 25 members. The number of members may be decreased for projects
with less than 25 units.
(2) Contributions by members. Nonprofit corporations may require a
membership fee or ask prospective members for a contribution. This is
the method often used by nonprofit corporation applicants to raise
initial operating capital. However, no such fee or contribution can
entitle a member or prospective member to a preference in occupancy of
the housing.
3. Cooperative membership. a. Only those persons who will reside in
the cooperative housing will be members of the cooperative. The
composition of the board of directors will be drawn from that
membership, initially by appointment and later by election from the
general membership. The board should be composed of at least 5 members.
b. The board of directors, with assistance from the adviser to the
board (discussed in a later section), will devise the rules and
regulations under which the cooperative will operate. Additionally, the
board will be responsible for management of the cooperative.
c. A membership list showing the names and addresses of each member
will be maintained by the secretary of the cooperative.
d. Cooperative membership will require the deposit of a membership
fee by each member as outlined in 1944.215(g) of this subpart. The fee
will be retained by the cooperative for as long as the person remains a
member of the cooperative. The fee will be refunded to the person when
membership is terminated.
4. The applicant should communicate with officials of the community
early in the development of the proposal to explain the benefits of the
proposed housing to the community. This meeting will serve to remove
the uncertainty of the impact of the housing on the community and may
aid in a timely processing of the preapplication. The support of
community officials is helpful in obtaining environmental clearances,
possible zoning changes, favorable taxation, etc.
5. Initial operating capital. a. All applicants must have enough
inital operating capital to get started. When justified, FmHA may
include these funds in a loan made to a consumer cooperative, nonprofit
organization or public body. Initial operating capital should be
sufficient to pay such costs as property and liability insurance
premiums, fidelity bond premiums when the applicant is an organization,
utility hook-up charges and deposits, maintenance and other equipment,
lease forms, furnishings, loan payments that may become due during
construction and other initial expenses.
b. At least 2 percent of the total development cost of the project is
required for initial operation and maintenance costs. The applicant can
determine the amount required by working out a detailed budget of income
and expenses for the period of time until the housing is ready for
occupancy and income will be available. The actual budget may indicate
that more than 2 percent is needed.
6. Analysis of market to determine demand for rental housing. a.
Applicants should discuss with the District Director the type of market
analysis that will be needed. Applicants must comply with paragraph II
of Exhibit A-7 when preparing market information.
b. Exhibits A-2 and A-3 are sample forms which may be modified by the
applicant to assist in the assembly of the information for the market
analysis.
7. Planning to serve the market. a. Planning the housing to serve
the market in the community involves more than obtaining a blueprint of
the building. It requires a careful evaluation of conditions in the
community and careful planning to assure that the result will be good
housing designed for independent living at a cost eligible tenants can
afford. Well planned housing is:
(1) Convenient, attractive, safe and comfortable.
(2) Easily maintained.
(3) Located where tenants or members can have easy access to the
goods and services they require for daily living.
(4) Planned to meet all codes, regulations, and acceptable
construction practices.
(5) Priced within an affordable range of its prospective tenants and
members.
(6) Energy efficient and complies with FmHA's thermal performance
standards.
b. The District Director and State Office architect can provide
information that will help the applicant in planning the housing.
8. Selecting an architect. a. The services of an architect are
required for all housing projects which have more than four units. The
cost of a registered architect/engineer may be included in the loan.
b. Before anything more than schematic drawings are prepared, the
applicant and its architect, the FmHA architect/engineer and the
District Director should arrange a meeting. This meeting will acquaint
the applicant's architect with the purposes of the housing and FmHA's
requirements. This will be helpful in eliminating misunderstandings.
Among the topics that should be discussed are:
(1) Objectives of the housing program.
(2) Design requirements that will produce good housing at reasonable
cost.
(3) Stages at which FmHA must review plans and specifications.
(4) Services the architect will be expected to perform.
(5) Agreement between architect and applicant.
9. Selecting a site. a. The location of the housing is an important
part of planning to serve the market. Occupants should have easy access
to required services. A desirable residential setting within a rural
community is essential.
b. Site cost is also important. The total cost of the site,
including the cost of improvements and the price of the land, must be
considered. Both may be included in the loan. However, loan funds made
available to purchase land may not exceed the present market value of
the land in its present condition as determined by an FmHA appraisal.
c. Before buying a site, the applicant should consult the architect
to determine the suitability of the site for the proposed housing. The
applicant must consider the site requirements detailed in paragraph III
of Exhibit A-7 of this instruction. The applicant should not enter into
any firm agreement to buy a site with the expectation of receiving an
FmHA loan without consulting with the District Director and prior to the
Agency's completion of the environmental impact review.
10. Drawings, specifications and cost estimates. The size,
complexity and cost of housing projects can vary from a duplex located
on a small building lot to a complex of buildings located on a site
containing several acres. The applicant must provide drawings and
specifications in accordance with paragraph IV of Exhibit A-7 of this
subpart.
11. Budgets. a. The initial budget should cover the period from the
date the first construction expenses are incurred until the end of the
applicant's first fiscal year following completion of the housing.
After the final cost estimate has been made and the amount of the loan
needed has been determined, a budget for a typical year should be
developed.
b. This budget should be based on a typical annual operation after
the project is occupied. Budgeting is an important part of the
management. The applicant should spend enough time working on it to
assure that the estimates are realistic. Budgets will be required each
year until the FmHA loan is repaid in full. The budget serves several
purposes including:
(1) Helps determine rental or occupancy rates.
(2) Indicates financial soundness.
(3) Serves as a guide for paying expenses.
c. Form FmHA 1930-7, ''Statement of Budget and Cash Flow,'' and its
accompanying Exhibit A-6 are a sample budget form and utility allowance
form.
12. Loan resolution or loan agreement. When the applicant is a
corporation or an individual applying for a loan above certain amounts,
a copy of the required loan resolution or loan agreement should be
obtained from and discussed with the District Director before the loan
docket is developed. Among other things, this document outlines how the
income from the housing is to be used. These requirements should be
understood at the time the budget is developed.
13. Rental management plan. A detailed management plan will be
developed which will outline the basic policies and procedures to be
followed and the duties of the officers and employees. The applicant
must manage the project in accordance with the requirements of subpart C
to part 1930 of this chapter.
14. Rental manager and caretaker. a. A comprehensive management
program is essential to the successful operation of the project. A
carefully written plan should be developed in accordance with Exhibit B
of FmHA Instruction 1930-C.
b. The use of an onsite manager should be based on the size of the
project. The manager should be readily available to the tenants. The
manager might be one of the tenants or a member of the board of
directors of a nonprofit corporation. The manager's duties should be
specified in the management plan.
c. The board of directors of a corporation is responsible for overall
supervision and management of all its affairs. The board should
delegate actual operating and management responsibility to committees or
individuals and meet often enough to see that enterprise is being
managed successfully.
15. Cooperative self-management. a. The success of cooperative
housing will depend on how well the members are able to manage the
cooperative themselves with assistance from the adviser to the board.
The cooperative must first develop and designate those areas of
responsibilities to be delegated to committees, a list of the
committees, and the functions of the committees. A copy of this
information will be provided to each prospective member.
b. It will be necessary for the proposed board of directors to become
familiar with how a cooperative is supposed to work before it is able to
successfully assume the responsibilities of running the cooperative.
This can best be achieved by participating in programs designed for the
express purpose of educating potential board members. The prospective
board members will be expected to take part in such a training program.
c. Participation on committees by members will be on a voluntary
basis. However, if it appears a committee does not have sufficient
numbers for it to adequately operate, then additional members will be
expected to volunteer their time and talents. Thus, participation on
committees is voluntary up to a point. If a member has experience in a
particular area, that member should be encouraged to join the committee
which will benefit from his/her experience. The cooperative will need a
total commitment from the membership in order to assure success of
self-management. Examples of the types of committees which may be
considered are:
(1) Maintenance
(2) Groundskeeping
(3) Communications
(4) Budget and finance
(5) Rules
(6) Recreation
(7) Home service
d. If the cooperative is not successful in managing itself,
professional management will be hired by the cooperative.
16. Occupancy policies. a. Applicants should review carefully the
occupancy requirements with the District Director. Particular attention
should be given to the following requirements:
(1) The housing must be open to all eligible persons regardless of
race, color, religion, sex, handicap, marital or familial status, age,
or national origin.
(2) The incomes of tenants and the initial incomes of cooperative
members must be within the maximum income limits approved by FmHA.
b. Additional guidance concerning occupancy in congregate housing
projects can be found in Exhibits B-10 and B-10A to subpart C of part
1930 of this chapter.
17. Cooperative board of directors. The board will essentially be
the backbone of the cooperative structure. In this capacity it will be
responsible for establishing the policies and procedures which will
govern the operation of the cooperative and for enforcing those policies
and procedures. The board will be composed of members of the
cooperative with the same interests and concerns as the general
membership. For instance, instituting an increase in the occupancy
rates or terminating a member's right to cooperative ownership because
of serious repeated violations of cooperative rules and regulations will
be the types of actions which are taken by the board. The members of
the board will be affected by these same decisions since they must
adhere to the same rules and regulations as the rest of the cooperative
community.
18. Adviser to the board. Resident(s) of the community who is not a
member of the cooperative will serve as an adviser to the board during
the period of formation and until the board of directors has effectively
demonstrated its ability to manage the cooperative. At that time, the
adviser will maintain close contact with the cooperative and provide
advice and assistance as needed. The adviser may also be an
organization; however, one specific individual will have sole contact
with the board to eliminate confusion and to prevent one person from
countermanding another's instructions. The adviser will closely monitor
the cooperative for at least 2 years after it becomes its own manager.
This time may vary, depending on the circumstances. The adviser must be
very carefully selected to ensure that adequate guidance is given to the
board. The adviser must be able to meet certain criteria in order to
provide the best possible counsel. The Qualifications of an Adviser to
the Board, Relationship of Adviser to Members, and Adviser
Responsibilities, found at Exhibits E, E-1, and F of this subpart,
should be used in evaluating potential advisers. While it may not be
possible to find some one individual or individuals who can meet all the
requirements outlined, the criteria should be used as guides in
determining the best candidate. FmHA will provide counsel to the
cooperative during the interview period and must approve the selection
of the individual(s). We recognize the adviser will require
compensation for services rendered, however, the amount paid should not
severely limit the amount of patronage capital accruing to the members.
19. Management reserve. The board's ability to manage the
cooperative will determine whether members will receive equity from
membership in the cooperative. A set rate for professional management
will be assessed each month as part of the occupancy rate and will be
maintained in a separate reserve account. If the cooperative is
successful at managing its own affairs during the year, the amount
accumulated in the reserve will be assigned equally to each member at
the end of the year as patronage capital. This same procedure will be
followed each year, allowing a buildup of patronage capital. If
professional management is hired by the cooperative to correct
deficiencies which have arisen from poor self-management, further
accumulations to the management account will then be used to pay for
professional management and the amount being accrued to the members'
patronage capital account will be suspended. If the amount being
accumulated for management is not sufficient to meet the needs,
occupancy rates will be increased to cover the expense of management.
When the cooperative begins to again manage itself, the assessment for
the management reserve will resume as previously stated. Any other
income remaining at the end of the year will also be assigned as
patronage capital. Assignment from both of these sources must be
accomplished in accordance with the IRS ruling concerning patronage
distribution. Careful records must be kept to track the monthly amount
being contributed by each member to the management reserve account so
that the cooperative will know how much patronage capital the member is
entitled to should membership be terminated prior to the end of the
fiscal year. FmHA rental assistance proceeds are not to be used to make
the member's contribution to the management reserve account. Therefore,
the member must have sufficient income from which to make this payment.
If it becomes necessary to hire full-time professional management, then
the management fee will be considered part of the shelter cost and thus
eligible for RA. FmHA will assist the adviser to the board in
determining if and when professional management will be hired in lieu of
self-management. In the event the adviser and FmHA are unable to reach
an agreement regarding the hiring of professional management, the
ultimate decision will rest with FmHA. Compensation paid to the adviser
will be shared by members through the deduction of equal amounts from
their management reserve payments.
20. Rules and regulations. The rules and regulations for tenants and
members should be developed by the applicant and a copy included in the
loan docket.
21. Lease or occupancy agreement. The applicant should develop an
application form for occupancy and a lease or occupancy agreement form
in accordance with the requirements of subpart C of part 1930 of this
Chapter. Exhibit J of this subpart is to be used as a guide for
developing an occupancy agreement. Copies of these forms should be
included in the loan docket.
22. Affirmative fair housing marketing. In order to promote proper
planning for initial rent-up and occupancy, the District Director will
meet with the applicant after loan approval, preferably at the
preconstruction and/or the prerent-up or preoccupancy conference to
discuss the Affirmative Fair Housing Marketing Plan or other similar
agreement approved for the project. In the case of a cooperative, the
District Director will discuss the Plan at the preapplication stage.
A. When the applicant has developed the complete loan docket, it
should furnish and discuss the information with the District Director.
SF 424.2, the information and materials listed in Exhibit A-9 plus FmHA
forms provided by the District Director become the loan docket.
B. If the docket is submitted to the State Office for consideration,
the State Director will indicate any special requirements that need to
be met before loan approval or loan closing.
C. Commercial financing should be used for projects during the
interim construction period if available at reasonable rates and terms,
FmHA can make a conditional commitment to the interim lender that will
loan the funds to finance the construction of the project. The
commitment will be conditioned upon acceptable performance by the
builder and payment of all construction bills. After the conditions
have been met, the FmHA loan will be closed to pay the interim
construction indebtedness. Draws on interim loan funds will be made
only as needed and will require the joint approval of the applicant and
the FmHA District Director.
D. In other cases FmHA can make advances of loan funds for
construction, the note and mortgage will be signed by the applicant and
the loan funds deposited in a joint bank account at loan closing. The
loan funds are disbursed from the bank account as needed. Checks on the
account must be signed by the borrower and countersigned by the FmHA
District Director.
The start of construction is the first physical sign that the housing
will become a reality. The construction period is a most critical
period of time.
A. Competitive bidding. 1. Competitive bidding is recommended and
may be required by FmHA in some cases. If required, the State
Director's letter sent after the loan is authorized will instruct the
District Director to have the applicant or its architect complete the
necessary bid documents.
2. The applicant and the architect should invite competent
contractors to bid on the housing. If bids are within the estimates,
the successful bidder will be selected and the contract for construction
will be awarded. During construction, a qualified FmHA representative
and the applicant and its architect will inspect the work to protect
their respective interests in the project. Payment will be made from
the FmHA loan funds, or interim loan funds, according to provisions in
the contract.
B. Construction without competitive bidding. When competitive
bidding is not required, the loan docket will include reliable cost
estimates or a firm offer to build from a builder selected by the
applicant. A contract concurred with by FmHA will be executed by the
applicant and the contractor. If full architectural services are
obtained by the applicant, inspection of the work will be performed by
the architect's staff. The applicant and FmHA will inspect the
construction to protect their respective interests in the project.
Payments will be made to the contractor in accordance with the terms of
the contract.
C. Starting construction. Construction should not be started until
the FmHA loan is closed or the FmHA commitment has been made to the
interim lender.
Promotion of the housing availability should start at least 90 days
prior to completion. The applicant may want to create interest in the
housing and build up the list of prospective tenants or members by
having a dedication ceremony. This will attract attention and remind
the local residents of what the housing means to the community. This is
especially recommended for housing developed by nonprofit corporations.
The following exhibits may be used when applicable and, if necessary,
adapted to meet the specific needs of applicants.
A-1 Legal Services Agreement
A-2 Survey of Existing Rental Housing
A-3 Rental Housing Survey
A-4 Cooperative Housing Survey
A-5 Housing Survey Summary
A-6 Housing Allowances for Utilities and Other Public Services
A-7 Information to be Submitted with Preapplication for a Rural
Rental Housing (RRH) or a Rural Cooperative Housing (RCH) Loan
A-8 Outline of Professional Market Study
A-9 Information to be Submitted with Application for a Rural Rental
Housing (RRH) or a Rural Cooperative Housing Loan.
(56 FR 2241, Jan. 22, 1991; 56 FR 47376, Sept. 19, 1991)
07 CFR 1944.250 Pt. 1944, Subpt. E, Exh. A-1
07 CFR 1944.250 Exhibit A-1 -- Legal Services Agreement (For
Cooperative or Other Nonprofit Organizations)
Agreement made this ------ day of ---------------- , 19 ---- between
the -------------------- , hereinafter called the (owner) (board of
directors), and -------------------- , hereinafter called the attorney,
witnesseth:
Whereas the (owner) (board of directors) intend to form a cooperative
or other nonprofit corporation, hereinafter called the (corporation)
(cooperative), to construct and operate a rural housing project in
(Town) (County) (State)
and to obtain a loan from the Farmers Home Administration to finance
the construction, and the attorney agrees to perform all legal services
necessary to incorporate the (corporation) (cooperative), and to perform
all other customary legal services necessary to the organization,
financing, construction, and initial operating of the proposed rural
housing project, such services to include but not to be restricted to
the following:
1. Prepare and file incorporating papers and supervise and assist in
taking other necessary or incidental actions to create the (corporation)
(cooperative) and authorize it to finance, construct, and operate and
proposed housing project.
2. Prepare for and furnish advice and assistance to the owner, or to
the board of directors and officers of the corporation, in connection
with (a) notices and conduct of meetings; (b) preparation of minutes of
meetings; (c) preparation of adoption of necessary resolutions in
connection with the authorization, financing, construction, and initial
operation of a rural housing project; (d) special tax treatment
applicable to housing cooperatives; (e) necessary construction
contracts; (f) preparation of adoption of bylaws and related documents;
(g) any other action necessary for organizing the (corporation)
(cooperative) or financing, constructing, and initially operating the
proposed housing project.
3. Review construction contract, bid-letting procedure, and surety
and performance bonds.
4. Examine real estate titles and prepare, review and record deeds
and any other instruments.
5. Cooperate with the architect employed by the (owner) (board of
directors) in connection with preparation of survey sheets, easements,
and any other necessary title documents, construction contracts, and
other instruments.
6. Render legal opinions as required by the (owner) (board of
directors) or the Farmers Home Administration, United States Department
of Agriculture.
7. (Owner) (board of directors) agree to pay the attorney for
professional services in accordance with this agreement, as follows:
The fees to be payable in the following manner and at the following
times:
The attorney states and agrees that of the above total fees,
------------ , represents fees for services in connection with the
organization and incorporation of the (corporation) (cooperative).
The (owner) (board of directors) and the attorney further covenant
and agree that, if upon organization and incorporation, the
(corporation) (cooperative) fails or refuses to adopt and ratify this
agreement by appropriate resolution within ------ days, this agreement
shall terminate and (owner) (board of directors) shall be liable only
for payment for legal services rendered in connection with such
organization and incorporation.
Signed this ------ day of ------------ 19 ---- .
Attorney:
(Owner)
(board of directors)
(56 FR 2245, Jan. 22, 1991)
07 CFR 1944.250 Pt. 1944, Subpt. E, Exh. A-2
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. A-3
07 CFR 1944.250 -- Exhibit A-3 -- Rental Housing Survey
(SAMPLE)
A rental housing project is being planned for (name of community.)
The project would provide comfortable living at monthly rental rates of
(Indicate proposed basic rent by number of bedrooms.) Your opinion on
the following will help us to determine whether such a project is
practical. This information does not obligate you in any way.
1. What age group are you in? 62 or over ( ) 50-61 ( ) 35-49 ( )
Under 35 ( )
2. Are you or members of the household handicapped or impaired and in
need of specially designed housing arrangements? yes ( ) no ( )
3. Number of person(s) in your household: XXX.
4. Approximate annual income from all sources including any social
security pension, payments made on behalf of minor children, public
assistance, etc.: $XXX.
5. Do you own ( ) or rent ( ) present residence?
6. Do you live in house ( ) apartment ( ) room ( ) mobile home ( ) on
a farm ( ) in town ( )?
7. Is your present housing modern ( ) not modern, but adequate ( )
inadequate ( ). If inadequate, in what respect? XXX.
8. What amount of monthly rent do you pay with utilities included?
$XXX.
9. Would you pay 30 percent of your monthly income for modern housing
for your family? yes ( ) no ( )
10. Would you be willing to move in if an apartment were
availableXXX, 19XX? yes ( ) no ( )
11. Do you have a car? No, 1, 2, 3 (circle)
Name
Address
(including city/town)
Telephone Number
Location of employment
12. Number of meals you would like prepared for you per day XXX
13. What other services would you like to have available to you?
14. List any hobbies or organizational membership you have.
Note to Applicant: This sample survey form is for your use in
evaluating the need for new rental units in the community and its market
area. You should be prepared to explain the methodology of the survey
since FmHA will be spotchecking the respondents' answers. How the
survey is performed can influence the outcome; therefore, it is
encumbent upon you to see that the manner in which it is conducted is
suitable and acceptable to FmHA. For instance, compensation being paid
to someone for survey work should not be dependent upon the number of
respondents who would be willing to move into the project. The survey
should be based on a random sampling of persons now residing in the
market area. Things to avoid are surveying from the telephone book
listing or a door-to-door canvass of a certain segment of the community.
We want the development of rental units to be based upon actual
circumstances prevailing in the market area in order that the housing
development will present a secure and economical living arrangement for
the persons in need of the housing.
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. A-4
07 CFR 1944.250 -- Exhibit A-4 -- Cooperative Housing Survey
BEFORE ATTEMPTING TO ANSWER THESE QUESTIONS, PLEASE READ THE
GUIDELINES FOR UNDERSTANDING THE PRINCIPLES OF COOPERATIVE HOUSING. NOW
TAKE TIME TO ANSWER THE FOLLOWING QUESTIONS AS HONESTLY AS YOU CAN.
(Circle yes or no)
1. Are you willing to share the responsibilities required of a
cooperative member?
yes XXXX noXXXX
2. If asked, will you serve on the board of directors or on a
committee?
yes XXXX noXXXX
3. Are you willing to help in maintaining the cooperaive property?
yes XXXX noXXXX
4. Do you now have a better idea of what cooperative housing really
is?
yes XXXX noXXXX
5. Do you want to ask more about the cooperative before deciding
whether to join?
yes XXXX noXXXX
6. If the answer to question 5 is ''yes,'' will you come to an
information meeting to be held in town?
yes XXXX noXXXX
7. Have you answered the questions truthfully? Did you answer ''no''
to any of questions 1, 2, or 3? If so, this type of housing is not for
you. If you are interested, please go on to complete the second portion
of this survey.
1. How many persons in your household?
adults
children
2. Approximate annual income from all sources: $ ------------
3. Are you or members of the household handicapped or impaired and in
need of specifically designed housing arrangements?
yes XXXX noXXXX
4. An informal meeting is scheduled for ------ a.m./p.m., on
------------ , 19 ---- , for the purpose of discussing a proposed ----
-unit cooperative planned for this community. At that time a
representative of the cooperative will be on hand to answer other
questions you may have.
So that we may know how many persons to expect at the meeting, we ask
that you give us your name, address, and phone number.
NAME
ADDRESS
PHONE
(56 FR 2245, Jan. 22, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. A-5
07 CFR 1944.250 -- Exhibit A-5 -- Housing Survey Summary
(SAMPLE)
(53 FR 2159, Jan. 26, 1988. Redesignated and amended at 56 FR 2245,
2246; 56 FR 65985, Dec. 20, 1991.
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. A-6
07 CFR 1944.250 -- Exhibit A-6 -- Housing Allowances For Utilities And
Other Public Services
--
Name of Borrower
--
Location and Identification of Project
Prepared by:
Borrower or Agent
Title
Signature
Date
Approved by Farmers Home Administration
Name
Title
Signature
Date
To:
Name of Tenant --
Address of Tenant
No. of Bedrooms
You will be billed directly for utilities and service charges. Block
B sets forth the allowances credited in your rent for the payment of
utilities. You may be billed for more or less than shown in Block B
depending on your use of utilities
--
Signature of Borrower or Agent
-- (Date)
I. General. These instructions are for completing Exhibit A-5 for the
establishment and use of approved utility allowances for tenants. The
objective will be to establish allowances at levels that will apply to
the majority of the households assigned to the specified size unit.
II. Determining allowances.
A. Existing construction. The borrower will provide information
which shows the utility bills and fees for public services which have
been charged to units in the project in previous years. If possible,
this historical data should cover a period of at least 24 months and
should show billings to all types and sizes of units in the project. If
data is not available on the specific project, data from similar
projects may be substituted. Consideration should be given to making
proper adjustments in the data caused by some tenants' excessive use of
utilities. Current rate schedules and known rate increases will be used
to estimate utility allowances. The following local sources should be
contacted as appropriate:
1. Electric utility suppliers.
2. Natural gas utility suppliers
3. Water and sewer suppliers.
4. Fuel oil and bottle gas suppliers.
5. Public service commissions.
6. Real estate and property management firms.
7. State and local agencies including public housing authorities.
In cases where a project uses a single meter for more than one living
unit or where a single fuel supply or heating or cooling plant is used
for more than one unit, the following factors will be used to determine
the pro rata share of utility costs or public service fees per living
unit:
Example: An 8-plex structure containing four 1-bedroom apartments
and four 2-bedroom apartments has an average annual consumption of
42,000 kilowatt-hours of electricity. Allowance per unit is calculated
as follows:
Total use total of factors ---- x cost per kilowatt-hour
(kwh)-average billing (assume $.04 per kwh)
42,000/6.4 x .04=262.50
unit factor x average billing=^unit allowance
(one bedroom)/.7 x 262.50=$183.75/yr.
(two bedroom)/.9 x 262.50=$236.25/yr.
B. New construction. The applicant, with assistance from its
architect, mechanical engineer or other heating and cooling system
specialists, will provide heating and cooling load calculations for each
type and size of unit. Heating and/or cooling costs will be calculated
from these load factors using current rate schedules and known rate
increases. Procedures described in the American Society of Heating,
Refrigeration and Air Conditioning Engineers ''Handbook of
Fundamentals,'' the National Association of Homebuilders ''Insulation
Manual Home, Apartments,'' or other recognized authority may be used.
General appliance and lighting loads and fees for public services
should be estimated using data from the local utility companies and from
other sources listed in paragraph II A above.
C. Type of allowance.
1. Separate heating and cooling allowances will be estimated for the
various types of multiple family housing financed by FmHA in the
project. For example, separate allowances may be needed for duplexes,
row or townhouses, or for garden and low and medium rise apartments. In
addition to establishing different heating and cooling allowances for
various types of structures, attention should be given to different
allowances for water depending on whether the tenants will have
responsibility for lawn care.
2. Allowances for air-conditioning will be established only for
projects in which the owner furnishes a central air-conditioning system
or other type unit as a part of the permanent equipment.
3. The cost of gas and electricity varies according to amounts
consumed as shown on the appropriate rate schedules of the supplier. It
is not possible to compute exactly the cost of electricity for any given
function without knowing the total electrical usage for a unit.
However, because neither the borrower nor the tenants know beforehand
what the combination of utilities for any unit rented will be, it will
be necessary to approximate the allowances for each function (e.g.,
heating, cooking, etc.) as follows: For electricity, the rates used for
lighting, refrigeration and appliances should be from the top of the
rate schedule or the higher unit costs. Allowances for electric
cooling, water heating and space heating should be computed from the
middle or lower steps in the rate schedules. Similarly, allowances for
gas used for water heating and cooking should be computed using rates
from the top of the rate schedule and for heating from the lower steps.
III. Preparation by borrower or applicant.
A. Applicable projects. Except for projects operating on a profit
basis, Exhibit A-5 will be completed in an original and three copies in
all instances where the tenants pay utilities or authorized services
directly. When the borrower pays all utilities, Part I of Exhibit A-5
may also be required as part of the budget submitted for any new project
if the loan approval official determines it is needed to properly
evaluate projected utility costs. This form will establish the
allowances for all size units in the project. The allowances will be
adequate for all utilities and any authorized services which are or will
be payable directly by the tenants, except telephone and cable TV. The
forms will be signed by the borrower. The original and two copies of
the form will be submitted to FmHA. Backup data and necessary
documentation should be included with the submission.
B. Submission of supporting data to FmHA. The applicant will submit
to FmHA adequate data to justify the utility allowances for the project.
The data will include the following:
1. Completed Exhibit A-5.
2. List of local sources contacted for information and copies of any
data provided by such sources.
3. Any data on allowances already established for the area.
4. Complete narrative statement and computations on method used in
arriving at the allowances.
IV. Actions by FmHA. If FmHA finds the allowances acceptable, the
approval portion of Part I will be completed. The District Director
will keep a copy for the District Office file and return the original to
the borrower. If the proposed utility allowance is unacceptable, the
borrower will be requested to revise the data and resubmit it for
further consideration.
V. Subsequent action by borrower. After approval by FmHA, the
borrower will complete Part II of Exhibit A-5 and provide copies for
each tenant paying utilities directly by attaching it to the lease
entered into by the borrower and tenant. The form will provide the
household with the amount of allowance for each utility and service
which is to be paid by the tenant. If all utilities and services are
paid by the borrower, Exhibit A-5 need not be attached to the lease.
(53 FR 2159, Jan. 26, 1988. Redesignated at 56 FR 2245; 56 FR 65985,
Dec. 20, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. A-7
07 CFR 1944.250 -- Exhibit A-7 -- Information to be Submitted With
Preapplication for a Rural Rental Housing (RRH) or a Rural Cooperative
Housing (RCH) Loan
The following information is to be submitted with SF 424.2 (for
preapplication submission):
I. Eligibility.
A. Financial statement for Rental Project -- Each applicant must
submit a current, signed and dated financial statement. The financial
statement must reflect sufficient financial capacity to meet the
applicant's equity capital and initial operating capital requirements.
Applicants may contribute cash, free and clear title to the building
site or a combination of both as an equity contribution. The initial
operating capital requirement may be fulfilled by contributing cash or
by providing an irrevocable letter of credit.
(1) For a corporation (other than a nonprofit corporation) or a
trust, financial statements will be required from each member,
stockholder or beneficiary who holds an interest in the organization in
excess of 10 percent.
(2) For a partnership, financial statements will be required from
each general partner who holds an interest in the organization.
(3) For limited partners in a limited partnership who will have 10
percent or more ownership, a certificate of net worth will be required.
(4) For applicants that are not legally organized at the time of
filing the preapplication, financial statements will be required from
all of the proposed parties in proportion to the proposed ownership
interest of each part. However, the applicant must be legally organized
prior to loan approval and must submit financial statements.
(5) For cases in which financial statements are required from an
individual, the financial statements must also include the financial
interest and signature of the spouse.
(6) When the applicant and/or general partner(s) have multiple
applications pending and/or when the State Director is uncertain of the
applicant's ability to provide the necessary 3 percent borrower
contribution, 2 percent initial capital contribution and/or other assets
needed for a sound loan, the State Director may request the applicant to
submit additional financial information relative to its financial
position. This information may be obtained from 6- to 12-month
projected pro forma statements with supporting schedules.
(7) All financial statements or net worth certifications submitted
must contain the following statement immediately preceding the signature
line:
(A) In new projects in which the loan has not been closed:
I/we certify the above is a true and accurate reflection of my/our
financial condition as of the date stated herein. This statement is
given for the purpose of inducing the United States of America to make a
loan or to enable the United States of America to make a determination
of continued eligibility of the applicant for a loan as requested in the
loan preapplication or application of which this statement is a part.
(B) For projects in which the loan has been closed and the applicant
has been formed:
I/we certify the above is a true and accurate reflection of my/our
financial condition as of the date stated herein. This statement is
given for the purpose of enabling the United States of America to make a
determination of continued eligibility of the borrower organization for
a loan as requested in the application of which this statement is a
part.
B. Financial Statements for Cooperative Members -- Each prospective
member must provide a statement of monthly income and expenses showing
the repayment of debts and whether those payments are current. The
statement must indicate that the person will have the financial ability
to meet the monthly occupancy rate requirement, while still meeting
other monetary obligations. FmHA Form 1944-38, ''Application for
Cooperative Housing Assistance,'' may be used for this purpose. (See
FMI for preparation instructions.)
C. The names and addresses of persons who have expressed an interest
in becoming members of the cooperative. Signature and date evidencing
this interest from each person will be obtained to fully document the
need for the cooperative housing. This certification should contain a
statement that the prospective member understands the cooperative type
of organization and the time and effort each member must spend in its
operating and maintenance.
D. For all cooperative projects containing over four units, the
applicant must submit an Affirmative Fair Housing Marketing Plan for
approval in accordance with 1901.203 of subpart E to part 1901 of this
chapter. The plan must be prepared in a complete, meaningful,
responsive and detailed manner.
E. Evidence Concerning the Test for Other Credit -- Applicants other
than States or local public agencies must show that other credit is not
available at rates and terms that will allow a unit rent or occupancy
charge to be within the payment ability of the occupants. The applicant
should provide letters from local real estate lenders stating the amount
of loan funds they would be willing to extend and the rates and terms at
which the loans would be available.
F. Statement of applicant's experience in operating rental housing
and related business, including a statement on the proposed method of
operation and management.
G. For an Organization Applicant -- A copy of, or an accurate
citation to, the specific provisions of State law under which the
applicant is, or is to be organized; a certified copy of the
applicant's actual, or a copy of the applicant's proposed charter,
articles of incorporation, bylaws, partnership agreement, certification
of limited partnership, or other basic authorizing documents; the names
and addresses of the applicant's members, directors and officers; and,
if a member of a subsidiary of another organization, its name, address,
and principal business, if available.
H. FmHA requires that applicants disclose identities of interests
that will exist related to the development of the proposed housing. A
written, dated, and signed statement from the applicant stating the
following:
(I) or (we) understand and agree that the Farmers Home Administration
(FmHA) will consider an identity of interest to exist between the loan
applicant as the party of the first part and general contractors,
architects, engineers, attorneys, interim lenders, subcontractors,
material suppliers, or equipment lessors as parties of the second part
under any of the following conditions: (1) When there is any financial
interest of the party of the first part in the party of the second part;
(2) when one or more of the officers, directors, stockholders or
partners of the party of the first part is also an officer, director,
stockholder or partner of the party of the second part; (3) when any
officer, director, stockholder or partner of the party of the first part
has any financial interest whatsoever in the party of the second part;
(4) when the party of the second part advances any funds to the party of
the first part other than an interim lender advancing funds to enable
the applicant to pay for construction and other authorized and legally
eligible expenses during the construction period; (5) when the party of
the second part provides and pays on behalf of the party of the first
part the cost of any legal services, architectural services, engineering
services or interim financing other than those of a survey, general
superintendent or engineer employed by a general contractor in
connection with obligations under the construction contract; (6) when
the party of the second part takes stock or any interest in the party of
the first part as part of the consideration to be paid them; and (7)
when there exists or comes into being any side deals, agreements,
contracts, or undertakings entered into thereby altering, amending or
canceling any of the required closing documents or approval conditions
as approved by FmHA. (I) or (we) certify that there is not now, nor
will there be an identity of interest between or among the applicant,
contractor, architect, engineer, attorney, interim lender,
subcontractors, material suppliers, equipment lessors or any of their
members, directors, officers, stockholders, partners or beneficiaries
without prior written identification to FmHA and written consent to such
identity of interest by FmHA. This statement is given for the purpose
of inducing the United States of America to make a loan as requested in
the loan preapplication or application of which this statement is a
part.
I. The social security or tax identification number will be required
in all cases. The loan will be denied for refusal to furnish the
required social security or tax identification number.
(1) In the case of an individual, the social security number of the
applicant must be provided. The spouse's social security number must
also be provided when they have joint responsibility for the loan.
(2) In the case of a partnership, the tax identification number of
the partnership must be provided if available and also the social
security numbers of all the general partners and their spouses.
(3) In the case of a limited partnership, the tax identification
number of the limited partnership is required. The social security
number of all the general partners and their spouses should be secured
if possible.
(4) In the case of a company, corporation or nonprofit organization,
the tax identification number of the organization is required. The
social security number of the officers should be secured if possible.
(5) If an organization does not have a tax identification number, the
social security number of one of the officers must be used.
J. All known principals and affiliates are required to submit a
properly completed Form HUD 2530/FmHA 1944-37, ''Previous Participation
Certification.'' Architects and attorneys who have any interest in the
project other than an arms length fee arrangement for professional
services are also considered principals. The form will be completed and
processed according to the instructions attached to the form.
II. Need and demand.
A. Economic justification and project size should be based on the
housing need and demand from eligible prospective tenants or members who
are permanent residents of the community and its surrounding trade area.
Since the intent of the program is to provide adequate housing for the
eligible permanent residents of the community, temporary residents of a
community (such as college students in a college town, military
personnel stationed at a military installation within the trade area, or
others not claiming their current residence as their legal domicile)
should be discounted in determining need and project size.
B. For rental projects of 20 units or more, a detailed study based
upon data obtained from census reports, state or county data centers,
individual employers, industrial directories or chambers of commerce is
required. The study should include:
(1) A complete description of the proposed site, including at least
the location with respect to city boundary lines and residential
developments and the location of services and their distances from the
site.
(2) Major employment data to portray the names of major employers
within the community and/or market area, the product or service of each
employer, the number of employees at each employer, the location of each
employer within the community and/or market area, and the year the
employer was established at the location. If certain income data cannot
be obtained from individual employers, salary information for the
community can be provided by the state employment commission.
(3) Population by year, number, total increase/decrease, percentage,
annual increase/decrease and percentage.
(4) Population characteristics by age.
(5) The household data by number, year and number of persons per
household.
(6) A breakdown of households by owners and renters.
(7) Households by income group.
(8) Building permits issued by year by single unit dwelling and
multiple unit dwelling. In nonreporting jurisdictions, this information
may have to be substituted with number of requests for electric service
connections, number of water/sewer hookups, etc., obtained from local
suppliers.
(9) Housing stock as defined by total number of units, one unit
buildings, two or more unit buildings, mobile homes and number lacking
some or all plumbing facilities.
(10) A survey of existing rental housing by name, number of units,
bedroom mix, family or elderly type, year built, rent, vacancies,
location and amenities.
(11) A projection of housing demand based on household growth, units
constructed since last census, number of owned and rented units, number
of replacements and the number of persons in the eligible income range.
C. Exhibit A-7 is a guide to be used in preparing professional market
studies which provides more specifics as to study content. The
qualifications of the person preparing the market study should include
some housing or demographic experience.
D. A table of contents, the analyst's statement of qualifications,
and certification of accuracy of study should be placed at the beginning
of the study. The context of the study must be in clear, understandable
language -- not written to confuse or to camouflage. All mathematical
calculations must be expressed in actual numbers and may also be
accompanied by percentages. Each table and/or section should identify
the source of the data. A brief statement of the methodology used in
the study should be included in the foreward and in other sections where
necessary for clarity.
E. The market analyst must affirm that he/she will receive no fees
which are contingent upon approval of the project by FmHA, before or
after the fact, and that he/she will have no interest in the housing
project. A study prepared by an analyst with an identity of interest
with the developer will need to fully disclose the nature of the
identity.
F. For rental projects of less than 20 units, the need for the
housing may be established by obtaining signed expressions of interest
from 50 percent more eligible prospective tenants than the number of
proposed units. Exhibits A-3 and A-4 or similar forms may be used for
the analysis. Statements evidencing a continued need for the units must
be included in the analysis of market. These statements should be based
on historical population growth taken from census reports or a current
housing evaluation by the county. If this type of analysis does not
adequately support the need for housing in a questionable market area,
FmHA will request that a full market study be prepared. The applicant
will provide a written, signed certification that the survey was
performed in a manner acceptable to FmHA and that the results are a true
portrayal of the survey.
G. For cooperative housing proposals, market feasibility will be
evidenced by the names and addresses of prospective members who have
definitely affirmed their intention of becoming cooperative members in
the proposed project. In the event some persons cannot be accepted for
membership for financial or other reasons, the cooperative should obtain
more names than the number of proposed units in order to assure adequate
feasibility coverage. The Potential Cooperative Members form located at
Exhibit A-4 and in What is Cooperative Housing? may be used for this
purpose.
H. In the case of a proposal involving congregate housing with
central dining area or housing involving a group living arrangement, a
narrative statement from local, State and/or Federal Government agencies
supporting the current and long-range need for the facilities in the
community and its trade area is required.
I. A schedule of proposed rental or occupancy rates and, in the case
of a congregate housing proposal, a separate schedule listing the
proposed cost of any nonshelter service to be provided should be
included with the market information.
III. Site.
A. Size of tract and a plot map identifying its boundaries.
B. A map showing the location and other supporting information on the
neighborhood and existing facilities, such as distance to shopping
areas, churches, schools, available transportation, drainage,
santitation facilities, water supply and access to essential services
such as doctors, dentists, pharmacies and hospitals. The map should
also show significant features such as main highways, railroads, rivers
and lakes. The use of property surrounding the site should also be
indicated.
C. The applicant should provide evidence of having control of the
proposed site either by ownership or by executing an option to buy.
IV. General description of the housing planned. A brief narrative
description of the housing planned should include the following items:
A. The type of project and structures proposed, such as garden
apartments for elderly and handicapped persons; townhouses for low- and
moderate-income persons; congregate housing for senior citizens and
handicapped persons, or housing designed for cooperative living.
B. The size of each type of rental unit measured in square feet of
living area.
C. The size and type of other facilities to be included in the
project, such as laundry rooms, storage spaces, etc.
D. The total number of units and the number of each type of unit
proposed.
E. The type of construction proposed and the method of construction,
i.e., owner/builder, negotiated bid or public bid.
F. The estimated total development cost, the cost per unit and the
estimated loan amount.
G. Type of utilities such as water, sewer, gas and electricity and
whether each is publicly, community or individually owned.
H. The comments and recommendations of any professional consultants
regarding on- or off-site conditions that could affect the proposed
project should be submitted, if available. Any comments addressing an
adverse condition should include recommended corrective actions. Any
special regulation waivers or variances that may be necessary should
also be identified.
I. Schematic design drawings should be included with the narrative
description and contain, as a minimum:
(1) Site plan, including significant ground contour lines.
(2) Floor plans of each living unit type and other type spaces.
(3) Building exterior elevations.
(4) Typical building exterior wall section.
J. A plot plan showing the relationship of the proposed structures,
the property lines, streets, utility lines, alleys and adjacent
structures and their uses. It should also show proposed off-street
parking for the tenants or members and their visitors. Other
facilities, such as private and public walks, private drives and
recreation areas on and off the property, laundry drying areas, and
garbage and refuse holding areas which are sufficient for the period
between collections in the neighborhood should be shown.
V. The applicant must submit a signed statement agreeing to pay cost
overruns from its own resources.
VI. For preapplications that will be submitted to the National Office
for concurrence, Form FmHA 1940-20, ''Request for Environmental
Information.''
VII. Intergovernmental consultation. Comments must be submitted in
accordance with 7 CFR, Part 3015, ''Intergovernmental Review of
Department of Agriculture Programs and Activities.'' See FmHA
Instruction 1940-J (available in any FmHA office).
VIII. Disclosures by Applicants.
(A) Applicants will submit information regarding any other government
assistance as defined in 1944.205 of this subpart from the Federal
Government, a State, or a unit of general local government, or any
agency or instrumentality thereof, that is expected to be made available
with respect to the project for which the applicant is seeking.
(B) The applicant will submit the names of any interested parties as
defined in 1944.205 of this subpart.
(C) The applicant will also submit a report detailing the expected
sources and uses of funds that are to be made available for the project.
(D) The disclosures required in paragraphs (A)-(C) will be updated
within 30 days of any substantial change during the period of the
application process.
IX. For congregate housing proposals. Applicants must submit
information on the services to be provided in accordance with exhibit E
of this subpart.
(53 FR 2159, Jan. 26, 1988, as amended at 53 FR 7492, Mar. 9, 1988;
53 FR 36268, Sept. 19, 1988; 54 FR 14337, Apr. 11, 1989; 55 FR 13503,
Apr. 11, 1990; 55 FR 26647, June 29, 1990; 55 FR 29558, and 29562,
July 20, 1990. Redesignated and amended at 56 FR 2245, 2246, Jan. 22,
1991; 56 FR 65985, Dec. 20, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. A-8
07 CFR 1944.250 -- Exhibit A-8 -- Outline of Professional Market Study
This outline is to be used by analysts as the basis for preparing
market studies for the 515 housing program. It generally contains the
type of depth of information which FmHA requires for evaluating the
feasibility of prospective housing developments. In addition to these
specifications, the analyst will be responsible for including data
pertinent to the elderly population if the proposed design is for
elderly housing. The guidelines provide for the demonstration of
historical trends and allows the analyst to project into the two years
beyond the last actual year of record. Additional guidance is offered
in individual segments of the outline.
If you have not previously participated in this program, you will
have to obtain approval from FmHA before your study is accepted. To do
this, a sample of a prior market analysis which you have prepared will
need to be submitted to the local FmHA office for review. If this is to
be your first market study, you will need to provide a statement of your
experience and why you think you are qualified to prepare such a study.
I. Market area -- General.
The market area will be the community where the project will be
located and only those outlying rural areas which will be impacted by
the project (excluding all other established communities). Any
deviation from this definition must be coordinated with the district
office. The market area must be realistic. The criteria for selection
should be described by the analyst. A map showing the market area will
be required. The following is an example of a market area description:
A. Based on an analysis of population and housing development
patterns, major employers and commuting patterns, the effective market
area for the subject proposal is defined to include all of (Name), 35
percent of (Name) and 25 percent of (Name) census divisions. This area
is shown on Map 2 following Table 4 (page 11) in Section II of this
report. In 1970, this geographic market area contained an estimated
6,350 persons (6.1 percent of the county total of 103,829 persons).
During the 1970's decade, the overall market area experienced growth of
1,253 persons (representing 13.5 percent of total gains in the county).
In 1980, the (Name) market area population of 7,603 represented 6.7
percent of the county population of 113,086. (See Table 4 and Map 2 in
Section II for details.)
B. The effective market area for the subject proposal includes the
town of (Name) and a portion of the unincorporated areas to the east and
south. The (Name) River forms a natural barrier restricting development
to the west. Housing development and population growth have occurred
along major transportation corridors, particularly Interstate 81 and
U.S. 11 between (Name) and (Name). Secondary growth has occurred along
State Roads 63 and 68 to the northwest and southeast of (Name). The
Interstate Industrial Park, with 16 employers providing 999 jobs, is
centrally located within the market area.
II. Site.
This section will contain a full description of the site, its
position in the community and location with respect to residential
support services.
A. The proposed site is located in the eastern section of (Town) on
(Major Thoroughfare). The area surrounding the site is predominantly
comprised of modest single family dwellings.
B. The site is approximately .3 mile east of the heart of town which
contains a grocery store, drugstore, restaurants, banking facilities,
the post office and town hall. Other shopping is available .2 mile
south at (Town) Plaza.
C. The medical clinic, which provides services of an osteopath, X-ray
technician, a physician's assistant and a nurse, is approximately .8
mile north of this site. This clinic is open daily and also provides
24-hour emergency service. The nearest hospitals are (Large City) and
(City).
D. All public services are available at the site.
III. Demographic characteristics.
A. Economic profile.
1. Labor force and employment trends presents trends between 1970 and
1980, provides current year estimates and projected changes at the
county level.
2. Employment data. In order to determine how employment affects the
market area, it will be necessary to show the number of employed persons
between 1980 and the current year, the increase and/or decrease and the
percentage of unemployed at the county level. The employment figures
can be obtained from the State Employment Commission.
Example:
3. Major employers. This section will contain information pertinent
to an analysis of the economic stability of the town. The major
employers within the town and market area, the product or service
offered by each employer, number of employees at each employer, salary
range of each employer, location of employer, and year each employer was
established are types of data FmHA will need to evaluate. It is also
helpful to know if the larger employers intend to increase or decrease
number of employees in the immediate future or if there have been any
significant recent changes in number of employees.
4. It should not be difficult to obtain some of the above data from
the employers themselves. However, some employers may be reluctant to
divulge certain information regarding their businesses, such as the
salary range of their employees. In those cases, the analyst will have
to obtain averages, by job type, from the State Employment Commission
using job classifications from the Standard Industrial Classification
Manual. The data should be shown as follows:
Example:
B. Demographic Profile.
1. Population. The analyst will need to show population changes
between 1970 and 1980, the current year estimate and projected change.
The annual changes will need to be shown also. We also want percentages
along with the figures, as follows:
2. Age Characteristics.
3. Households. A breakdown by town and county for last 2 census
years, a current year estimate and a projection to the year the housing
would be built (24 months) will have to be illustrated so that household
formations can be tracked. This data will tell us what portion of a
housing demand is being created by an increase in numbers of new
households.
4. Households by Tenure. This section is one of the more important
aspects of the market analysis. This information will enable us to more
closely pinpoint the number of households which would comprise the
target group of our evaluation.
5. Households by Income Group. This section is also vital to the
evaluation of the market because of the low income ranges which exist in
the rural areas and the lack of deep subsidy. For this reason, close
attention must be paid to the number of persons whose incomes will allow
them to pay the rent plus utilities and still remain within the 30
percent criterion. In some cases, persons with incomes in the upper
range of the eligible income group have displayed a lack of interest
since they would be required to pay the full market rent. Also persons
with lower incomes will move into projects even though they will pay
more than 30 percent of their incomes. Irrespective of these
considerations, the study will need to show the entire scale of incomes
from lowest to highest. The number of renters who fall within the
feasibility range can then be estimated. Income data should be shown
for total and renter households, updated to the current year.
a. Rent for a 1-bedroom apartment is $250 with a $30 utility
allowance (which can include electric or gas heat, air conditioning,
lighting, cooking, water heating and trash collection, water, sewer).
The amount of income needed to pay the total bill and stay within 30
percent of income would be:
$280 divided by .30 12=$11,088 income.
Household Income Profile, ------ County, 1984 /1/
b. HUD has furnished its information on owner/renter by income group
by number of persons in the household. This type of information will
further enhance evaluation of the affordability issue by allowing the
examination of the number of renters in the affordability range. For
the present time, the analyst should make a request for this data
through the District Office.
C. Housing supply profile.
1. Building permits issued. The Housing Units Authorized by Building
Permits and Public Contracts (C-40 Construction Report), furnished by
the Bureau of the Census, provides a list of permits issued in all
reporting jurisdictions. This publication is printed monthly and
annually.
2. Housing stock. The study must include the number of units within
the county and town (where available), both single family type and
multi-family, along with the number of substandard units and the
quantity of mobile homes, based on the most recent census data.
Occasionally, a situation will exist within a community where a number
of detached single family homes are standing vacant. How this condition
may affect the rental market must be evaluated and discussed.
Plumbing Facilities /1/
Complete -- Exclusive Use
Lacking Complete Facilities
Number of Units /1/
1
2-9
10 or more
Mobile Home
3. Existing rental housing. The analyst must determine where the
proposed project will fit into the present housing stock. The rent
levels, number of bedrooms, type of project, age, vacancy rate, location
and amenities available will have to be compared. This will enable FmHA
to judge how many of the existing units: (a) would be comparable with
the proposed project in overall appeal; (b) are less than desirable
because of the age factor or upkeep; (c) are inconveniently located;
(d) do not provide the appropriate bedroom mix for the community need,
etc.
4. Additional narrative which describes the rental stock and provides
tenant characteristics may be included. The survey should include both
subsidized and nonsubsidized rentals and have photographs as backup.
The survey should include the description in Exhibit A-2 of this
subpart. In conjunction with the survey, the analyst is expected to
discuss the reasons for extended vacancies, either in individual
developments or in the community in general.
IV. Housing Demand Forecasts.
A. The analyst must give a projection of the housing needs for a
specified forecast period. The information may be presented in chart
form in other formats with other types of information but should include
the following as a minimum:
B. The demand forecast should be adjusted for rental units already
provided (if any) within the market area. The residual demand
represents the market from which the proposed project will attract
tenants.
(53 FR 2159, Jan. 26, 1988. Redesignated at 56 FR 2245; 56 FR 65985,
Dec. 20, 1991.
/1/ Income information may also be obtained from Sales and Marketing
Management Magazine and used in conjunction with the HUD data.
/1/ Data available for incorporated places of 2,500 or more only.
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. A-9
07 CFR 1944.250 -- Exhibit A-9 -- Information to be Submitted With
Application for a Rural Rental Housing (RRH) Loan
The following information is to be submitted with SF 424.2 (for
application submission):
1. Drawings and specifications, including any cost containment
considerations and special design features for elderly or handicapped
persons.
2. A detailed cost breakdown of the project for such items as land
and rights-of-way, building construction, equipment, utility
connections, architectural/engineering and legal fees, and on- and
off-site improvements. The cost breakdown also should show separately
the items not included in the loan, such as furnishings and equipment.
This trade-item cost breakdown should be updated just prior to loan
approval.
3. Information on the method of construction, the proposed contractor
if a construction contract is to be negotiated, and the architectural,
engineering and legal services included in the proposal.
4. Satisfactory evidence of review and approval of the proposed
housing by applicable State and local officials whose approval is
required by State or local laws, ordinances or regulations. This could
be an indication of approval to proceed with the development of the
project rather than final approval of plans and specifications.
5. If more than 12 months have transpired since the applicant
submitted the market analysis, the State Director may require an updated
one if he/she determines it necessary.
6. For all projects containing over four units, the applicant must
submit an Affirmative Fair Housing Marketing Plan for approval in
accordance with 1901.203 of Subpart E to Part 1901 of this chapter.
The plan must be prepared in a complete, meaningful, responsive and
detailed manner.
7. If more than 90 days have transpired since the applicant submitted
the dated financial statement, the State Director may require a new one
if he/she determines it necessary.
8. If there is any change in related assistance available to the
applicant from other government agencies or in the interested parties as
defined in 1944.205 of this subpart, it must be disclosed at this time.
9. Detailed operating budgets showing a schedule of proposed rental
rates for the first year's operation and a typical year's operation.
The first year's budget should show that the applicant has sufficient
operating capital on hand or sufficient planned income to pay all
operating costs and meet scheduled payments on debts during the planning
and construction period prior to occupancy. The typical year's budget
should show there will be ample income to pay essential operating costs,
meet required debt payments and permit accumulation of required
reserves. Form FmHA 1930-7, ''Statement of Budget and Cash Flow,'' and
Exhibit A-5 of this subpart (or similar forms) may be used for this
purpose. The operating budgets should be updated if necessary just
prior to loan approval.
a. The initial budgets should include an allowance of 10 percent for
vacancies, nonpayment of rent and contingency expenses. The allowance
in subsequent year budgets may be adjusted to be consistent with the
actual past experience in vacancy, nonpayment of rent and contingency
needed for the project.
b. The budgets should provide for accumulating a reserve at the rate
of 1 percent per annum of the amount of the loan until a minimum reserve
equal to 10 percent of the loan is reached. Budgets should not include
an additional item for depreciation since the reserve account is to
provide funds for this purpose.
c. All applicable taxes, including Federal and State income taxes,
should be included in the budgets and separately identified. If the
applicant considers itself tax-exempt, evidence of exemption must be
included in the loan docket before the loan is closed. An eligible
nonprofit organization should ordinarily be able to qualify for Federal
income tax exemption under section 501(c) (4) of the Internal Revenue
Code.
10. A description and justification of any related facilities to be
financed wholly or in part with loan funds.
11. A statement in narrative form outlining the proposed manner of
management of the housing, such as whether by owner or by hired
management firm or agent. Experience and other factors pertaining to
the qualifications of the manager should be set forth and will be taken
into consideration. If management will be performed by a hired
management firm or agent, a copy of the proposed management agreement
should be submitted. It must contain the clause stating that it is not
in full force and effect until approved by FmHA.
12. A management plan which sets forth clear and concise statements
of policy concerning management and operation of the project in
accordance with the requirements of paragraph V of Exhibit B of Subpart
C to Part 1930 of this chapter. Copies of the proposed application for
occupancy, sample waiting lists, lease or rental agreement, and rules
and regulations governing administration, occupancy and pet policies
should be included. The management plan must be submitted in writing
and the applicant must certify that it is in compliance with the
requirements of Subpart C to Part 1930 of this chapter.
13. A schedule of any separate charges for the use of any related
facilities and, in the case of congregate housing, a schedule of any
separate charges for nonshelter services (such as meals, personal care
and housekeeping). These schedules should be supported by appropriate
operating budgets for services to be provided.
14. A satisfactory survey of the land to be given as security
prepared by a licensed surveyor will be included in the loan docket. If
necessary, a new survey will be obtained.
15. Form FmHA 1940-20, ''Request For Environmental Information.''
16. Form FmHA 1910-11, ''Applicant Certification, Federal Collection
Policies for Consumer or Commercial Debts.''
(53 FR 2159, Jan. 26, 1988, as amended at 53 FR 36268, Sept. 19,
1988; 54 FR 29332, July 12, 1989; 55 FR 13503, Apr. 11, 1990; 55 FR
29563, July 20, 1990. Redesignated at 56 FR 2245; 56 FR 65985, Dec.
20, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. A-10
07 CFR 1944.250 -- Exhibit A-10 -- Administrative Process for Combining
Farmers Home Administration (FmHA) Assistance With Low-Income Housing
Tax Credits
A. This exhibit will be used by States to coordinate efforts with
State Agencies administering tax credits. This exhibit will be utilized
unless a State develops its own State supplement in which case the State
supplement will supersede this exhibit.
B. The State Agency administering tax credits is required under
section 42 of the U.S. Internal Revenue Code to select projects to
receive the tax credits from applications according to tax credit
allocation plans developed by the State Agency. Each application
submitted to the State Agency is to be evaluated to determine the amount
of credit necessary to make the proposal financially feasible and
viable. When making this evaluation, the State Agency is required to
consider the ''sources and uses'' of funds and the total financing
planned for the project, as well as the proceeds expected to be
generated by reason of tax benefits.
A. FmHA will review preapplications from applicants seeking FmHA
assistance when those applicants submit SF 424.2, ''Application for
Federal Assistance (For Construction),'' and the requirements of Exhibit
A-6 of this subpart. When a preapplication is determined by FmHA to be
eligible, feasible and has sufficient points to be funded, the applicant
will be notified by issuance of an AD-622, ''Notification of
Preapplication Review,'' to develop a complete loan application. The
State Agency will also be sent a copy of Form AD-622 with a copy of SF
424.2 on which FmHA based its preliminary determination regarding
funding. When a preapplication is determined by FmHA to be eligible and
feasible but lacks sufficient priority points for funding consideration,
or, if a preapplication is rejected by FmHA, the applicant(s) and the
State Agency will only receive a copy of the AD-622 in accordance with
1944.231(a)(9)(i) of this subpart.
1. Under the State allocation plan criteria, only projects receiving
a favorable review, which reflect they are likely to be funded in the
current fiscal year, will be eligible to apply to the State Agency for
low income tax credit allocations. It is the responsibility of the
applicant to provide the State Agency with any additional information or
clarification of funding sources as may be necessary. The State Agency
will evaluate the applicant's request for a tax credit allocation in
accordance with its application processing criteria, using the AD-622
and any attachments. When the evaluation is completed, a copy of the
tax credit reservation will be transmitted to FmHA by the State Agency.
2. After FmHA finalizes its processing of SF 424.2 and related
materials constituting a full loan application, FmHA will submit to the
State Agency a copy of Form FmHA 1944-51, ''Multiple Family Housing
Obligation -- Fund Analysis,'' as well as a copy of the updated
financial assistance analysis.
3. The State Agency will then evaluate the project based on any
changes in funding sources and amounts resulting from the FmHA loan
obligation. A formal tax credit commitment is made by the State Agency
at this time and a copy of the tax credit commitment notice will be sent
to FmHA by the State Agency. Since the loan obligation and the tax
credit commitment are likely to occur in one calendar year and the final
loan closing and the tax credit allocation in a later calendar year, the
State Agency may award a carryover commitment to the project. A
carryover commitment provides that the project must be placed in service
by the end of the second calendar year following the year in which the
carryover is awarded.
B. At loan closing, FmHA will send the final terms of the FmHA loan
to the State Agency. The State Agency will make a final tax credit
award calculation based upon any changes in the FmHA loan which may have
taken place between obligation and closing. The State Agency will
allocate the tax credits based on documentation received either at loan
closing or immediately after loan closing. An executed Form 8609,
''Low-Income Housing Credit Allocation Certification,'' will be
transmitted to FmHA by the State Agency. Form 8609 will be retained in
the project file for the life of the loan, along with supporting final
documentation on the sources and uses of funds upon which the low-income
housing tax credit allocation was made.
III. In evaluating projects to determine tax credit awards, the State
Agency may rely upon the loan amount and terms determined by FmHA. If
FmHA also provides rental assistance to units in the project, the State
Agency may rely on FmHA's judgment and determination that such
assistance is necessary.
IV. The State Agency and FmHA will transmit to each other, as soon as
possible, the appropriate documentation at each milestone in the loan
processing/tax credit allocation process. Materials transmitted and
correspondence received will be retained by FmHA as part of the
permanent project file.
V. Form 8609 will be issued by the State Agency in accordance with
authorizing statutes to ensure that financial assistance provided on
behalf of the project is not more than is necessary to provide
affordable housing.
VI. The FmHA State Director will make a certification by Memorandum
to the FmHA Administrator that the assistance provided to the project is
not more than is necessary to make the project affordable. This
certification will be based on FmHA processing and the State Agency's
certification (Form 8609). The State Director's certification
memorandum and State Agency certification will be filed in the FmHA loan
docket with other loan security instruments and kept as a permanent part
of the loan file for the life of the loan.
VII. A diagram of the administrative process between FmHA and the
State Agency is provided as part of this exhibit.
(56 FR 66960, Dec. 27, 1991)
Effective Date Note: At 56 FR 66960, exhibit A-10 of subpart E was
revised, effective January 27, 1992. For the convenience of the user,
the superseded text follows:
I. The State Agency is required under section 42 of the U.S.
Internal Revenue Code to select projects to receive low income housing
tax credits from among applications according to tax credit allocation
plans developed by the State Agencies. Each application submitted to
the State Agency is to be evaluated to determine the amount of credit
necessary to make the proposal financially feasible and viable. When
making this evaluation, the State Agency is required to consider the
''sources and uses'' of funds and the total financing planned for the
project as well as the proceeds expected to be generated by reason of
tax benefits.
A. FmHA will review preapplications from applicant/entities seeking
FmHA assistance when those applicant/entities submit Form SF 424.2,
''Application for Federal Assistance for Construction,'' and required
supporting material. When a preapplication is determined by FmHA to be
eligible, feasible, and has sufficient points to be funded, such
information is conveyed to the applicant by way of an AD-622 ''Notice of
Preapplication Review Action''. The State Agency will also be sent a
copy of the Form AD-622 by FmHA and a copy of the financial assistance
package on which FmHA based its preliminary determination regarding
funding. It is, however, the responsibility of the applicant/entity to
apply to their respective State agencies for a tax credit allocation.
Likewise, when a preapplication is determined by FmHA to be eligible and
feasible but lacks sufficient priority points, or if a preapplication is
rejected by FmHA, the applicant(s) and the State Agency will only
receive a copy of the Form AD-622, in accordance with 1944.231(a)(9)(i)
of this subpart.
1. Under the State allocation plan criteria, only projects receiving
a favorable review, which reflect they are likely to be funded in the
current fiscal year, will be eligible to apply to the State agency for
low income tax credit allocations. It is the responsibility of the
applicant to provide the State Agency with any additional information or
clarification of funding sources as may be necessary. The State Agency
will then evaluate the applicant/entity's request for a tax credit
allocation using the Form AD-622 and any attachments. When the
evaluation is completed, a copy of the tax credit reservation will be
transmitted to FmHA by the State Agency.
2. After FmHA finalizes its processing of Form SF 424.2 and related
materials constituting a full application, FmHA will submit to the State
Agency a copy of Form 1944-51, ''Multiple Family Housing Obligation-Fund
Analysis,'' as well as a copy of the updated financial assistance
package, on the same date it is delivered to the applicant/entity. It
is the applicant's responsibility to follow-up with the State agency
once the form 1944-51 has been issued.
3. The State Agency will then be ready to evaluate the project based
on any changes in funding sources and amounts resulting from the FmHA
obligation. A formal tax credit commitment is made by the State Agency
at this time and a copy of the tax credit commitment notice will be sent
to FmHA by the State Agency. Since the loan obligation and the tax
credit commitment are likely to occur in one calendar year and the final
loan closing and the tax credit allocation in a later calendar year, the
State Agency will award a carryover commitment to the project. A
carryover commitment provides that the project must be placed in service
by the end of the second calendar year following the year in which the
carryover is awarded.
B. At loan closing the FmHA will send the final terms of the funding
level to the State Agency. The State Agency will make a final tax
credit award calculation based upon any changes in the FmHA funding
levels which may have taken place between obligation and closing. The
State Agency will allocate the tax credits based on documentation
received either at loan closing or immediately after loan closing. A
duly executed ''Low-Income Housing Credit Allocation Certification'',
Form 8609 (Department of The Treasury, Internal Revenue Service) will be
transmitted to FmHA by the State Agency. The Form 8609 will be retained
in the project file for the life of the loan, along with supporting
final documentation on the sources and uses of funds upon which the Low
Income Housing Tax Credit Allocation was made.
II. In evaluating projects to determine tax credit awards, the State
Agency may rely upon the debt terms and loan amounts determined by FmHA.
If FmHA also applies rental assistance to units in the projects, the
State Agency may rely on FmHA's judgment and determination that such
assistance is necessary.
III. The State Agency and FmHA will transmit the appropriate
documentation to each other within 7 working days of each event.
Facsimile transmissions are permissible and appropriate. Materials
transmitted and correspondence received will be retained by FmHA as part
of the permanent project file.
IV. The Form 8609 will be issued by the State Agency in accordance to
legal requirements that the amount of low income tax credit in concert
with other assistance is not more than is necessary to provide
affordable housing.
V. The FmHA State Director will make a certification by memorandum to
the FmHA Administrator that the assistance provided to the project is
not more than is necessary to make the project affordable. This
certification will be based on FmHA processing and the State Agency's
certification, via Form 8609. The State Director's Certification
Memorandum and State Agency certification will be filed in the FmHA loan
docket with loan security instruments and kept as a permanent part of
the loan file for the life of the loan.
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. B
07 CFR 1944.250 -- Exhibit B -- Guide Letter For Use in Informing
Interim Lender of FmHA's Commitment
(Name and Address of Private Lender)
-- --
Dear Mr./Ms.:
(For Organizations)
Reference is made to a request from the
(Smith Housing Assoc.)
--
through
(John Smith),
--
its President, for interim financing from your firm to construct a
housing facility at the interest rate and terms and conditions agreed
upon as reflected in the attached letter.
(For Individuals)
Reference is made to a request for
(John Jones)
--
for interim financing from your firm to construct a rental housing
facility at the interest rate and terms and conditions agreed upon as
reflected in the attached letter.
This letter is to confirm certain understandings on behalf of the
Farmers Home Administration (FmHA).
Final drawings, specifications and all other contract documents have
been prepared and approved, and the applicant is prepared to start
construction. The applicant and FmHA have determined that the
conditions of loan closing can be met. Funds have been obligated for
the project.
FmHA has required the applicant to deposit $XXXX with your firm to be
used before any interim loan funds. The applicant has proposed and FmHA
has agreed that you may first advance any applicant funds on deposit,
and then advance the proceeds of the interim loan in accordance with the
terms and conditions stated in your attached letter to pay for
construction and other authorized and legally eligible expenses incurred
by the applicant. It is understood, however, that advances of both the
applicant's funds and the interim loan funds will be made only upon
presentation of proper statements and partial payment estimates proposed
by the builder and approved for payment by the consulting architect,
applicant and FmHA District Director.
We have scheduled the FmHA loan to be closed when construction to be
financed with loan funds is substantially complete in accordance with
the FmHA approved (contract documents), drawings and specifications,
(except for minor punch list items), and the applicant provides evidence
and a signed certification indicating that there are no unpaid
obligations outstanding in connection with the project. At that time,
funds not exceeding the FmHA loan amount will be available to pay off
the amount of loan advances your lending institution has made for
authorized approved purposes, including accrued interest to the date of
closing.
FmHA cannot provide you with an unconditional letter of commitment
guaranteeing FmHA loan closing. Factors such as noncompletion, default,
unacceptable workmanship and marked deviation from approved drawings and
specifications could prevent the FmHA loan from being closed.
These problems can be minimized by making a thorough review of the
(contract documents) /1/ and drawings and specifications, evaluating the
qualifications and past performance of the builder, and obtaining an
adequate corporate surety bond guaranteeing both payment and
performance. If the builder is unable to provide a surety bond, we
suggest that your lending institution consider making advances for
partial payments to the builder (in accordance with the provisions of
the construction contract) /1/ based upon no less than 60 percent and no
more than 90 percent of the value of acceptable work in place, less the
aggregate of previous payments.
The following are additional safeguards to help assure FmHA loan
closing:
1. We invite you or your representatives to accompany FmHA personnel
during construction inspections so that at least three or four joint
inspections at critical points during construction, including the final
inspection, can be made to help assure that construction is proceeding
in accordance with the FmHA approved drawings and specifications.
2. FmHA will maintain its commitment in the amount of the obligated
loan funds for a reasonable period of time after the expiration of any
specified completion dates provided work on the project is progressing
satisfactorily and any identified problems have been resolved.
3. FmHA will not arbitrarily abandon your lending institution in the
event of default. If the contractor defaults, FmHA will attempt to
provide financial assistance to the applicant in accordance with our
administrative procedures and lending requirements if a new contractor
can complete the project for a total cost within the security value of
the project. If this is not possible or if the FmHA loan applicant
becomes unable or unwilling to continue with the project, FmHA will
attempt to provide financial assistance to any eligible applicant
(subject to the availability of funds, our administrative procedures,
and our lending requirements) to purchase the completed project from
your lending institution.
4. FmHA is aware that circumstances such as subsurface ground
conditions and change orders necessitated by required changes in the
work to be performed may cause cost increases after FmHA loan approval
and the obligation of FmHA loan funds. When justified, FmHA may make
subsequent loans when necessary to help cover the eligible costs,
provided additional loan funds are available, the change orders were
approved by FmHA, the increased costs are legitimate and are for
authorized loan purposes, and the total cost of the project is within
its security value.
Your assistance to the applicant is appreciated.
Sincerely,
--
State Director
(53 FR 2159, Jan. 26, 1988, as amended at 56 FR 2247, Jan. 22, 1991)
/1/ These words may be omitted for projects constructed by the
owner-builder method of construction with a construction contract.
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. C
07 CFR 1944.250 -- Exhibit C -- Articles of Incorporation for Rental or
Cooperative Organizations (Not for Profit)
We, the undersigned, incorporators, hereby associate ourselves
together to form and establish a (corporation) (cooperative) not for
profit under the laws of the State of XXXXXX.
First: The name of the (corporation) (cooperative) is
-- .
Second: The location of its principal place of business in this
State is XXXXXX, XXXXXX County.
Third: The location of its registered office in this State is
XXXXXX, XXXXXX County.
Fourth: The name and address of its resident agent in this State is
XXXXXX County.
Fifth: This (corporation) (cooperative) is organized not for profit
under , XXXXXXXXX and the objects and purposes to be transacted and
carried on are to promote the general social welfare of the community
and for that purpose:
To acquire, construct, provide, and operate (rental) (cooperative)
housing and related facilities suited to the special needs and living
requirements of eligible occupants as determined by FmHA regulations,
without regard to race, color, religion, sex, age, handicap, marital or
familial status or national origin;
To acquire, improve, and operate any real or personal property or
interest or right herein or appurtenant thereto;
To sell, convey, assign, mortgage, lease any real and personal
property;
To borrow money and to execute such evidence of indebtedness and such
contracts, agreements, and instruments as may be necessary, and to
execute and deliver any mortgage, deed of trust, assignment of income,
or other security instrument in connection therewith; and to do all
things necessary and appropriate for carrying out and exercising the
foregoing purposes and powers.
Sixth: The number of directors shall be prescribed in the bylaws,
but shall not be less than five nor more than nine. /1/
Seventh: The (corporation) (cooperative) formed hereby shall have no
capital stock. It shall be composed of members rather than
shareholders. The conditions and regulations of membership and the
rights or other privileges of the classes of members shall be determined
and fixed by the bylaws.
Eighth: (Rental only) The corporation is not organized for pecuniary
profit and shall have no power to declare dividends. No part of its net
earnings shall inure to the benefit of any member, director, or
individual. The balance, if any, of all money received by the
corporation from its operations, after payment in full of all operating
expenses, debts, and obligations of the corporation of whatsoever kind
and nature as they become due shall be used to make advance payments on
a XXXXXX owed by the corporation, to lower the lease-rental charge to
occupants of the housing, to provide additional housing and related
facilities, or for some related purpose.
Eighth: (Cooperative only) The cooperative is not organized for
pecuniary profit and shall have no power to declare dividends. The
balance, if any, of all money received by the cooperative from its
operations, after payment in full of all operating expenses, debts, and
obligations of the cooperative of whatsoever kind and nature as they
become due, shall accumulate in an interest-bearing account but be
equally assigned to each member as patronage capital.
Ninth: The name and place of residence (post office address) of each
of the incorporators and initial directors until the first annual
meeting:
Incorporators
-- --
Directors
-- --
Tenth: (Rental only) In the event of dissolution of this
corporation, or in the event it shall cease to carry out the objectives
and purposes herein set forth, all business, property, and assets of the
corporation shall go and be distributed to one or more such nonprofit
corporations or municipal corporations as may be selected by the board
of directors of this corporation, to be used for and devoted to the
purpose of carrying on a nonprofit housing project for such rural
residents or other purposes to promote the general social welfare of the
community. In no event shall any of the assets or property, in the
event of dissolution thereof, go or be distributed to members, either
for the reimbursement of any sum subscribed, donated, or contributed by
such members or for any other purposes, provided that nothing herein
shall prohibit the corporation from paying its just debts.
Tenth: (Cooperative only) In the event of dissolution of this
cooperative, or in the event it shall cease to carry out the objectives
and purposes herein set forth, all business, property, and assets of the
cooperative, except members' patronage capital and membership fees,
shall be used for providing low income rental housing or other purposes
to promote the general welfare of the community. In no event shall any
of the assets or property, in the event of dissolution thereof, go or be
distributed to members, except that the membership fee and money accrued
to members in their patronage capital accounts shall be paid to members
prior to conversion or satisfaction of the Government's debt.
Eleventh: (Cooperative only) At any time prior to dissolution the
member wishes to terminate membership in the cooperative, money which
has accrued in the member's patronage capital account and the member's
membership fee shall be paid to the member provided the member's
occupancy account is not delinquent and that any other charges to which
the member is liable are paid.
Twelfth: The duration of the existence of this corporation shall be
perpetual. /1/
IN TESTIMONY WHEREOF, We have here unto subscribed our names on XXXXX
19 XXX.
-- -- --
(Insert acknowledgement or other form if required by State law.)
(56 FR 2247, Jan. 22, 1991)
/1/ If the statute under which the cooperative housing project is to
be incorporated will permit, it is preferable to state here the minimum
number of directors. The actual number can then be stated in the bylaws
which are more easily amended if it becomes necessary to change the
number.
/1/ Duration should be perpetual, or long enough to cover the period
of the loan plus 5 years.
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. D
07 CFR 1944.250 -- Exhibit D -- Bylaws (Except Cooperative)
(Sample)
Section 1.01. Principal Office.
The principal office of the corporation in the State of XXXXXX, shall
be located at XXXXXX, County of XXXXXX Section 1.02. Registered Office
and Agent. The corporation shall have and continuously maintain in the
State of XXXXXX a registered office and a registered agent whose office
is identical with such registered office.
Section 2.01. Eligibility for membership.
The corporation shall have one class of members. Members may be
individuals or organizations. Any legally competent person of good
reputation who resides in the town of XXXXXX or in the surrounding trade
area, applies for membership, and pays the required membership fee shall
be eligible.
Section 2.02. Approval of Applications.
All applications for membership shall be approved at: (1) Any
special or regular meeting of the board of directors, when a quorum is
present, by a majority vote of the board members or (2) by a majority
vote of the existing membership present at any annual or special meeting
held in accordance with Article III herein.
Section 2.03. Voting Rights.
Each member shall be entitled to one vote on each matter submitted to
a vote of the members.
Section 2.04. Termination of Membership.
A member may be suspended or expelled, for cause, by the vote of not
less than three-fourths of the members present at a meeting of the
members, provided notice of such proposed action shall have been duly
given in the notice of meeting and provided the member has been informed
in writing of the charges preferred against the member at least ten days
before such meeting. The members shall be given an opportunity to be
heard at such meeting. The members of the board, by a majority vote of
those present at any regularly constituted meeting, may terminate the
membership of any member who becomes ineligible for membership and may
suspend or expel any member who shall be in default with respect to any
financial obligation to the corporation.
Section 2.05. Resignation.
Any member may resign by filing a written resignation with the
secretary.
Section 2.06. Reinstatement.
Upon written request signed by a former member and filed with the
secretary, the board may reinstate such former member to membership upon
such terms as the board may deem appropriate.
Section 2.07. Transfer of Membership.
Membership in this corporation is not transferable or assignable.
Section 2.08. Membership -- Fees.
The membership fee shall be $XXXXXX or such other amount as may be
fixed by the members at any annual meeting or at any special meeting
called for the purpose. No person shall attain membership before paying
the treasurer the membership fee.
Section 2.09. Membership -- Liability for Corporation's Obligations.
Fully paid members shall not be liable for any debts or obligations
of the corporation and shall not be subject to any assessment; but the
members at any annual meeting or at any special meeting called for the
purpose, may fix reasonable annual dues to become effective after not
less than 30 days' notice to all members of such action.
Section 2.10. Membership -- Minimum Number.
The board will make all reasonable efforts to maintain a broad
community-wide membership of not less than 25 members at any time.
Section 2.11. Membership -- Residence.
A majority of the members shall be residents of the community where
the housing is or will be located.
Meetings of Members.
Section 3.01. Annual Meeting.
An annual meeting of the members shall be held at XXXXXX, on the
XXXXXX of the month of XXXXXX each year, beginning with the year 19XX,
at the hour of XXXX o'clock, for the purpose of electing directors and
for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal
holiday in said State, such meeting shall be held on the next succeeding
business day. If the election of directors shall not be held on the day
designated herein for any annual meeting, or at any adjournment thereof,
the board shall cause the election to be held at a special meeting of
the members as soon thereafter as convenient.
Section 3.02. Special Meetings.
Special meetings of the members may be called by the president, the
board, or not less than one-tenth of the members.
Section 3.03 Place of Meeting.
The board of directors may designate any place within or not more
than XX miles from XXX as the place for an annual meeting or for any
special meeting called by the board. If no designation is made or if a
special meeting be otherwise called, the place of meeting shall be the
registered office of the corporation in said State.
Section 3.04. Notice of Meetings.
Written or printed notice stating the place, day, and hour of any
meeting of members shall be delivered either personally or by mail, to
each member entitled to vote at such meeting, not less than seven or
more than thirty days before the date of such meeting, by or at the
direction of the president, or the secretary, or the officers or persons
calling the meeting. In case of a special meeting or when required by
statute of these bylaws, the purpose or purposes for which the meeting
is called shall be stated in the notice. If mailed, the notice of a
meeting shall be deemed to be delivered when deposited in the United
States mail addressed to the member at the address as it appears on the
records of the corporation, with postage thereon prepaid.
Section 3.05. Informal Action by Members.
Any action required by law to be taken at a meeting of the members,
or any action which may be taken at a meeting of the members, may be
taken without a meeting upon written consent or approval of all the
members, setting forth the action so taken.
Section 3.06. Quorum.
At such meeting, a quorum shall consist of 30 percent of the members,
or twice the number of directors, whichever is greater. If a quorum is
not present at any meeting of members, a majority of the members present
may adjourn the meeting from time to time without further notice.
Section 3.07. Proxies.
(a) At any meeting of the members, a member entitled to vote may vote
by proxy executed in writing by the member. No proxy shall be valid
after eleven months from the date of its execution. A proxy may be
canceled by notice executed by the member with like formality and
delivered to the secretary.
(b) At each meeting of the members, every member shall be entitled to
vote in person or by proxy and shall be entitled to cast one vote. The
votes for directors shall be by ballot. Only the person in whose name
membership is standing in the books of the corporation on the day of
such meeting shall be entitled to vote in person or by proxy.
(c) For any person to represent a member by proxy, such person must
submit a power of attorney to the secretary of the board for examination
at least one hour before the time of meeting. When the secretary has
certified the power of attorney is in good order, the proxy holder shall
have the right to do any and all things which might be done by the
member were the member present in person, which right shall include the
establishment of a quorum and the organizing of any meeting.
Section 4.01. General Powers.
The affairs of the corporation shall be managed by its board of
directors.
Section 4.02. Number, Tenure, and Qualifications.
The number of directors shall be XXX. The directors elected at the
annual meeting to succeed the directors named in the Articles of
Incorporation shall be elected for staggered terms of three, two, and
one year. As the terms of such directors expire, their successors shall
be elected for terms of three years and until their successors are
elected and have qualified. Directors shall be members of the
corporation and residents of the community where the housing is or will
be located. Of the total number of directors, at least five must be
among the leaders in such community.
Section 4.03. Regular Meetings.
A regular annual meeting of the board shall be held, without other
notice than these bylaws, immediately after and at the same place as the
annual meeting of the members. The board may provide by resolution the
time and place, within or not more than XXX miles from XXXX for holding
of additional regular meetings of the board without other notice than
such resolution.
Section 4.04. Special Meetings.
Special meetings of the board may be called by or at the request of
the president and shall be called by the secretary at the request of any
two directors. The authorized person or persons calling a special
meeting of the board may fix any place within or not more than XXX miles
from XXXX as the place for holding such meeting.
Section 4.05. Notice.
Notice of any special meeting of the board shall be given at least
two days previously thereto by written notice delivered personally, or
four days notice sent by mail or telegram, to each director at the
director's address as shown by the records of the corporation. If
mailed, such notice shall be deemed to be delivered when deposited in
the United States mail in a sealed envelope so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph
company. Any director may waive notice of any meeting. The attendance
of a director at any meeting shall constitute a waiver of notice of such
meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. The business to be
transacted at the meeting need not be specified in the notice or waiver
of notice of such meeting, unless specifically required by law or these
bylaws.
Section 4.06. Quorum.
A majority of the board shall constitute a quorum for the transaction
of business at any meeting of the board; but if less than a majority of
the directors are present at said meeting, a majority of the directors
present may adjourn the meeting from time to time without further
notice.
Section 4.07. Manner of Acting.
The act of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the board, unless the act of a
greater number is required by law or by these bylaws. The board may
also act by written consent of all the directors of the corporation
setting forth the action taken.
Section 4.08. Vacancies.
Any vacancy occurring in the board shall be filled by the board until
the next meeting of the members and until a successor has been elected
by the members to fill a vacancy. Such person shall be elected for the
unexpired term of office of the predecessor in office.
Section 4.09. Compensation.
Directors shall not receive any compensation for their services as
directors.
Section 4.10. Director -- Absence From Meetings.
Any director who is absent from XXX consecutive meetings without
excuse satisfactory to the board shall be deemed to have surrendered the
office as director.
Section 4.11. Directors -- Residuary Powers.
The board shall have the powers and duties necessary or appropriate
for the administration of the affairs of the corporation. All powers of
the corporation except those specifically granted or reserved to the
members by law, the articles of incorporation, or these bylaws shall be
vested to the board.
Section 4.12. Directors -- Removal From Office.
A director may be removed from office, for cause, by the vote of not
less than three-fourths of the members present at a meeting of the
members, provided notice of such proposed action shall have been duly
given in the notice of the meeting and provided the director has been
informed in writing of the charges preferred against the director at
least 10 days before such meeting. The director involved shall be given
an opportunity to be heard at such meeting. Any vacancy created by the
removal of a director shall be filled by a majority vote, which may be
taken at the same meeting at which such removal takes place.
Section 5.01. Officers.
The officers of the corporation shall be a president, a vice
president, a secretary, and a treasurer. The board may elect or appoint
such other officers as it shall deem desirable, such officers to have
the authority and perform the duties prescribed, from time to time, by
the board. The offices of secretary and treasurer may be combined and
held by one person.
Section 5.02. Election and Term of Office.
(a) The officers of the corporation specified in Section 5.01 shall
be elected from the membership of the board by the board at its annual
meeting or as soon thereafter as feasible. New offices may be created
and filled at any meeting of the board. Each officer shall hold office
until the next annual election of directors and until a successor shall
have been duly elected and shall have qualified.
(b) The term of office shall be one year. Election of officers shall
take place at the annual board meeting and shall be by ballot cast by
qualified directors. A plurality of votes cast shall elect.
Section 5.03. Removal.
Any officer elected or appointed by the board may be removed by the
board by two-thirds vote of the remaining directors whenever in its
judgment the best interests of the corporation would be served thereby,
but such removal shall be without prejudice to the contract rights, if
any, of the officer so removed.
Section 5.04. Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification, or otherwise, may be filled by the board by majority
vote for the unexpired portion of the term.
Section 5.05. President.
The president shall be the principal executive officer of the
corporation and shall in general supervise and control all the business
and affairs of the corporation. The president shall preside at all
meetings of the members and of the board. The president may sign, with
attestation of the secretary or any other proper officer of the
corporation authorized by the board, any deeds, mortgages, bonds,
contracts, or other instruments which the board authorizes to be
executed, except in cases where the signing and execution thereof shall
be expressly delegated by the board of these bylaws or statutes to some
other officer or agent of the corporation and in general shall perform
all duties incident to the office of president and such other duties as
may be prescribed by the board from time to time.
Section 5.06. Vice President.
In the absence of the president or in the event of an inability or
refusal to act, the vice president shall perform the duties of the
president and, when so acting, shall have all the powers of and be
subject to all restrictions upon the president. Any vice president
shall perform such other duties as from time to time may be assigned by
the president of the board.
Section 5.07. Treasurer.
The treasurer shall give a bond for the faithful discharge of duties
in such sum and with such surety or sureties as the board shall
determine. The treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive
and give receipts for moneys due and payable to the corporation from any
source whatsoever, deposit all such moneys in the name of the
corporation in such banks, trust companies, or other depositories as
shall be selected in accordance with the provisions of Article VIII of
these bylaws; and in general perform all duties incident to the office
of treasurer and such other duties as from time to time may be assigned
by the president or the board.
Section 5.08. Secretary.
The secretary shall keep the minutes of the meeting of the members
and the board in one or more books provided for that purpose, see that
all notices are duly given in accordance with the provisions of these
bylaws or as required by law; be custodian of and see that the seal of
the corporation is affixed to all documents the execution of which on
behalf of the corporation under its seal is duly authorized in
accordance with the provisions of these bylaws; keep a register of the
post office address of each member, which shall be furnished to the
secretary by such member; and in general perform all duties incident to
the office of secretary and such other duties as from time to time may
be assigned by the president or the board.
Section 6.01. Order of Business.
The order of business at any regular or special meeting of the
members or the board shall be:
(a) Reading and approval of any unapproved minutes.
(b) Reports of officers and committees.
(c) Unfinished business.
(d) New business.
(e) Adjournment.
Section 6.02. Parliamentary Procedure.
On questions of parliamentary procedure not covered in these bylaws,
a ruling by the president shall prevail.
Section 7.01. Committees of Directors.
The board of directors, by resolution adopted by a majority of the
directors in office, may designate one or more committees, each of which
shall consist of one or more directors, which committees, to the extent
provided in said resolution, shall have and exercise the authority of
the board in the management of the corporation; but the designation of
such committees and the delegation thereto of authority shall not
operate to relieve the board, or any individual director, of any
responsibility imposed upon the board, or any individual director, by
law.
Section 7.02. Other committees.
Other committees not having and exercising the authority of the board
in the management of the corporation may be designated by a resolution
adopted by a majority of the directors present at a meeting at which a
quorum is present. Except as otherwise provided in such resolution,
members of each such committee shall be members of the corporation, and
the president of the corporation shall appoint the member thereof. Any
member thereof may be removed by the person or persons authorized to
appoint such member whenever in their judgment the best interest of the
corporation shall be served by such removal.
Section 7.03. Term of Office.
Each member of a committee shall continue as such until the next
annual meeting of the members of the corporation and until a successor
is appointed, unless the committee shall be sooner terminated, or unless
such member to be removed from such committee, or unless such member
shall cease to qualify as a member thereof.
Section 7.04. Chairman.
One member of each committee shall be appointed chairman by the
persons authorized to appoint the members thereof.
Section 7.05. Vacancies.
Vacancies in the membership of any committee may be filled by
appointments made in the same manner as provided in the case of the
original appointments.
Section 7.06. Quorum.
Unless otherwise provided in the resolution of the board of directors
designating a committee, a majority of the whole committee shall
constitute a quorum and the act of a majority of the members present at
a meeting at which a quorum is present shall be the act of the
committee.
Section 7.07. Rules.
Each committee may adopt rules for its own government not
inconsistent with these bylaws or with rules adopted by the board of
directors.
Section 8.01. Contracts.
The board may authorize any officer or officers, agent or agents of
the corporation, in addition to the officers so authorized by these
bylaws, to enter into any contract or execute and deliver any instrument
in the name of and on behalf of the corporation; and such authority may
be general or confined to specific instance.
Section 8.02. Checks, Drafts, etc.
All checks, drafts, or orders for the payment of money, notes, or
other evidence of indebtedness issued in the name of the corporation
shall be signed by the officer or officers, agent or agents of the
corporation, and in a manner as shall from time to time be determined by
resolution of the board. In the absence of determination by the board,
these instruments shall be signed by the treasurer and countersigned by
the president of the corporation.
Section 8.03. Deposits.
All funds of the corporation shall be deposited from time to time to
the credit of the corporation in such banks, trust companies or other
depositories as the board may select.
Section 8.04. Gifts.
The board may accept on behalf of the corporation any contribution,
gift, bequest, or devise for the general purposes or for any special
purposes of the corporation.
Section 9.01. Certificates of Membership.
The board may provide for the issuance, and determine the form of
certificates evidencing membership in the corporation. Such
certificates shall be signed by the president and the secretary, sealed
with the seal of the corporation, and consecutively numbered. The name
and address of each member and the date of issuance of the certificate
shall be entered on the records of the corporation. If any certificate
becomes lost, mutilated or destroyed, a new certificate may be issued
upon such terms and conditions as the board may determine.
Section 9.02. Issuance of Certificates.
When a member has been elected to membership and has paid any dues
that may then be required, a certificate of membership shall be issued
in his or her name and delivered to the member by the secretary.
The corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its members, the
board, and committees having any of the authority of the board of
directors, and shall keep at the registered or principal office a record
giving the names and addresses of the members. All books and records of
the corporation may be inspected by any member, or member's agent or
attorney, for any proper purposes at any reasonable time. The board
shall cause an audit of the records of the corporation to be made each
year by a competent auditor.
The fiscal year of the corporation shall begin on the first day of
January and end on the last day of December in each year.
The board shall provide a corporate seal, which shall be in the form
of a circle and shall have inscribed thereon the name of the corporation
and the words, ''corporate seal.''
Whenever any notice is required to be given under the provisions of
the statutes of said State or the articles of incorporation or the
bylaws of the corporation, a waiver thereof in writing signed by the
person or persons entitled thereto, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
Section 14.01. These bylaws may be repealed or amended by a majority
vote of the members present at any annual meeting of the members, or at
any special meeting of the members called for such purpose, at which a
quorum is present: provided, however, no such action shall change the
purposes of the corporation so as to impair its rights and powers under
the laws of said State, or to waive any requirements of bond or any
provision for the safety and security of the property and funds of the
corporation or its members or to deprive any member without any express
assent of rights, privileges, or immunities then existing. Notice of
any amendment to be offered at any meeting shall be given not less than
7 nor more than 30 days before such meeting and shall set forth such
amendment.
That the undersigned secretary of the corporation identified in the
foregoing bylaws does hereby certify that the foregoing bylaws were duly
adopted by the members of said corporation, as bylaws of said
corporation, on the XXX day of XXX, 19XXX at a duly called and
constituted meeting of the members, and that they do now constitute the
bylaws of said corporation.
Secretary
(Corporate Seal)
(53 FR 2159, Jan. 26, 1991, as amended at 56 FR 2248, Jan. 22, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. D-1
07 CFR 1944.250 -- Exhibit D-1 -- Bylaws (Cooperative)
-- (a nonprofit cooperative corporation)
Section 1.01. Principal office. The principal place of business of
the cooperative in the State of XXXXX shall be located at XXXXXX, County
of XXXXX.
Section 1.02. Registered office and agent.
Section 2.01. Eligibility for membership during cooperative's
formation. Any natural person who is approved by the cooperative under
its rules and regulations by the board of directors shall be eligible
for membership, provided that he/she executes a Subscription Agreement
and Occupancy Agreement in the usual form employed by the cooperative
covering a specific unit in the housing project.
Section 2.02. Approval of Applications for Membership after the
cooperative's formation.
All applications for membership received after the cooperative has
been established and in operation shall be approved at any special or
regular meeting of the board of directors, when a quorum is present, by
a majority vote of the board members.
Section 2.03. Membership certificates. The board may provide for the
issuance, and determine the form of, certificates evidencing membership
in the cooperative. Such certificates shall state that the cooperative
is organized under the laws of the State of XXXXXX, the cooperative's
lien rights against such membership as set forth in these Bylaws, shall
be signed by the president and the secretary, sealed with the seal of
the cooperative, and consecutively numbered. The name and address of
each member and the date of cooperative. If a certificate becomes lost,
mutilated, or destroyed, a new certificate may be issued upon such terms
and conditions as the board may determine.
Section 2.04. Lien. The cooperative shall have a lien on the
outstanding memberships in order to secure payment of any sums which
shall be due or become due from the holders for any reason whatsoever,
including any sums due under any occupancy agreements.
Section 2.05. Voting rights. Each member shall be entitled to one
vote on each matter submitted to a vote of the members. /1/
Section 2.06. Patronage capital. All funds accruing to the
cooperative during the year, above and beyond the costs and expenses of
operating the cooperative, shall be assigned to each member on the books
of the cooperative as patronage capital at the end of each fiscal year.
These patronage capital funds may not be removed from the patronage
capital account except in payment to members upon termination of
membership. Any member not wishing to renew the Occupancy Agreement
will be entitled to receive the patronage capital assigned to the member
on the books of the cooperative. Likewise, members terminated because
of violation of these bylaws may receive his/her patronage capital
pursuant to provisions of section 2.07.
Section 2.07. Termination of membership. A member may be suspended
or expelled, for violation of rules set forth in the Occupancy Agreement
or these bylaws, by the vote of not less than a majority of the board of
directors, provided the member has been informed in writing of the
charges preferred against the member at least ten days before such
meeting. However, the cooperative shall not evict any member except by
judicial action pursuant to State or local law and in accordance with
the requirements of the Farmers Home Administration Tenant Grievance and
Appeals Procedure. The member shall be given an opportunity to be heard
at such meeting. Upon termination of membership rights under the
Occupancy Agreement, the member shall be required to deliver promptly to
the cooperative his/her membership certificate and Occupancy Agreement
endorsed as required by the cooperative. The retiring member then shall
be entitled to receive the amount determined in accordance with the
provisions of section 2.10 less the following amounts (the determination
of such amounts by the cooperative to be conclusive):
a. Any amounts due to the cooperative from the member under the
Occupancy Agreement;
b. The cost or estimate cost of all deferred maintenance, including
painting, redecorating, floor finishing, and such repairs and
replacements as are deemed necessary by the cooperative to place the
dwelling unit in suitable condition for another occupancy; and
c. Legal and other expenses incurred by the cooperative in connection
with the default of such member. In the event the retiring member
fails, within a 10-day period after demand, to deliver to the
cooperative his endorsed membership certificate, the membership
certificate shall be deemed to be canceled and may be reissued by the
cooperative to a new member.
Section 2.08. Resignation. Any member may choose not to renew the
Occupancy Agreement by notifying the cooperative 4 months in advance of
the renewal date.
Section 2.09. Transfer of membership. Membership in this cooperative
is not transferable or assignable except to the cooperative unless, upon
death of a member, his/her membership in the cooperative passes by will
or intestate distribution to a member of the immediate family. This is
conditioned upon the person's eligibility and approval for membership
according to FmHA regulations and by his/her assuming in writing the
terms of the Subscription Agreement and Occupancy Agreement within 60
days after member's death and payment of such debts.
Section 2.10. Transfer value. Whenever a membership is transferred
to the cooperative, the term ''transfer value'' shall mean the sum of:
a. The membership fee paid by the member on the books of the
cooperative, and
b. The amount of the patronage capital which has accrued to the
member during his/her period of membership as shown on the books of the
cooperative.
Section 2.11. Subscription fees. All subscription funds shall be
deposited promptly without deduction in a special account or accounts of
the cooperative as escrow or trustee for the subscribers membership.
These funds shall not be corporate funds, but shall be held solely for
the benefit of the subscribers until transferred to the account of the
cooperative as hereinafter provided. Such special account or accounts
shall be established with a banking institution where deposits are
insured by an agency of the Federal Government. Such funds shall be
subject to withdrawal, or transfer to the account of the cooperative, or
disbursed in a manner directed by the cooperative only upon
certification by the president and secretary of the cooperative that:
(a) The subscription agreement of a named applicant has been
terminated pursuant to its terms and such withdrawal is required to
repay the amount paid by him under such agreement; or
(b) A sufficient number of applicants for XXXX dwelling units has not
been established and such withdrawal is required to repay established
applicants the amounts paid by them; or
(c) Applicants for XXXX dwelling units have signed subscription
agreements, have been approved as to their eligibility by the board of
directors, and have made at least a downpayment on their subscription
(membership) fee. If these requirements have been met and the mortgage
loan has been scheduled for closing, the entire amount of the funds in
the subscription escrow account may be transferred to the cooperative
which shall at that time deliver membership certificates to all members.
Section 3.01. Annual meeting. An annual meeting of the members shall
be held at XXXXXX on the XXXX of the month of XXXXX each year, beginning
with the year 19XXXX at the hour of XXXX o'clock, ??m., for the purpose
of electing directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday in said State, such meeting shall be held on
the next succeeding business day. If the election of directors shall
not be held on the day designated herein for any annual meeting, or at
any adjournment thereof, the board shall cause the election to be held
at a special meeting of the members as soon thereafter as convenient.
Section 3.02. Special meetings. Special meetings of the members may
be called by the president, the board or not less than one-fourth of the
members.
Section 3.03. Place of meeting. The board of directors may designate
any place within or not more than XXXX miles from XXXXXX as the place
for an annual meeting or for any special meeting called by the board.,
Section 3.04. Notice of meetings. Written or printed notice stating
the place, day, and hour of any meeting of members shall be delivered
either personally or by mail, to each member entitled to vote at such
meeting, not less than ten or more than twenty days before the date of
such meeting, by or at the direction of the president, or the Secretary,
or the officers or persons calling the meeting. In case of a special
meeting or when required by statute of these bylaws, the purpose or
purposes for which the meeting is called shall be stated in the notice.
If mailed, the notice of a meeting shall be deemed to be delivered when
deposited in the United States mail addressed to the member at the
address as it appears on the records of the cooperative, with postage
thereon prepaid.
Section 3.05. Informal action by members. Any action required by law
to be taken at a meeting of the members, or any action which may be
taken at a meeting of the members, may be taken without a meeting upon
written consent or approval of all the members, setting forth the action
so taken.
Section 3.06. Quorum. At such a meeting a quorum shall consist of 40
percent /2/ of the members, or twice the number of directors, whichever
is greater. If a quorum is not present at any meeting of members, a
majority of the members present may adjourn the meeting from time to
time without further notice.
Section 3.07. Proxies. (a) At any meeting of the members, a member
entitled to vote may vote by proxy executed in writing by the member.
No proxy shall be valid after eleven months from the date of its
execution. A proxy may be cancelled by notice executed by the member
with like formality and delivered to the secretary.
(b) At each meeting of the members, every member shall be entitled to
vote in person or by proxy and shall be entitled to cast one vote. The
votes for Directors shall be by ballot. Only the person in whose name
membership is standing in the books of the cooperative on the day of
such meeting shall be entitled to vote in person or by proxy. If the
membership is jointly owned, co-members are limited to one-half vote
each.
(c) For any person to represent a member by proxy, such person must
submit a power of attorney to the secretary of the board for examination
at least one hour before the time of meeting. When the secretary has
certified the power of attorney is in good order, the proxy holder shall
have the right to do any and all things which might be done by the
member were the member present in person, which right shall include the
establishment of a quorum and the organizing of any meeting.
Section 4.01. General powers. The affairs of the cooperative shall
be managed by its board of directors.
Section 4.01. Powers and duties. The board of directors shall have
all the powers and duties necessary for the administration of the
affairs of the cooperative and may do all such acts and things as are
not by law or by these bylaws directed to be exercised and done by the
members. The powers of the board of directors shall include but not be
limited:
a. To accept or reject all applications for membership and admission
to occupancy of a dwelling unit in the cooperative housing project,
either directly or through an authorized representative;
b. To establish monthly occupancy charges, subject to approval of
FmHA, as provided for in the Occupancy Agreement and based on an
operating budget formally adopted by the board;
c. To engage an agent or employees, subject to the approval of FmHA,
for the management of the project under such terms as the board may
determine;
d. To authorize the recording of patronage capital assignments on the
cooperative's books to members;
e. To terminate membership and occupancy rights for cause; and
f. To promulgate such rules and regulations pertaining to use and
occupancy of the premises as may be deemed proper and are consistent
with these bylaws and the Certificate of Incorporation and with any
requirements of FmHA while mortgagee.
The affairs of the cooperative shall be managed by its board of
directors.
Section 4.02. Number and qualifications. The board of directors
shall be composed of XXX persons, all of whom shall be members of the
cooperative. /3/
Section 4.03. Election and term of office. The term of the directors
named in the Certificate of Incorporation shall expire when their
successors have been elected at the first annual meeting or any special
meeting called for that purpose. For a board of five (5) directors, the
first annual meeting of the members the term of office of two (2)
directors shall be fixed for two (2) years, and the term of office of
one (1) director shall be fixed at (1) year. At the expiration of the
initial term of office of each respective director, his/her successor
shall be elected to serve a term of office for three (3) years.
The directors shall hold office until their successors have been
elected and hold their first meeting. (If a larger board of directors
is contemplated, the terms of office should be established in a similar
manner so that they will expire in different years.) The term of any
director who becomes more than 30 days delinquent in payment of his
occupancy charges shall be automatically terminated and the remaining
directors shall appoint his successor as provided in 4.11.
Section 4.04. Organization meeting. The first meeting of a newly
elected board of directors shall be held within ten (10) days of
election at such place as shall be fixed by the directors at the meeting
at which such directors were elected. No notice shall be necessary to
the newly elected directors in order legally to constitute such meeting,
providing a majority of the whole board shall be present.
Section 4.05. Regular Meetings. Regular meetings of the board of
directors shall be held each month at such time and place within XXX
miles of XXXXXX. Notice of regular meetings of the board of directors
shall be given to each director, personally or by mail, telephone or
telegraph, at least 5 days prior to the day named for such meeting.
Section 4.06. Special meetings. Special meeting of the board may be
called by or at the request of the president and shall be called by the
secretary at the request of any two directors on three days notice.
Such notice shall be by mail, telephone or telegraph and shall state the
time, place (as provided below) and purpose of meeting. The authorized
person or persons calling a special meeting of the board may fix any
place within or not more than XXX miles from XXXXXX as the place for
holding such meeting.
Section 4.07. Waiver of notice. Before or at any meeting of the
board of directors, any director may, in writing, waive notice of such
meeting and such waiver shall be deemed equivalent to the given of such
notice. Attendance by a director at any meeting of the board shall be a
waiver of notice by him/her of the time and place thereto. If all
directors are present at any meeting of the board, no notice shall be
required and any business may be transacted at such meeting.
Section 4.08. Quorum. A majority of the board shall constitute a
quorum for the transaction of business at any meeting of the board; but
if less than a majority of the directors is present at said meeting, a
majority of the directors present may adjourn the meeting from time to
time without further notice.
Section 4.09. Fidelity Bonds. The board of directors shall require
that all officers and employees of the cooperative handling or
responsible for cooperative or trust funds shall furnish adequate
fidelity bonds. The premiums on such bonds shall be paid by the
cooperative.
Section 4.10. Manner of acting. The act of a majority of the
directors at a meeting at which a quorum is present shall be the act of
the board, unless the act of a greater number is required by law or by
these bylaws. The board may also act by written consent of all the
directors of the cooperative setting forth the action taken.
Section 4.11. Vacancies. Any vacancy occurring on the board shall be
filled by the board until the next meeting of the members and until a
successor has been elected by the members to fill a vacancy. Such
person shall be elected for the unexpired term of office of the
predecessor in office.
Section 4.12 Directors -- removal from office. A director may be
removed from office for violation of these bylaws or rules set forth in
the Occupancy Agreement, by the vote of not less than three-fourths of
the members present at a meeting of the members, provided notice of such
proposed action shall have been duly given in the notice of the meeting
and provided the director has been informed in writing of the charges
preferred against the director at least 10 days before such meeting.
The director involved shall be given an opportunity to be heard at such
meeting. Any vacancy created by the removal of a director shall be
filled by a majority vote, which may be taken at the same meeting at
which such removal takes place.
Section 4.13. Compensation. Directors shall not receive any
compensation for their services as directors.
Section 4.14. Directors -- absence from meetings. Any director who
is absent from XXX consecultive meetings without excuse satisfactory to
the board shall be deemed to have surrendered the office of director.
Section 4.15. Directors -- Residuary Powers. The board shall have
the powers and duties necessary or appropriate for the administration of
the affairs of the cooperative. All powers of the cooperative except
those specifically granted or reserved to the members by law, the
Articles of Incorporation, or these bylaws shall be vested in the board.
Section 4.16. Adviser to the board. The adviser to the board will be
a member (or members) of the community who is not a member of the
cooperative. In that capacity, the individual will be responsible for
maintaining regular contacts with the board as well as being available
to respond to special needs of the board at mutually agreeable times.
The adviser will guide the board in its role of self-manager until such
time as the adviser and FmHA determine that such close guidance is no
longer necessary, usually not to exceed 2 years. At that time, the
adviser will continue to counsel the board as appropriate. If it is
apparent to the adviser, during this second phase of converting to
self-management, that the cooperative is unable to assume such a
responsibility, the adviser will again establish the close supervision
required in the first phase of operation. The ultimate goal of the
adviser and the board is to achieve self-management for the cooperative.
If this goal cannot be realized within a timeframe determined during
the first, or subsequent, year of operation, then the management reserve
funds will be used to hire professional management, thus relieving the
adviser of his/her responsibilities.
Section 5.01. Officers. The officers of the cooperative shall be a
president, a vice president, a secretary, and a treasurer. The board
may elect or appoint such other officers as it shall deem desirable,
such officers to have the authority and perform the duties prescribed,
from time to time, by the board. The offices of secretary and treasurer
may be combined and held by one person.
Section 5.02. Election and term of office. (a) The officers of the
cooperative specified in Section 5.01 shall be elected from the
membership of the board by the board at its annual meeting or as soon
thereafter as feasible. New officers may be created and filled at any
meeting of the board. Each officer shall hold office until the next
annual election of directors and until a successor shall have been duly
elected and shall have qualified.
(b) The term of office shall be one year. Election of officers shall
take place at the annual board meeting and shall be by ballot cast by
qualified directors. A plurality of votes cast shall elect.
Section 5.03. Removal. Any officer elected or appointed by the board
may be removed by the board by two-thirds vote of the remaining
directors FmHA whenever, in its judgment, the best interests of the
cooperative would be thereby served. Such removal shall be without
prejudice to the membership rights, if any, of the officer so removed.
Section 5.04. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by
the board by majority vote for the unexpired portion of the term.
Section 5.05. President. The president shall be the principal
executive officer of the cooperative and shall in general supervise and
control all the business and affairs of the cooperative. The president
shall preside at all meetings of the members and of the board. The
president may sign, with attestation of the secretary or any other
proper officer of the cooperative authorized by the board, any deeds,
mortgages, bonds, contracts, or other instruments which the board
authorizes to be executed. In some cases the signing and execution
thereof shall be expressly delegated by the board or these bylaws or
statute to some other officers or agent of the corporation and in
general shall perform all duties incident to the office of president and
such other duties as may be prescribed by the board from time to time.
Section 5.06. Vice President. In the absence of the president or in
the event of an inability or refusal to act, the vice president shall
perform the duties of the president and, when so acting, shall have all
the powers of and be subject to all the restrictions upon the president.
Any vice president shall perform such other duties as from time to time
may be assigned by the president of the board.
Section 5.07. Secretary. The secretary shall keep the minutes of the
meeting of the members and the board in one or more books provided for
that purpose, see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; be custodian of and
see that the seal of the cooperative is affixed to all documents, the
execution of which is on behalf of the cooperative under its seal, is
duly authorized in accordance with the provisions of these bylaws; keep
a register of the post office address of each member, which shall be
furnished to the secretary and such other duties as from time to time
may be assigned by the president of the board.
Section 5.08. Treasurer. The treasurer shall have charge and custody
of and be responsible for all funds and securities of the cooperative;
receive and give receipts for moneys due and payable to the cooperative,
from any source whatsoever, deposit all such money in the name of the
cooperative in such banks, trust companies, or other depositories as
shall be selected in accordance with the provisions of Article VIII of
these bylaws; and in general perform all duties incident to the office
of treasurer and such other duties as from time to time be assigned by
the president of the board.
Section 6.01. Order of business. The order of business at any
regular or special meeting of the members or the board shall be:
a. Roll Call.
b. Proof of notice of meeting or waiver of notice.
c. Reading and approving of any unapproved minutes.
d. Reports of officers and committees.
e. Election of inspectors of election (when applicable)
f. Election of directors (when applicable).
g. Unfinished business.
h. New business.
i. Adjournment.
If present, a representative of FmHA will be given an opportunity to
address any regular or special meeting.
Section 6.02. Parliamentary Procedure. On questions of parliamentary
procedure not covered in these bylaws, a ruling by the president shall
prevail.
Section 7.01. Committees of directors. The board of directors, by
resolution adopted by majority of the directors in office, may designate
one or more committees, each of which shall consist of one or more
directors, which committees, to the extent provided in said resolution,
shall have and exercise the authority of the board in the management of
the cooperative; but the designation of such committees and the
delegation thereto of authority shall not operate to relieve the board,
or any individual director, of any responsibility imposed upon the board
or any individual director by law.
Section 7.02. Membership committees. Other committees not having and
exercising the authority of the board in the management of the
cooperative will be designated by a resolution adopted by a majority of
the directors present at a meeting at which a quorum is present. At the
first membership meeting the members will be solicited by the president
to obtain voluntary commitments to serve on the various committees. As
many members as possible should be encouraged to become involved in
committee responsibilities. Any member may be removed from a committee
by the president whenever in his/her judgment the best interest of the
cooperative shall be served by such removal.
Section 7.03. Term of office. Each member of membership committees
shall continue as such until the next annual meeting of the members of
the cooperative when members may change from one committee to another.
Additional members may join a committee at any time during the year.
Section 7.04. Chairperson. One member of each membership committee
shall serve as chairperson by decision of the members of the committee.
The chairperson will report committee activities and receive direction
from a designated member of the board.
Section 7.05. Vacancies. Vacancies in the membership of any
membership committee may be filled in the same manner as provided in the
case of the original members.
Section 7.06. Quorum. Unless otherwise provided in the resolution of
the board of directors designating a committee, a majority of the whole
membership committee shall constitute a quorum and the act of a majority
of the members present at a meeting at which a quorum is present shall
be the act of the committee.
Section 7.07. Rules. Each membership committee may adopt rules for
its own government not inconsistent with these bylaws or with rules
adopted by the board of directors.
Section 8.01. Deposits. All funds of the cooperative shall be
deposited from time to time to the credit of the cooperative in such
Federally insured banks, trust companies, or other Federally insured
depositories as board may select.
Section 8.02. Gifts. The board may accept on behalf of the
cooperative any contribution, gift, bequest, or devise for the general
purposes or for any special purpose of the cooperative.
Section 9.01. Issuance of certificates. When a person has been
approved for membership and has paid any dues that may then be required,
a certificate of membership shall be issued in his/her name and
delivered to the member by the secretary.
Section 10.01. Books and accounts. The Treasurer of the cooperative
shall keep correct and complete books and records of account and shall
keep minutes of the proceedings of its members, the board, and
committees having any of the authority of the board of directors, and
shall keep at the registered or principal office a record giving the
names and addresses of the members. All books and records of the
cooperative may be inspected by any member, or member's agent or
attorney, or FmHA for any proper purposes at any reasonable time.
Section 10.02. Auditing. At the close of each fiscal year, the books
and records of the cooperative shall be audited by a Certified Public
Accountant or other person acceptable to FmHA whose report will be
prepared and certified in accordance with the requirements of FmHA.
Based on such reports, the cooperative will furnish its members with an
annual financial statement including the income and disbursements of the
cooperative. The cooperative will also supply the members, as soon as
practicable after the end of each calendar year, with a statement
showing the amount assigned to each member's patronage capital account.
The fiscal year of the cooperative shall begin on the first day of
January and end on the last day of December in each year, except that
the first fiscal year of the cooperative shall begin at the date of
incorporation.
The board shall provide a cooperative seal, which shall be in the
form of a circle and shall have inscribed thereon the name of the
cooperative and the words ''Cooperative Seal.'' The seal will be kept by
the secretary.
Whenever any notice is required to be given under the provisions of
the statutes of said State or the Articles of Incorporation or the
Bylaws of the cooperative, a waiver thereof in writing signed by the
person or persons entitled thereto, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
Section 14.01. Repeal of amendment of bylaws. These bylaws may be
repealed or amended by a majority vote of the members present at any
annual meeting of the members, or at any special meeting of the members
called for such purpose, at which a quorum is present provided that
while FmHA is mortgagee no amendment will become effective until it has
received the FmHA written approval of FmHA and provided no such action
shall change the purposes of the cooperative so as to impair its rights
and powers under the laws of said State, or to waive any requirements of
bond or any provision for the safety and security of the property and
funds of the cooperative or its members, or to deprive any member
without an express assent of rights, privileges or immunities then
existing. Notice of any amendment to be offered at any meeting shall
accompany the notice of any regular or special meeting at which proposed
amendment is to be voted upon.
(56 FR 2248, Jan. 22, 1991)
/1/ In the case of joint membership, each member shall be entitled to
cast a one-half vote.
/2/ For large organizations, a smaller figure may be used if it will
not result in a quorum of less than 20 members.
/3/ Number of directors must be not less than 5 and must be selected
by a procedure that insures that the interest of minorities and woman
are adequately represented.
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. E
07 CFR 1944.250 -- Exhibit E -- Support Services for Congregate Housing
and Group Homes
This exhibit prescribes support services for congregate housing and
group homes.
The success of congregate housing and group homes will depend on the
quality and affordability of the service component. Congregate housing
applicants should explore the feasibility of providing services
individually to ensure affordability by very low-income tenants. If
feasible, fully independent tenants who do not require services to live
independently should be given the option of choosing the services they
want and can afford.
Applicants should check local service agencies to determine what
services are already available in the community. Services can often be
provided more inexpensively through local service agencies or other
groups which assist in providing services. In many communities there
are established volunteer groups that may be willing to provide
volunteer assistance to congregate housing tenants. Volunteer groups
with a history of assisting elderly people may be able to supplement the
delivery of services and help keep the costs affordable. Applicants
should explore the availability of volunteers from the Retired Senior
Volunteer Program (RSVP), local church groups and other community
organizations. If volunteer groups are used, an alternative method of
service delivery must be addressed in case the availability of
volunteers ceases in the future. Applicants must also verify State and
local licensing and certification requirements and include relevant
information in the preapplication.
Applicant must submit a service agreement(s) for services that will
not be provided by employees of the project. If services will be
provided by employees of the project, the applicant must submit a
separate budget for services and describe how tenants will be billed for
services. Employees of congregate housing facilities who perform tasks
for the management of the building and spend an appreciable amount of
time in providing services to tenants should have their salaries
prorated between the project's operation and maintenance budget and the
services budget.
The following services must be made available to tenants of
congregate housing projects:
A. Meals. At least one nutritious meal a day, 7 days a week, must be
provided in accordance with 1944.224(a)(5)(i) of this subpart. The
following information concerning the meal service must be included with
the preapplication.
1. Who will provide the meals (i.e., meals offered by a local agency
with tenant contribution; supplied or contracted for by owner with
charge to tenant)?
2. If the service will be provided by employees of the project, a
proposed breakdown of costs for the meal service. The breakdown should
include the cost of food, personnel and utilities needed to prepare and
serve the meals. Information concerning the proposed staffing should be
included.
3. The cost to the tenant. Will tenants pay by the meal or be
charged a rate for a specified time?
4. A statement concerning the frequency of meals, including the
number of meals to be served per week.
5. Information concerning how the meals will be served (i.e., waiter
style, buffet, tray service).
6. Any licensing requirement necessary for the service.
B. Transportation. Adequate transportation must be provided to
shopping, medical and other services to meet the needs of the tenants.
Applicants are encouraged to locate congregate housing facilities so
that tenants can use public services. In many cases, service is
available and the applicant can arrange for the project to be included
in the schedule established by the provider. The following information
concerning the transportation service must be included with the
preapplication:
1. Who will provide the service (i.e., transportation provided by a
local agency with tenant contribution; vehicle leased or purchased by
applicant with charge to tenant)?
2. If the service will be provided by employees of the project, a
proposed breakdown of costs for the transportation service. The
applicant should address the following costs: vehicle purchase or lease
payment; personnel to operate the vehicle; fuel; maintenance; and
insurance.
3. The cost to the tenant. Will tenants pay for each trip or will
they be charged a monthly rate?
4. A typical proposed schedule.
C. Housekeeping. Housekeeping services must be offered to assist
congregate tenants with household tasks. The applicant must address the
following concerning the housekeeping service:
1. Who will provide the service (i.e., housekeeping offered by a
local agency with tenant contribution; supplied or contracted for by
applicant with charge to tenant)?
2. If the service is provided by employees of the project, a proposed
cost breakdown for the service which includes the cost of labor and
supplies.
3. The type of tasks that will be offered (i.e., light housekeeping,
laundry, shampooing carpeting). What is the planned frequency of the
tasks?
4. The cost to the tenant.
D. Personal services. Personal services include such items as
assistance with personal hygiene, nutrition counseling and general
health screening (blood pressure checks, etc.). The following
information concerning the personal services must be submitted with the
preapplication:
1. Who will provide the service (i.e., personal services offered by a
local agency with tenant contribution; volunteer health services;
contracted for by applicant with charge to tenant)?
2. If the service is provided by employees of the project, a proposed
cost breakdown for the service which includes the cost of labor and
supplies.
3. The type of tasks that will be provided.
4. The cost to the tenant.
5. Any licensing requirement necessary for the services.
E. Recreational/social. Recreational and social activities must be
offered to tenants to encourage interest in a variety of areas. The
following areas could be considered: hobby and craft classes; dinners
for holidays, birthdays, etc.; educational lectures; wellness and
exercise programs; and a library. The applicant should encourage
recreational/social activities which cause interaction between tenants,
the project and the community. The following information concerning the
recreational/social service must be included with the preapplication:
1. Who will provide the service (i.e., recreational/social activities
offered by a local agency with tenant contribution; supplied or
contracted for by applicant with charge to the tenant)?
2. If the service is provided by employees of the project, a proposed
cost breakdown which includes the cost of labor and supplies.
3. The types and frequency of recreational/social activities that
will be offered.
4. The cost to the tenant.
The following services must be made available to tenants of a group
home:
A. Meals. At least three nutritious meals a day, 7 days a week, must
be provided if tenants are not capable of preparing their meals. If
meals are provided, the budget may include only the cost of food if
tenants assist a staff person in preparing meals. Tenants in some group
homes may be able to prepare meals on their own with supervision from a
project personnel. In these cases, applicants must ensure that the
tenants will be preparing nutritious meals.
B. Transportation. Applicants must submit information on the
transportation service as detailed in paragraph V B of this Exhibit.
C. Housekeeping. Applicants must provide a narrative explaining how
housekeeping will be accomplished. In many cases, group home tenants
assist with housekeeping chores with little expense being borne by the
project. Applicants should detail expenses that will be part of the
service budget.
D. Personal services. A higher percentage of tenants in a group home
may require personal services. Applicants must detail the services to
be offered and the cost to tenants.
E. Recreational/social. In most cases, there will be little expense
for recreational/social opportunities in a group home. Applicants
should explain what will be offered to the tenants and the projected
cost to tenants.
Congregate housing/group home projects require additional items that
will not become affixed to the real estate. These items can include
special portable equipment, furnishings, kitchen bars, dining ware,
eating utensils, movable tables and chairs, steamtables, etc. In
accordance with 1944.224(a)(3) of this subpart, loan funds cannot be
used to finance these items. As a part of the preapplication,
applicants must include a proposed list of additional items that will be
needed by the project and state how these items will be paid for.
(55 FR 26647, June 29, 1990)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. F
07 CFR 1944.250 -- Exhibit F -- Qualifications of an Adviser to the
Board
In the Board's analysis of the talents and abilities of a person to
handle the job of adviser, the first attribute most desirable is the
capacity to be a friend. The definitions of a friend include (1) A
person whom one knows, likes, and trusts; (2) one with whom one is
allied in a struggle or cause; (3) one who supports, sympathizes with
or patronizes a group, cause, or movement.
The adviser must care about the person he or she is trying to help.
That means having patience and understanding during the trial and error
period of a new cooperative's operation and also when it becomes
necessary to explain complicated regulations or legal documents more
than just once to those who have had less educational opportunities than
the adviser.
The adviser must teach a totally new housing concept to persons who
have only had experience with a rental environment. This means that the
adviser must be able to talk to each and every person who is interested
in the cooperative housing and explain just what the person is facing.
The adviser must also be able to listen to those who rely on someone's
''being there'' to hear their problems and ideas. The adviser must be
someone who is able to work with low-income persons and one who both
understands their particular circumstances and strives to improve their
well-being. The adviser, in this regard, must be able to learn as well
as to teach.
The adviser must be dedicated to those persons with whom he or she is
associated as well as to have the capacity to work with city officials,
Government officials, politicians, and other professionals to achieve
the goal of housing the local citizens.
a. Experience in working with --
Low-income people and with the problems inherent with this group.
b. Administrative background for --
1. Setting up system for management, including detailed financial,
personal, and activity records;
2. Setting up system for maintenance for buildings, grounds, and
equipment.
c. Training to --
1. Accept the major responsibility of teaching and have the
experience to carry this out.
2. Make certain that members are learning while doing, whatever the
activity.
3. Know how to use group dynamics.
4. Be ready to assist individual members resolve problems.
5. Recognize a need for social casework when required, then be able
to give or obtain that assistance. (Individual problems quickly affect
cooperatives.)
6. Have knowledge of and make effective use of resources.
7. Handle the business of a cooperative while teaching members how to
manage it themselves.
8. Understand complexity of management and maintenance.
9. Be able to understand, interpret, and teach the contents of
documents from funding agencies.
Ideally, a background in social work would be the most logical
experience, but others can be considered.
(56 FR 2252, Jan. 22, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. F-1
07 CFR 1944.250 -- Exhibit F-1 -- Relationship of Adviser to Members
I. The adviser must be able to teach the members and the members must
be willing to learn management and maintenance of total Cooperative
while they gradually assume more and more responsibilities, until the
cooperative is completely self-managed.
II. In order to be effective, the adviser should have the ability to
teach to members:
a. The complete procedures and techniques of management and
maintenance.
b. A cooperative approach to everything involved while member lives
in a cooperative.
c. An ability to deal with persons in authority.
d. Resources and how to use them.
e. Board procedures and specific duties.
f. Functions and responsibilities of Committees.
g. Regulatory documents and their importance.
h. Attitudes and procedures that will help member to:
1. Learn while doing.
2. Make payments on time.
3. Develop a willingness to do his or her fair share of the work and
the decisions-making.
4. Cultivate a concern for his or her neighbor.
5. Consider the good of the group, ahead of self-interest.
6. Use his or her vote and know it counts: within the cooperative
for directors and officers of the board; outside for local, state, and
national Government.
7. Cooperate with board and committees.
III. The adviser must be able to help the people understand that
there are rules which must be followed. The adviser must make certain
that the members realize that, by signing their occupancy agreement,
they are agreeing to live up to all aspects of that agreement. In so
doing, they are agreeing to abide by all of the funding agency's
regulations pertaining to the cooperative. These regulatory documents
must be taught over and over and consulted by the members in all major
decisions. The adviser would also be expected to:
a. Work with families or individuals with specific problems.
b. Consider each activity as an opportunity for the members to learn,
learning while doing must be the members' primary goal.
c. Become involved in the early planning stage of the cooperative.
d. Involve members in decisionmaking during the planning stage,
including the selection of living unit.
e. Feel a part of the group of members and break down regulations and
instructions into language understood by them.
f. Give members the freedom and encouragement to express ideas and to
carry out ideas accepted by the majority unless they are contrary to
Government regulations.
g. Interpret Government regulations and guidelines, being able to
apply and teach them.
(56 FR 2252, Jan. 22, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. G
07 CFR 1944.250 -- Exhibit G -- Adviser Responsibilities
I. Responsibilities of the adviser to the board will include --
a. Serving as backup manager while teaching self-management and
maintenance to the members.
b. Assisting in organizing the board of directors and standing
committees and meeting regularly with them.
c. Assisting in continual evaluation and monitoring of operations.
d. Developing an educational plan and being responsible for its
implementation.
e. Assisting in setting up systems and procedures for --
1. Management, including detailed financial, personal, and activity
records;
2. Maintenance of buildings, grounds, and equipment.
f. Assisting with financial questions that are not of sufficient
complexity to require referral to an outside auditor.
g. Advising in evaluation of new applicants for membership.
(56 FR 2252, Jan. 22, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. H
07 CFR 1944.250 -- Exhibit H -- Limited Equity Agreement
This Agreement, dated XXXXXX, by and between XXXXXX (hereinafter
''referred to as the ''Cooperative''), a corporation having its
principal office and place of business at XXXXXX and Farmers Home
Administration, United States Department of Agriculture (hereinafter
referred to as FmHA).
The purpose of the cooperative is to own and operate cooperative
housing on behalf of its members, and the cooperative has applied to
FmHA for mortgage financing as authorized under Section 515 of the
Housing Act of 1949, as amended.
The purpose of FmHA is to provide long term housing financing for
very-low, low-, and moderate-income persons and households, although
initially eligible cooperative members may remain in occupancy after
exceeding the income limit established for moderate income.
The additional purpose of FmHA is to maintain the availability of
units financed by FmHA for very-low, low-, and moderate-income persons
for as long as possible up to the 50-year maximum life of the loan.
As a means for implementing and carrying out these purposes, the
cooperative pledges to FmHA that:
(a) Equity accumulated by the cooperative, other than through the
appreciation in value of real estate, furnishings, and equipment of the
cooperative, will be assigned on the cooperative's books equally to
members at the end of its fiscal year and in accordance with the IRS
ruling concerning patronage capital.
(b) The members will be notified, in writing, of the amount assigned
to his or her patronage account each year after the assignment has been
made.
(c) The officers, board of directors, and members of the cooperative
may not act to dissolve the cooperative for the purpose of distributing
equity, or for other reasons, except as necessary due to default or
other circumstances beyond the cooperative's control, and
(d) Should it become necessary to dissolve the cooperative, all
property and assets of the cooperative will be transferred to another
nonprofit or such other municipal organization and be maintained for the
same purposes for which it was started.
(e) Only membership fees and money accrued in the member's patronage
capital accounts will be distributed to the members and represents the
entire equity payment to which the members are entitled. The
cooperative reserves the right to withdraw from the equity payment or
membership fee any amount due the cooperative through member's
delinquency in payment of occupancy charge or through damage to the
premises.
In witness thereof, the parties hereto have caused this agreement to
be signed and sealed the day and year first above written.
-- (Cooperative) -- (Witness)
By: XXXXXX (Seal)
(Member)
This agreement will be filed with the member's record.
(56 FR 2252, Jan. 22, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. I
07 CFR 1944.250 -- Exhibit I -- Subscription Agreement
Dwelling Unit No. XXXXXX
Date XXXXXX
1. Subscription Amount:
(a) I/We XXXXXX, a legal resident(s) of XXXXXX, hereinafter called
''Subscriber,'' hereby subscribe for membership in XXXXXX, a cooperative
housing corporation hereinafter called the ''Cooperative,'' and hereby
subscribe to a Membership Certificate in said Cooperative having a par
value of $XXXXXX.
(b) Subscriber hereby agrees to pay for the Membership Certificate,
also referred to as Membership Fee, as follows:
(1) $XXXXXX upon signing this Agreement.
(2) $XXXXXX in monthly payments of XXXXXX payable over XXXXXX
consecutive months (not to exceed 12 months).
2. Ratification of Other Provisions. Subscriber has read and agrees
to be bound by all provisions of the articles of incorporation, bylaws,
and occupancy agreement, copies of which are attached hereto and receipt
of which is hereby acknowledged, and agrees to be bound by requirements
of the Farmers Home Administration (FmHA) as long as it remains
mortgagee.
3. Priority of mortgage lien. This agreement and all rights
hereunder are and at all times shall be subject and subordinate to the
lien of the mortgage and accompanying documents to be executed by the
Cooperative to FmHA and to any and all modifications, extensions, and
renewals thereof; and to any mortgage or deed of trust which may at any
time hereafter be placed on the property of the Cooperative or any part
thereof.
4. Occupancy agreement. Subscriber, if approved for membership, will
be entitled to occupancy of the above numbered dwelling unit under
provisions of the above-mentioned occupancy agreement. Estimated
initial charge per month for said unit will be established prior to
signing the occupancy agreement. Future charges will be based on family
income, as provided for in the occupancy agreement. I/We agree to
execute the occupancy agreement on demand and to comply with all the
terms thereof.
5. Cancellation rights. (a) The Cooperative reserves the right at
any time before it has notified the Subscriber of his/her acceptability
for membership, for reasons deemed sufficient by the Cooperative, and
approved by FmHA, to return the amount paid by the Subscriber under this
Agreement. In the event the Subscriber shall have died prior to
becoming a member, the Cooperative reserves the right to return the
amount paid by the Subscriber under this Agreement to the Subscriber's
estate or legal representative, and thereupon all rights of the
Subscriber shall cease and terminate without further liability on the
part of the Cooperative.
(b) It is understood that the Subscriber's credit is subject to
approval by FmHA, and that said Subscriber's total household income must
not exceed any limitations for initial occupancy established by FmHA.
In the event FmHA determines that the Subscriber does not meet FmHA
credit, income limitation, or other eligibility requirements for
participation in this project, the Cooperative shall return to
Subscriber the sums paid hereunder. In the event FmHA determines that
the necessary loan to finance the Cooperative housing project cannot be
made or insured by FmHA, or the Cooperative withdraws its application
for such loan, the Cooperative shall return to Subscriber all sums paid
by Subscriber hereunder. Upon either determination by FmHA and the
return of the sums to Subscriber as provided in this paragraph (b), this
agreement shall become null and void and all rights and liabilities
hereunder of the parties shall cease and terminate.
(c) If the Subscriber within five (5) days after the execution of
this subscription agreement, notifies the Cooperative in writing that he
wishes to withdraw from the agreement, the amounts paid by the
Subscriber under this agreement will be returned to the Subscriber and
thereupon all rights and liabilities of the Subscriber hereunder shall
cease and terminate. If, at the end of the five-day period, the
Subscriber has not exercised this right to withdraw, the right will be
terminated. If FmHA determines that membership has not been achieved to
the extent required by FmHA, the Subscriber will again have the right to
withdraw within a five-day period.
(d) If the Subscriber defaults in any obligation under this
Agreement, and such default continues for fifteen (15) days after notice
sent by registered mail by the Cooperative to the Subscriber at the
address given below, then at the option of the Cooperative, the
Subscriber shall lose any and all rights under this agreement. Any
amount paid toward this subscription price at the option of the
Cooperative may be retained by the Cooperative as liquidated damages or
be returned, less the Subscriber's proportionate share of expenses
incurred by the Cooperative as determined solely by the Cooperative.
The Cooperative may, at its option, release the obligations of the
Subscriber under this agreement in the event the Subscriber secures an
assignee of this agreement who assumes the obligations herein contained
and is satisfactory to the Cooperative and FmHA while mortgagee. This
Agreement is not otherwise assignable.
6. Oral Representation Not to be Relied Upon. This agreement will
supersede any prior understandings and agreements and constitutes the
entire agreement between the Subscriber and the Cooperative, and no oral
representation or statements shall be considered a part hereof.
Witness:
-- Subscriber -- -- Subscriber -- Address -- -- Telephone
(56 FR 2253, Jan. 22, 1991)
07 CFR 1944.250 -- Pt. 1944, Subpt. E, Exh. J
07 CFR 1944.250 -- Exhibit J -- Occupancy Agreement
This Agreement, dated XXXXX, by and between XXXXX (hereinafter
referred to as the ''Cooperative''), at XXXXX and XXXXX (hereinafter
referred to as ''Member'').
Witnesseth: Whereas:
The purpose of the Cooperative is to acquire, own, and operate a
cooperative housing project and its members shall have the right to
occupy its dwelling units under the terms and conditions set forth in
this agreement:
Member is the owner and holder of a certificate of membership of the
Cooperative and intends to occupy a dwelling unit in the project as
permanent residence; and
Member has certified to the accuracy of the statements in Member's
application and agrees and understands that household income and other
eligibility requirements are substantial and material requirements of
his initial and continuing occupancy.
To Have and To Hold dewelling unit Number XXXXX on the terms and
conditions set forth in this agreement, in the corporate charter,
bylaws, and any other rules and regulations of the Cooperative. The
term of this agreement shall be for a three-year period ending on XXXXX,
19 XX, /1/ renewable for successive three-year periods under the
conditions provided for in this Agreement.
Section 1.01. Commencing at the time indicated in ARTICLE 2, the
Member agrees to pay to the Cooperative a monthly sum referred to as the
''Occupancy Charge.'' This amount will be equal to one-twelfth of the
Member's proportionate share of the total amount required by the
Cooperative, as estimated by its board of directors, to meet its annual
expenses and the requirements of the FmHA loan. These inlcude but are
not limited to, the following items:
(a) Project operating expenses and cost of services furnished.
(b) Necessary management reserve and administrative costs.
(c) Taxes and assessments levied against the project or the
Cooperative which it is required to pay.
(d) Fire and extended coverage insurance on the project and any other
insurance which the Cooperative may require.
(e) The cost of furnishing any water, electricity, heat, gas, garbage
and trash collection, and other utilities, if furnished by the
Cooperative.
(f) Payments to other reserves set up by the board of directors.
(g) Estimated costs of repairs, maintenance, and replacements of
project property to be made by the Cooperative.
(h) The amount of principal, interest, and any other required
payments on any indebtedness of the Cooperative, including any loan made
or insured by the Farmers Home Administration (FmHA), United States
Department of Agriculture.
(i) Any other expenses of the Cooperative approved by the board of
directors and by FmHA, while mortgagee, incluidng operating
deficiencies, if any, for prior periods.
Section 1.02. The board of directors shall determine the amount of
the occupancy charges annually, but may do so at more frequent intervals
should circumstances so require. No Member shall be charged with more
than the appropriate share determined by the board of directors. That
amount of the occupancy charge required for payment on the principal of
mortgage of the Cooperative or any other capital expenditures shall be
credited upon the books of the Cooperative as a capital contribution by
the Members. Until further notice from the Cooperative, the monthly
charge for the above-mentioned dwelling unit shall be $XXX.
Section 2.01. After thirty days' notice by the Cooperative that the
dwelling unit is available for occupancy, or upon acceptance of
occupancy, whichever is earlier, Member shall make a payment for
occupancy charge covering the unexpired balance of the month.
Thereafter, Member shall pay occupancy charge in advance on the first
day of each month. Dates of payments may be changed by mutual agreement
of the Cooperative and FmHA.
Section 2.02. The Member agrees to furnish to the Cooperative, each
year, a certificate of income on which the Member's occupancy charge
will be determined.
Section 3.01. The Board shall, on the books of the Cooperative,
assign to Member in accordance with the IRS ruling concerning patronage
capital, a porportionate share of money collected in excess of the
amount needed for Cooperative expenses, including reserves designated as
management reserve, and Members will be notified of the amount assigned
each year.
Section 4.01. It is agreed that the term of occupancy shall be
renewed for further periods of three years from the expiration of the
initial term (or for the term mutually agreed to by the member and the
Cooperative). Such renewals shall be based upon the same agreements as
contained in this agreement unless: (1) Notice of Member's decision not
to renew is given to the Cooperative in writing at least 4 months prior
to expiration of the current terms, and (2) Member, before expiration of
said term, shall (a) endorse membership certificate for transfer to
Cooperative and deposits same with the Cooperative, (b) meet all
obligations and pay all amounts due under this Agreement before said
expiration, and (c) vacate and leave the premises in good state of
repair. Upon compliance with foregoing provisions (1) and (2), Member
shall have no further liability under this agreement. If extenuating
circumstances warrant, the Member's four-month notification of intention
to vacate may be modified appropriately. The Member will be entitled to
the patronage capital which has accrued and been assigned during the
term of this agreement provided that provisions (1) and (2) have been
met.
Only
Section 5.01. Member shall occupy the dwelling unit covered by this
agreement as a private dwelling unit for the Member and/or immediate
household and for no other purpose. The Member shall have use of all
common community property and facilities of the project so long as
Member continues to own a membership certificate of the Cooperative,
occupies the assigned dwelling unit, and abides by the terms of this
Agreement. Any sublessee of the Member , if approved pursuant of
Article 7 hereof, may enjoy the rights to which Member is entitled under
this Article 5, except that the sublessee will have no voting rights in
the affairs of the Cooperative.
Section 5.02. Member shall not permit or suffer anything to be done
or be kept upon said premises which will increase the rate of insurance
on the building, or on its contents. Member will not obstruct or
interfere with the rights of other occupants, or annoy them by
unreasonable noises or otherwise permit any nuisance on the premises, or
allow any illegal act to be committed. Member shall comply with all the
requirements of the Board of Health and of all other governmental
authorities with respect to the said premises. If, by reason of the
occupancy or use of these premises by Member, the rate of insurance on
the building is increased, Member shall become personally liable for the
additional insurance premiums.
Section 6.01. In return for Member's continued fulfillment of the
terms and conditions of this agreement, the Cooperative agrees that the
Member may at all times while this agreement remains in effect, have and
enjoy for the Member's sole use and benefit the dwelling unit and
community facilities hereinabove described.
Section 7.01. This agreement shall not be assigned nor Member's
dwelling unit sublet without the written consent of the Cooperative and
FmHA, while mortgagee. Under this agreement the Member shall be liable
for the conduct of the sublessee. Any unauthorized subleasing shall, at
the option of the cooperative and of FmHA, while mortgagee, result in
termination and forfeiture of Member's rights under this occupancy
agreement.
Section 8.01. Neither this agreement nor Member's right of occupancy
shall be transferrable or assignable except as provided in the bylaws of
the Cooperative for the transfer of membership.
Section 9.01. The Cooperative shall provide necessary management,
operation, and administration of the project; pay or provide for the
payment of all taxes or assessments levied against the project; procure
and pay or provide for the payment of fire insurance and extended
coverage, and other insurance as the Cooperative may deem advisable on
property in the project. The Cooperative will not, however, provide
insurance on Member's personal property.
Section 10.01. The Cooperative shall arrange for utilities (water,
electricity, heat, and gas) for common areas of the structure(s) in
amounts which it deems reasonable and in conformance with Exhibit A-6 to
subpart E of part 1944 (Strike out any of the foregoing items in this
Article which are not applicable.) Each unit will be separately metered
and Member shall pay directly to the supplier for the utilities billed
to Member.
Section 11.01. By Member. Member agrees to repair and maintain
Member's dwelling unit at own expense as follows:
(a) Any repairs or maintenance necessitated by Members's own
negligence or misuse;
(b) Any redecoration of own dwelling unit authorized, done or
contracted for by Member;
(c) Any repairs, maintenance, or replacements required on the
following items: (Insert the items desired, subject to FmHA approval.)
Section 11.02. By cooperative. The Cooperative shall provide and pay
for all necessary repairs, maintenance, and replacements except as
specified in 11.01. Member agrees to the right of the officers of the
Cooperative to authorize entrance to Member's dwelling unit in order to
complete necessary repairs, maintenance, and replacements and to
authorize entrance for such purposes by employees of any contractor,
utility company, municipal agency, or others at any reasonable hour of
the day, and upon reasonable notice. In the event of emergency, the
unit may be entered at any time. Notification of entry will be left for
the member by the person performing the maintenance or repair.
Section 11.03. Right of cooperative to make repairs at member's
expense. In case Member shall fail to effect and pay for the repairs,
maintenance, or replacement specified in 11.01, in a manner
satisfactory to the Cooperative, the board may do so and add the cost of
repairs to Member's next month's occupancy charge payment.
Section 12.01. The Member shall not, without the written consent of
the Cooperative make any structural alterations in the premises or in
the water, gas or steampipes, electrical conduits, plumbing or other
fixtures connected therewith, or remove any additions, improvements, or
fixtures from the premises.
Section 12.02. If Member for any reason ceases to be an occupant of
the premises, Member shall surrender to the Cooperative possession
thereof, including any alterations, additions, fixtures, and
improvements.
Section 12.03. Member shall not, without the prior written consent of
the Cooperative install or use in dwelling unit any air conditioning
equipment, electric heater, or power tools. Member agrees that the
Cooperative or FmHA, while mortgagee, may require the prompt removal of
any such equipment at any time, and that failure to remove such
equipment upon request shall constitute a default within the meaning of
Article 13 of this agreement.
Thereof
Section 13.01. If, at any time after the happening of any event
specified in clauses (a) through (k), below, the Cooperative gives to
Member a 30-day notice of expiration, this agreement and all Member's
rights under this agreement will expire on the date specified in such
notice. In the meantime the default may be cured in a manner deemed
satisfactory by the Cooperative. After 10 days following such
expiration of Member's rights, the Cooperative may reenter the dwelling
unit and remove all persons and personal property therefrom, by any
means available to it by law, and may repossess the dwelling unit in its
former state as if this agreement had not been made.
(a) If, during the term of this agreement, Member ceases to be the
owner and legal holder of a membership of the Cooperative.
(b) If Member attempts to transfer or assign this agreement in a
manner inconsistent with the provisions of the bylaws.
(c) If, during continuance of this agreement, Member is declared
bankrupt under the laws of the United States so as to be released from
any debt or obligation to the Cooperative or to interfere with his full
exercise of his rights as Member and occupant.
(d) If, during continuance of this agreement, a receiver of Member's
property is appointed under the laws of the United States or of any
State.
(e) If, during continuance of this agreement, Member shall make a
general assignment for the benefit of creditors.
(f) If, during continuance of this agreement, any of the membership
rights in the Cooperative owned by Member are duly levied upon and sold
under the process of any court.
(g) If Member fails to effect and/or pay for repairs and maintenance
as provided for in Article 11.
(h) If Member fails to pay any sum due pursuant to Article 1.
(i) If default occurs with respect to any obligation of Member under
this agreement.
(j) If, during the term of this agreement, Member fails to comply
promptly with all requests by the Cooperative for information and
certifications concerning the total current income of Member and
Member's household or any other eligibility requirements for membership
or occupancy.
(k) If, during the term of this agreement, limitations for continued
occupancy are established from time to time by the FmHA and are
exceeded.
Section 13.02. Member hereby expressly waives any and all right to
reenter the dwelling if the eviction is by judgment of any court or
judge. The words ''enter,'' ''reenter,'' or ''reentry'' as used in this
agreement are not restricted to their technical legal meaning. In the
event of a breach by Member of the terms of this agreement, the
Cooperative shall have the right of injunction and the right to invoke
any remedy allowed at law or in equity, as if reentry, summary
proceedings, and other remedies were not provided for.
Section 13.03. Failure by the Cooperative to avail itself of any
remedy given under this agreement shall not waive or destroy any right
of the Cooperative to avail itself of remedies for any similar or other
breach or default by Member.
Section 13.04. Notice by the Cooperative under any of the conditions
described in section 13 shall be in writing. The cooperative shall not
evict any member except by judicial action pursuant to State or local
law and in accordance with the requirements of subpart C of part 1930 of
this chapter.
Regulations
Section 14.01. Member agrees to preserve and promote the cooperative
ownership principles on which the Cooperative has been founded and to
abide by the charter, bylaws, rules and regulations of the Cooperative,
and amendments. The Member agrees to make diligent effort in performing
duties and accepting responsibilities either through volunteering or by
assignment from the board of directors. By acts of cooperation with
other members, Member will strive to bring about and maintain a high
standard in home and community conditions. The Cooperative agrees to
deliver to Member its rules and regulations and/or to distribute them in
such other manner as to constitute adequate notice.
Section 15.01. In the event of loss or damage by fire or other
casualty to Member's dwelling unit without fault or negligence of
Member, the Cooperative shall determine (1) Whether to restore the
damaged premises and, if not to restore (2) the amount to be paid to
Member to redeem membership and for reimbursement for any loss sustained
by the Member.
Section 15.02. If, under such circumstances, the Cooperative decides
to restore the premises, occupancy charges shall stop wholly or
partially, as determined by the Cooperative, until the premises have
been restored. If, on the other hand, the cooperative decides not to
restore the premises, the occupancy charges shall cease from the date of
such loss or damage.
Section 16.01. Member agrees that the representatives of any mortgage
holding a mortgage on the property of the Cooperative, the officers of
the Cooperative, or authorized representative of the Cooperative shall
have the right to enter the dwelling unit of Member and make inspections
and, with the approval of the Cooperative, the employees of any
contractor, utility company, municipal agency, or others shall have the
right to enter the dwelling unit of Member and make inspections at any
reasonable hour of the day, upon reasonable notice, and at any time in
the event of emergency.
Section 17.01. The Cooperative housing project of which Member's
dwelling unit is a part is planned to be constructed by the Cooperative
with the assistance of a loan to the Cooperative made or insured by the
FmHA. Therefore, this agreement and all rights, privileges, and
benefits hereunder shall be at all times subject and subordinate to a
first mortgage lien or any documents executed by the Cooperative to
secure its obligations to FmHA and to any extensions and removals and to
any security instrument which may be made in replacement thereof or at
any time hereafter be placed on the property of the corporation. Member
hereby agrees to execute, at the Cooperative's request and expense, any
instrument which the Cooperative or any lender or mortgagee may deem
necessary or desirable to subordinate this Agreement to any such
security instrument. Member hereby appoints the Cooperative and each
and every officer thereof, and any future officer, as irrevocable
attorney-in-fact during the term of the agreement to execute any such
instrument on behalf of Member.
Default
Section 18.01. In addition to all other sums due or to become due
under this agreement, Member shall pay to the Cooperative a late charge,
not to exceed $10.00, at any time payment of occupancy charges, or part
thereof, is more than 10 days late. This late fee may be waived,
depending on the circumstances and at the discretion of the board.
Section 18.02. If, because of default by Member under any obligation
in this agreement, the Cooperative obtains the services of an attorney,
Member shall pay to the Cooperative all costs and fees involved,
including reasonable attorney's fees and the costs of any resulting law
suit, if such an action becomes necessary.
Section 19.01. Whenever any bylaw of Cooperative, any law, or this
agreement requires notice to be given to either party, any notice or
demand by the Cooperative to Member shall be considered to have been
duly given if the same is delivered to Member at Member's unit or to
Member's last known address. Any notice or demand by Member to the
Cooperative shall be considered to have been duly given if delivered to
an officer of the Cooperative. Such notice may also be given by
depositing same in the United States mails addressed to Member as shown
on the books of the Cooperative, or to the president of the cooperative,
as the case may be, and the time of mailing shall be the time of giving
such notice.
Section 20.01. No representation other than those contained in this
Agreement and in the charter and the bylaws of the Cooperative shall be
binding upon the Cooperative.
In Witness Whereof, the parties hereto have caused this agreement to
be signed and sealed the day and year first above written.
-- Cooperative
By:L XXXXXX(Seal)
-- Member
To Be Duly Acknowledged
(56 FR 2253, Jan. 22, 1991)
/1/ The termination date to be inserted should be three years from
the date of the occupancy agreement. (These terms may be for periods
longer than 3 years if mutually agreeable to the member and to the
cooperative.)
07 CFR 1944.250 -- Subparts F-H -- (Reserved)
07 CFR 1944.250 -- Subpart I -- Self-Help Technical Assistance Grants
Source: 55 FR 41833, Oct. 16, 1990, unless otherwise noted.
07 CFR 1944.401 Objective.
This subpart sets forth the policies and procedures and delegates
authority for providing Technical Assistance (TA) funds to eligible
applicants to finance programs of technical and supervisory assistance
for self-help housing, as authorized under section 523 of the Housing
Act of 1949. This financial assistance may pay part or all of the cost
of developing, administering, or coordinating programs of technical and
supervisory assistance to aid needy very low- and low-income families in
carrying out self-help housing efforts in rural areas. Very low-income
families must receive a priority for recruitment and participation and
may not comprise less than the percentage stated in subpart L of part
1940 of this chapter of those assisted in any grant. The primary
purpose is to fund organizations that are willing to locate and work
with families that otherwise do not qualify as homeowners. Generally,
these are families below 50 percent of median incomes, living in
substandard housing, and/or lacking the skills to be good homeowners.
Grantees will comply with the nondiscrimination regulation subpart E of
part 1901 of this chapter which states that no person in the United
States shall, on the grounds of race, color, national origin, sex,
religion, marital status, mental or physical handicap, or age, be
excluded from participating in, be denied the benefits of, or be subject
to discrimination in connection with the use of grant funds and all
provisions of the Fair Housing Act of 1988.
07 CFR 1944.402 Grant purposes.
Farmers Home Administration (FmHA) may contract or make a grant to an
organization to:
(a) Give technical and supervisory assistance to eligible very low-
and low-income families as defined in Exhibit C of subpart A of this
part, in carrying out self-help housing efforts.
(b) Assist other organizations to provide technical and supervisory
assistance to eligible families.
(c) Develop a final application, recruit families and related
activities necessary to participate under paragraph (a) of this section.
07 CFR 1944.403 Definitions.
(a) Agreement. The Self-Help Technical Assistance Agreement, which
is a document signed by FmHA and the grantee, sets forth the terms and
conditions under which TA funds will be made available. (Exhibit A of
this subpart).
(b) Agreement period (or grant period). The period of time for which
an agreement is in force. Generally, the period will not exceed 24
months.
(c) Date of completion. The date when all work under a grant is
completed or the date in the TA grant agreement, or any supplement or
amendment to it, when Federal assistance ends.
(d) Direct costs. Those costs that are specifically identified with
a particular project or activity. Grantees receiving funds from a
single grant source would consider all costs as direct costs.
(e) Disallowed costs. Those charges to a grant which FmHA determines
cannot be authorized.
(f) Equivalent units. Equivalent units represent the ''theoretical
number of units'' arrived at by adding the equivalent percentage of
completion figure for each family in the self-help program
(pre-construction and actual construction) together at any given date
during program operations. The sum of the percentage of completion
figures for all participant families represent the total number of
''theoretical units'' completed at any point in time. Equivalent units
are useful in measuring progress during the period of the grant and are
not a measurement of actual accomplishments. The number of equivalent
units for any group can never exceed the number of planned or completed
houses for that group.
(g) Equivalent value of a modest house. The equivalent value of a
modest house is the typical cost of a recent contractor-built FmHA
financed home in the area plus the actual or projected costs of an
acceptable site and site development. If FmHA has not financed a
contractor-built house during the last twelve months, the value will be
established by use of the Marshall and Swift cost handbook or a similar
type of handbook. Equivalent value of a modest house is established by
FmHA.
(h) Indirect costs. Those costs that are incurred for common or
joint objectives and therefore, cannot be readily and specifically
identified with a particular project or activity, e.g., self-help.
(i) Mutual self-help. The construction method by which participating
families organized in groups generally of 4 to 10 families utilize their
own labor to reduce the total construction cost of their homes.
Participating families complete construction work on their homes by an
exchange of labor with one another. The mutual self-help method must be
used for new construction.
(j) Organization. (1) A State, political subdivision, or public
nonprofit corporation (including Indian tribes or Tribal corporations);
or
(2) A private nonprofit corporation that is owned and controlled by
private persons or interests and is organized and operated for purposes
other than making gains or profits for the corporation and is legally
precluded from distributing any gains or profits to its members.
(k) Participating family. Individuals and/or their families who
agree to build homes by the mutual self-help method and rehabilitate
homes by the self-help method. Participants are families with very low-
or low-incomes who have the ability to furnish their share of the
required labor input regardless of the handicap, age, race, color,
national origin, religion, family status, or sex of the head of
household. The participating family must be approved for a Section 502
RH loan or similar loans from other Federal, state, and private lenders
that uses income guidelines substantially similar to the Department of
Housing and Urban Development before the start of construction, have
sufficient time available to assist in building their own homes, and
show a desire to work with other families. Each family in the group
must contribute labor on each other's homes to accomplish the 65 percent
of the total 100 percent of tasks listed in Exhibit B-2 of this subpart.
A participating family may use a substitute to perform the labor with
prior approval of the Grantee and the FmHA State Director. A substitute
is only permitted when the participating family is incapacitated.
(l) Self-help. The construction method by which an individual family
utilizes their labor to reduce the construction cost of their home
without an exchange of labor between participating families. Unless
otherwise authorized by the District Director, this method is only
funded for repair and rehabilitation type construction.
(m) Sponsor. An existing entity that is willing and able to assist
an applicant, with or without charge, in applying for a grant and in
carrying out responsibilities under the agreement. Examples of sponsors
are local rural electric cooperatives, institutions of higher education,
community action agencies and other self-help grantees. Also, when
available, regional technical and management assistance contractors may
qualify to serve as a sponsor at no charge.
(n) Technical assistance. The organizing and supervising of groups
of families in the construction of their own homes including:
(1) Recruiting families who are interested in sharing labor in the
construction of each other's homes and assisting such families in
obtaining housing loans.
(2) Conducting meetings of the families to explain the self-help
program and subjects related to home ownership, such as loan payments,
taxes, insurance, maintenance, and upkeep of the property.
(3) Helping families in planning and developing activities that lead
to the acquisition and development of suitable building sites.
(4) Assisting families in selecting or developing house plans for
homes which will meet their needs and which they can afford.
(5) Assisting families in obtaining cost estimates for construction
materials and any contracting that may be required.
(6) Providing assistance in the preparation of loan applications.
(7) Providing construction supervision and training for families
while they construct their homes.
(8) Providing financial supervision to individual families with
section 502 Rural Housing (RH) loans which will minimize the time and
effort required by FmHA in processing borrower expenditures for
materials and contract services.
(9) Assisting families in solving other housing problems.
(o) Termination of a grant. The cancellation of Federal assistance,
in whole or in part, at any time before the date of completion.
07 CFR 1944.404 Eligibility.
To receive a grant, the applicant must:
(a) Be an organization as defined in 1944.403(j) of this subpart.
(b) Have the financial, legal, administrative, and actual capacity to
assume and carry out the responsibilities imposed by the Agreement. To
meet the requirement of actual capacity it must either:
(1) Have necessary background and experience with proven ability to
perform responsibly in the field of mutual self-help or other business
management or administrative ventures which indicate an ability to
perform responsibility in the field of mutual self-help; or
(2) Be sponsored by an organization with background experience, and
ability, which agrees in writing to help the applicant to carry out its
responsibilities.
(c) Legally obligate itself to administer TA funds, provide adequate
accounting of the expenditure of such funds, and comply with the
Agreement and FmHA regulations.
(d) If the organization is a private nonprofit corporation, be a
corporation that:
(1) Is organized under State and local laws.
(2) Is qualified under section 501(c)(3) of the Internal Revenue Code
of 1986.
(3) Has as one of its purposes the production of affordable housing.
(4) Has a Board of Directors which consist of not less than five.
07 CFR 1944.405 Authorized use of grant funds.
(a) Payment of salaries of personnel as authorized in the Agreement.
(b) Payment of necessary and reasonable office expenses such as
office rental, office utilities, and office equipment rental. The
purchase of office equipment is permissible when the grantee determines
it to be more economical than renting. As a general rule, these types
of expenses would be classified as indirect costs in multiple funded
organizations.
(c) Purchase of office supplies such as paper, pens, pencils, and
trade magazines.
(d) Payment of necessary employee benefit costs including but not
limited to items such as Worker's Compensation, employer's share of
social security, health benefits, and a reasonable tax deferred pension
plan for permanent employees.
(e) Purchase, lease, or maintenance of power or specialty tools such
as a power saw, electric drill, sabre saw, ladders, and scaffolds, which
are needed by the participating families. The participating families,
however, are expected to provide their own hand tools such as hammers
and handsaws.
(f) Payment of liability insurance and special purpose audit costs
associated with self-help activites. These would be considered direct
costs, even though the grantee's general liability insurance cost and
the cost of audits for the organization are generally indirect costs.
(g) Payment of reasonable fees for training of grantee personnel
including board members. This may include the cost of travel and per
diem to attend in or out-of-State training as authorized by the board of
directors and, when necessary, for the employee to do the current job.
These costs are generally direct costs.
(h) Payment of services rendered by a sponsor or other organization
after the grant is closed and when it is determined the sponsor can
provide the necessary services which will result in an overall reduction
in the cost of assistance. Typically, this will be limited to new
grantees and an existing grantee for the period of time that its size or
activity does not justify a full staff. A full staff is a full or
part-time director, project worker, secretary-bookkeeper, and a
construction supervisor. This type of cost is generally direct.
(i) Payment of certain consulting and legal costs required in the
administration of the grant if such service is not available without
cost. This does not include legal expenses for claims against the
Federal Government. (Legal costs that may be incurred by the
organization for the benefit of the participating families may be paid
with prior approval of the State Director).
(j) Payments of the cost of an accountant to set up an accounting
system and perform audits that may be required. Generally, these costs
are indirect.
(k) Payments of reasonable expenses of board members for attending
regular or special board meetings. These costs are indirect.
07 CFR 1944.406 Prohibited use of grant funds.
(a) Hiring personnel specifically for the purpose of performing any
of the construction work for participating families in the self-help
projects.
(b) Buying real estate or building materials or other property of any
kind for participating families.
(c) Paying any debts, expenses, or costs which should be the
responsibility of the participating families in the self-help projects.
(d) Paying for training of an employee as authorized by Attachment B
of OMB Circular A-122.
(e) Paying costs other than approved indirect (including salaries)
that are not directly related to helping very low- and low-income
families obtain housing consistent with the objectives of this program.
07 CFR 1944.407 Limitations.
The amount of the TA grant depends on the experience and capability
of the applicant and must be justified based on the number of families
to be assisted. As a guide, the maximum grant amounts for any grant
period will be limited to:
(a) An average TA cost per equivalent unit of no more than 15 percent
of the cost of equivalent value of modest homes built in the area.
(Upon request, the County Supervisor will provide the grantee the
average cost of modest homes for the area); or
(b) An average TA cost per equivalent unit that does not exceed the
difference between the equivalent value of modest homes in the area and
the average mortgage of the participating families minus $1,000; or
(c) A TA per equivalent unit cost that does not exceed an amount
established by the State Director. The State Director may authorize a
greater TA cost than paragraph (a) or (b) of this section when needed to
accomplish a particular objective, such as requiring the grantee to
serve very low-income families, remote areas, or similar situations; or
(d) A negotiated amount for repair and rehabilitation type proposals.
At a minimum, applicants applying for repair and rehabilitation grants
must include information on the proximity of the houses in a project,
the typical needed repairs, and the cost savings between self-help and
contractor rehabilitation and repair.
(55 FR 41833, Oct. 16, 1990; 56 FR 19253, Apr. 26, 1991)
07 CFR 1944.408 Accountability.
Applicants should be made aware of the accountability requirements of
persons paid to influence the making of an FmHA housing loan and/or
grant as described in subpart S of part 1940 of this chapter.
(56 FR 66961, Dec. 27, 1991)
Effective Date Note: At 56 FR 66961, Dec. 27, 1991, 1944.408 was
added, effective January 27, 1992.
07 CFR 1944.409 Executive Order 12372.
The self-help program is subject to the provision of Executive Order
12372 which requires intergovernmental consultation with State and local
officials. Under subpart J of part 1940 of this chapter (available in
any FmHA office), new applicants for the self-help program must submit
their Statement of Activities to the State single point of contact prior
to submitting their preapplication to FmHA. The name of the point of
contact is available from the FmHA State Office.
07 CFR 1944.410 Processing preapplications, applications, and
completing grant dockets.
(a) Form SF-424, ''Application for Federal Assistance.'' Form SF-424
in an original and one copy must be submitted by the applicant to the
District Director. It will be used to establish communication between
the applicant and FmHA, determine the applicant's eligibility, determine
how well the project can compete with similar applications from other
organizations and eliminate any proposals which have little or no chance
for Federal funding before applicants incur significant expenditures for
preparing an application. In addition, the following information will
be attached to and become a part of the preapplication:
(1) Complete information about the applicant's previous experience
and capacity to carry out the objective of the agreement.
(2) If the applicant organization is already formed, a copy of or an
accurate reference to the specific provisions of State law under which
the applicant is organized; a certified copy of the applicant's
Articles of Incorporation and Bylaws or other evidence of corporate
existence; certificate of incorporation for other than public bodies;
evidence of good standing from the State when the corporation has been
in existence 1 year or more; the names and addresses of the applicant's
members, directors, and officers; and, if another organization is a
member of the applicant-organization, its name, address, and principal
business. If the applicant is not already formed, attach copies of the
proposed organizational documents demonstrating compliance with
1944.404(d) of this subpart.
(3) A current (no more than 12 months old) dated and signed financial
statement showing the amounts and specific nature of assets and
liabilities together with information on the repayment schedule and
status of any debt owed by the applicant. If the applicant is being
sponsored by another organization, the same type of financial statement
also must be provided by the applicant's sponsor.
(4) A narrative statement which includes information about the amount
of the grant funds being requested, area(s) to be served, need for
self-help housing in the area(s), the number of self-help units proposed
to be built, rehabilitated or repaired during the agreement period,
housing conditions of low-income families in the area and reasons why
families need self-help assistance. Evidence should be provided that
the communities support the activity and that there are low-income
families willing to contribute their labor in order to obtain adequate
housing. Evidence of community support may be letters of support from
local officials, individuals and community organizations. The
pre-application may contain information such as census materials, local
planning studies, surveys, or other readily available information which
indicates a need in the area for housing of the type and cost to be
provided by the proposed self-help TA program.
(5) A plan of how the organization proposes to reach very low-income
families living in houses that are deteriorated, dilapidated,
overcrowded, and/or lacking plumbing facilities.
(6) A proposed budget which will be prepared on SF-424A, ''Budget
Information (Non-Construction Programs)'' will be completed to address
applicable assurances as outlined in 3015.205 of 7 CFR part 3015.
State and local Government will include an assurance that the grantee
shall comply with all applicable Federal statutes and regulations in
effect with respect to the periods for which it receives grant funding.
The State and local governments shall also comply with 7 CFR part 3016.
(7) A preliminary survey as to the availability of lots and projected
cost of the sites.
(8) A list of other activities the applicant is engaged in and
expects to continue, and a statement as to other sources of funding and
whether it will have sufficient funds to assure continued operation of
the other activities for at least the period of the agreement. If
multi-funded, its cost allocation plan or indirect cost rate must be
part of the pre-application.
(9) Whether assistance under paragraph (d) of this section is
requested and a brief narrative identifying the need, amount of funds
needed, and projected time period.
(10) If a project is planned for five or more housing lots or units,
an Affirmative Fair Marketing Plan is required. The plan will be in
effect until the completion of the project.
(b) Preapplication review. (1) The District Director, within 30 days
of receipt of the preapplication, Form SF-424, and all other required
information and material will complete a thorough review for
completeness, accuracy, and conformance to program policy and
regulations. Incomplete preapplications will be returned to the
applicant for completion. The applicant should be given the name of the
regional technical assistance contractor. The County Supervisor in the
prospective county will be contacted as to the need for the program in
the proposed area and if the necessary resources are available to the
grantee. This will include a discussion of the number of 502 and 504
units that will need to be committed to the grantee and the potential
work impact on the office during the grant period. If it is determined
that the County Office lacks the resources (either personnel or funds)
to process all loan requests in a timely manner, the District Director
must communicate this need to the State Director along with a
recommended solution. (Lack of resources at the county level are not
grounds to deny a request). After the District Director has determined
that the preapplication is complete and accurate, the District Director
will assemble the material in an applicant case file and forward it to
the State Director. The case file, as a minimum, must contain the
following:
(i) Form SF-424,
(ii) Original and one copy of Form FmHA 1940-20, ''Request for
Environmental Information,''
(iii) Eligibility recommendations, and
(iv) HUD Form 935.2 ''Affirmative Fair Housing Marketing Plan'', if
applicable.
(2) The State Director may, if needed, submit the organizational
documents with any comments or questions to the Office of General
Counsel (OGC) for a preliminary opinion as to whether the applicant is
or will be a legal organization of the type required by these
regulations and for advice on any other aspects of the preapplication.
(3) The State Director, if unable to determine eligibility or
qualifications with the advice of the OGC, may submit the preapplication
to the National Office for review. The preapplication will contain all
memoranda from OGC giving the results of its review. The State Director
will identify in the transmittal memorandum to the National Office the
specific problem and will recommend possible solutions and any
information about the applicant which would be helpful to the National
Office in reaching a decision.
(4) After an eligibility determination has been made, which should be
completed within 30 days unless OGC is involved, the State Director
will:
(i) If the applicant is eligible, contact the National Office as to
the availability of funds or submit the proposal to the National Office
for authorization if the requested amount exceeds the State Director's
approval authority. If funds are available, the final review officer,
either the State Director or the Assistant Administrator, Housing will
issue a letter of conditions that the applicant must meet and direct the
District Director to issue Form AD-622, ''Notice of Preapplication
Review Action.''
(ii) If the applicant is determined not eligible, the State Director
will direct the District Director to issue Form AD-622.
(c) Form AD-622, ''Notice of Preapplication Review Action.'' (1) If
the applicant is eligible and after the State Director has returned the
preapplication information and the executed original Form FmHA 1940-20
to the District Office, the District Director will, within 10 days,
prepare and issue Form AD-622. The original Form AD-622 will be signed
and delivered to the applicant along with the letter of conditions, a
copy to the applicant's case file, a copy to the County Supervisor, and
a copy to the State Director.
(2) If the applicant is not eligible and after the State Director has
returned the preapplication information, the District Director will
within 5 days notify the applicant on Form AD-622. The notification
will inform the applicant that an appeal of the decision may be made to
the National Appeals Staff under subpart B of part 1900 of this chapter.
(3) If the applicant is eligible and no grant or loan funds are
available, the State Director will return the preapplication information
to the District Director who will, within 10 days, notify the applicant
on Form AD-622. The notification will explain the facts concerning the
lack of funding and that FmHA will notify them when funding will be
available. This is not an appealable decision.
(d) Self-help technical assistance grant predevelopment agreement.
If the grantee requested predevelopment assistance and the State
Director determines that the applicant lacks the financial resources to
meet the conditions of grant approval, a grant of up to $10,000 and for
up to six months will be made in order for the applicant to provide what
is required by paragraph (e) of this section. Exhibit D of this subpart
will be used for this purpose. Existing grantees proposing to operate
in an area different from the area that they are currently funded to
operate are eligible for this grant. However, this grant is available
only once for a defined area. This grant is available only after the
letter of conditions has been issued. Denial of this assistance is an
appealable decision under subpart B of part 1900 of this chapter.
(e) Form SF-424, ''Application for Federal Assistance.'' The
applicant will submit Form SF-424 in an original and one copy to the
District Director. The application should provide a detailed proposal
of its goals including:
(1) Names, addresses, number in household, and total annual household
income of families who have been contacted by the applicant and are
interested in participating in a self-help housing project. Community
organizations including minority organizations may be used as a source
of names of people interested in self-help housing.
(2) Proof that the first group of prospective participating self-help
families have qualified for financial assistance.
(3) Evidence that lots are optioned by the prospective participating
self-help families for the first group. Evidence that lots are
available for the remaining groups.
(4) Detailed cost estimates of houses to be built by the mutual
self-help method. Plans and specifications should be submitted with the
cost estimates.
(5) Proposed staffing need, including qualifications, experience,
proposed hiring schedule, and availability of any prospective employees.
(6) Name, address, and official position of the applicant's
representative or representatives authorized to act for the applicant
and work with FmHA.
(7) Budget information including a detailed budget for the Agreement
period based upon the needs outlined in the proposal. SF 424A will be
completed to furnish the budget information.
(8) Indirect or direct cost policy and proposed indirect cost rate
developed in accordance with 7 CFR part 3015 and part 3016.
(9) Personnel procedures and practices that will be established or
are in existence. Forms to be used should be submitted with the
application.
(10) A proposed monthly activities schedule showing the proposed
dates for starting and completing the recruitment, loan processing and
construction phases for each group of participant families.
07 CFR 1944.411 Conditions for approving a grant.
A grant may be approved for an eligible applicant when the conditions
in the letter of conditions are met and the following conditions are
present:
(a) The applicant has or can hire, or contract directly or indirectly
with, qualified people to carry out its responsibilities in
administering the grant.
(b) The applicant has met all of the conditions listed in
1944.410(e) of this subpart.
(c) The grantee furnishes a signed statement that it complies with
the requirements of the Departmental Regulations found in 7 CFR part
3015 and part 3016.
(d) A resolution has been adopted by the board of directors which
authorizes the appropriate officer to execute Exhibit A of this subpart
and Form FmHA 400-4, ''Assurance Agreement.''
(e) The grantee has fidelity bonding as covered in 7 CFR part 3015 if
a nonprofit organization or, if a State or local government, to the
extent required in 7 CFR part 3016.
(f) The grantee has agreed by completing SF-424B, ''Assurances-Non
Construction Programs,'' that it will establish a recordkeeping system
that is certifiable by a certified public accountant that it adequately
meets the Agreement.
(g) The grantee has established an interest bearing checking account
on which at least two bonded officials will sign all checks issued and
understands that interest earned in excess of $250.00 annually must be
submitted to FmHA quarterly. (The use of minority depository
institutions is encouraged.)
(h) The grantee has developed an agreement to be executed by the
grantee and the self-help participants which clearly sets forth what is
expected of each and has incorporated Exhibit B-2 of this subpart which
clearly shows what work is expected of the participating family.
(55 FR 41833, Oct. 16, 1990; 56 FR 19253, Apr. 26, 1991)
07 CFR 1944.412 Docket preparation.
When the application and all items required for the complete docket
have been received, the District Director will thoroughly examine it to
insure the application has been properly and accurately prepared and
that it includes the required dates and signatures. The docket items
will be assembled and distributed by the District Director in the
following order:
07 CFR 1944.413 Grant approval.
(a) Approval of grant. Within 30 days of the grantee meeting the
conditions of 1944.411 of this subpart or, if applicable, signing
Exhibit D, the approving official will:
(1) Execute and distribute Form FmHA 1940-1 in accordance with the
Forms Manual Insert (FMI).
(2) After the Finance Office acknowledges that funds are obligated,
request an initial advance of funds on Form FmHA 440-57,
''Acknowledgment of Obligated Funds/Check Request,'' in accordance with
the FMI. The amount of this request should cover the applicant's needs
for the remainder of the month in which the grant is closed plus the
next month. Subsequent advances will cover only a one-month period.
(b) Cancellation of an approved grant. An approved grant may be
canceled before closing if the applicant is no longer eligible, the
proposal is no longer feasible, or the applicant requests cancellation.
Cancellation will be accomplished as follows:
(1) The District Director will prepare Form FmHA 1940-10,
''Cancellation of U.S. Treasury Check and/or Obligation,'' according to
the FMI and send it to the State Director with the reasons for
cancellation. If the State Director approves the request, Form FmHA
1940-10 will be returned to the District Office for processing in
accordance with the FMI.
(2) The District Director will notify the applicant of the
cancellation and the right to appeal under subpart B of part 1900 of
this chapter. If the applicant requested the cancellation, no appeal
rights are provided, but the applicant will still be notified of the
cancellation.
(c) Disapproval of grant. If a grant is disapproved after the docket
has been developed, the approving official will state the reason on the
original Form FmHA 1940-1, or in a memorandum to the District Director.
The District Director will notify the applicant in writing of the
disapproval and the reason for disapproval. Also, the notification will
inform the applicant of its appeal rights under subpart B of part 1900
of this chapter.
1944.414 (Reserved)
07 CFR 1944.415 Grant approval and other approving authorities.
(a) The State Director is authorized to approve or disapprove TA
grants under this subpart. For a grant in excess of $300,000, or in the
case of a grant amendment when the amount of the grant plus any
unexpended funds from a previous grant will exceed $400,000, prior
written consent of the National Office is required. In such cases, the
docket, along with the State Director's recommendations, must be
submitted to the National Office for review.
(b) The State Director may approve a grant not to exceed $10,000 to
an eligible organization under 1944.410(d) of this subpart. The grant
must be limited to 6 months and funds must be used for the development
of the final application, family recruitment, and related activities as
explained in 1944.410(e) of this subpart. The amount of this grant
will not be included in figuring TA cost per units.
(c) The authority to contract for services is limited to the
Administrator of FmHA.
(d) Monthly expenditures of the grantee will normally be approved by
the District Director unless:
(1) The grantee operates in only one county, in which case the
authority may be delegated to the County Supervisor.
(2) The grantee operates in more than one FmHA District, in which
case the State Director will designate the approving official.
(3) The grantee operates in more than one State Director's
jurisdiction, in which case the Administrator will designate the
approving official.
(4) The expenditure is under contract authority, in which case the
Contracting Official Representative will approve the monthly
expenditure.
07 CFR 1944.416 Grant closing.
The grant is closed on the date the Agreement is executed as defined
in 1944.403(a) by the applicant and the Government. Funds may not be
advanced prior to the signing of the Agreement. The District Director
or Assistant District Director are authorized to execute the Agreement
for FmHA. Person(s) authorized by resolution may sign for the
applicant.
07 CFR 1944.417 Servicing actions after grant closing.
FmHA has a responsibility to help the grantee be successful and help
the grantee avoid cases of fraud and abuse. Servicing actions also
include correlating activities between the grantee and FmHA to the
benefit of the participating families. The amount of servicing actions
needed will vary in accordance with the experience of the grantee, but
as minimum the following actions are required:
(a) Monthly, the grantee will provide the District Director with a
request for additional funds on Form SF-270, ''Request for Advance or
Reimbursement.'' This request need only show the amount of funds used
during the previous month, amount of unspent funds, projected need for
the next 30 days, and written justification if the request exceeds the
projected need for the next 30 days. This request must be in the
District Director's office fifteen days prior to the beginning of the
month. Upon receipt of the grantee's request, the District Director
will:
(1) If the request appears to be in order, process Form FmHA 440-57
so that delivery of the check will be possible on the first of the next
month.
(2) If the request does not appear to be in order, immediately
contact the grantee to resolve the problem. After the contact:
(i) If the explanation is acceptable, process Form FmHA 440-57 so
delivery may be possible by the first of the next month, or
(ii) If the explanation is not acceptable, immediately notify the
grantee and request the amount of funds that appear reasonable for the
next 30 days on Form FmHA 440-57, so that delivery may be possible by
the first of the next month. Unapproved funds that are later approved
will be added to the next month's request.
(b) Quarterly, the grantee will submit Exhibit B of this subpart in
an original and three copies to the County Supervisor on or before
January 15, April 15, July 15, and October 15 which will verify its
progress toward meeting the objectives stated in the Agreement and the
application. The County Supervisor will immediately complete the County
Office review part and forward the report to the District Office. After
Exhibit B is received in the District Office, a meeting should be
scheduled between the grantee, District Director, and the County
supervisor since this is an opportune time for both the grantee and FmHA
to review progress to date and make necessary adjustments for the
future. This meeting is required if the grantee was previously
identified as a problem grantee or will be identified as a problem
grantee at this time. Regardless of whether a meeting will be held, the
following will be done:
(1) Exhibit B and other information will be evaluated to determine
progress made to date. The District Director will comment on Exhibit B
as to whether the grantee is ahead or behind schedule in each of the
following areas:
(i) Assisting the projected number of families.
(ii) Serving very low-income applicants. Is the grantee reaching a
minimum of very low-income families as required in Exhibit A, Attachment
2 to subpart L of part 1940 of this chapter (available in any FmHA
office).
(iii) Equivalent units (EUs). Is the number of EUs completed
representative of lapse in time of the grant? For example, if 25
percent of the grant period has elapsed, are 25 percent of the number of
EUs completed?
(iv) Labor contributions by the family. Are the families working
together and are they completing the labor tasks as established on
Exhibit B-2?
(2) The District Director will submit Exhibit B to the State Director
who will evaluate the quarterly report along with the District
Director's comments. If the State Director determines the grantee is
progressing satisfactorily, the State Director will sign and forward
Exhibit B to the National Office. However, if the State Director
determines the grantee is not performing as expected, the State Director
will notify the grantee that it has been classified a ''High Risk''
grantee. The notice will specify the deficiencies and inform the
grantee of proposed remedies for noncompliance. The notice will advise
the grantee that FmHA is available to assist and provide the name and
address of an organization that is under contract with FmHA to assist
them. The State Director will forward a copy of Exhibit B, District
Directors comments, and the reasons for classifying them as ''High
Risk'' to the National Office, Single Family Housing, Special Programs
Branch. When the period of time provided for corrective action has
expired, an assessment will be made of the progress by the grantee
toward correcting the situation. If the State Director determines:
(i) The situation has been corrected or reasonable progress has been
made toward correcting the situation, the ''High Risk'' status will be
lifted and the grantee so notified.
(ii) The situation has not been corrected but it is correctable if
additional time is granted, an extension will be issued.
(iii) The situation has not been corrected and it is unlikely to be
corrected if given additional time, the grant will be terminated under
1944.426(b)(1) of this subpart.
(55 FR 41833, Oct. 16, 1990; 56 FR 19253, Apr. 26, 1991)
1944.418 (Reserved)
07 CFR 1944.419 Final grantee evaluation.
Near the end of the grant period but prior to the last month, an
evaluation of the grantee will be conducted by FmHA. The State Director
may use FmHA employees or an organization under contract to FmHA to
provide the evaluation. The evaluation is to determine how successful
the grantee was in meeting goals and objectives as defined in the
agreement, application, this regulation, and any amendments.
(a) This is a quantitative evaluation of the grantee to determine if
it met its goals in:
(1) Assisting the project number of families in obtaining adequate
housing.
(2) Meeting the goal of assisting very low-income families.
(3) Meeting the family labor requirement in 1944.411(h) and Exhibit
B-2 of this subpart.
(4) Keeping costs within the guides set in 1944.407.
(5) Meeting order objectives in the Agreement.
(b) The evaluation is a narrative addressed to the State Director
with a copy of the National Office, Single Family Housing Processing
Division. It will be in 3 parts, namely; findings, recommendations,
and an overall rating. The rating will be either unacceptable,
acceptable, or outstanding, as follows:
(1) Outstanding if the grantee met or exceeded all of the goals in
paragraph (a) of this section.
(2) Acceptable if the grantee met or exceeded all of the goals as
defined in paragraph (a) except two.
(3) Unacceptable if the grantee failed to obtain an acceptable
rating.
(c) After the State Director has reviewed the evaluation, a copy will
be mailed to the grantee. The grantee may request a review of the
evaluation with the District Director. This review is for clarification
of the material and to dispute the findings if they are known to be
wrong. The rating is not open for discussion except to the extent it
can be proven that the findings do not support the rating. If this is
the case, the District Director will file an amendment to the State
Director.
07 CFR 1944.420 Extension or revision of the grant agreement.
The State Director may authorize the District Director to execute on
behalf of the Government, Exhibit C of this subpart, at any time during
the grant period provided:
(a) The extension period is for no more than one year from the final
date of the existing Agreement.
(b) The need for the extension is clearly justified.
(c) If additional funds are needed, a revised budget is submitted
with complete justification, and
(d) The grantee is within the guidelines in 1944.407 of this subpart
or the State Director determines that the best interest of the
Government will be served by the extension.
07 CFR 1944.421 Refunding of an existing grantee.
Grantees wishing to continue with self-help efforts after the end of
the current grant plus any extensions should file Form SF-424, in
accordance with 1944.410(e). It is recommended that it be filed at
least 6 months before the end of the current grant period. Funds from
the existing grant may be used to meet the conditions of a new grant to
serve the same or redefined geographic area. If the grantee is
targeting a different geographic area, a new preapplication must be
submitted in accordance with 1944.410 and the grantee may apply for a
predevelopment grant in accordance with 1944.410(d). In addition to
meeting the conditions of an applicant as defined in 1944.411 of this
subpart, the grantee must also have received or will receive an
acceptable rating on its current grant unless an exception is granted by
the State Director. The State Director may grant an exception to the
rating if it is determined that the reasons causing the previous
unacceptable rating have been removed or will be removed with the
approval of this grant.
07 CFR 1944.422 Audit and other report requirements.
The grantee must submit an audit to the appropriate FmHA District
Office annually (or biennially if a State or local government with
authority to do a less frequent audit requests it) and within 90 days of
the end of the grantee's fiscal year, grant period, or termination of
the grant. The audit, conducted by the grantee's auditors, is to be
performed in accordance with Generally Accepted Government Auditing
Standards (GAGAS), using the publication ''Standards for Audit of
Governmental Organizations, Programs, Activities and Functions''
developed by the Comptroller General of the United States in 1981, and
any subsequent revisions. In addition, the audits are also to be
performed in accordance with 7 CFR parts 3015 and 3016 and FmHA
requirements as specified in this subpart. Audits of borrower loan
funds will be required. The number of borrower accounts audited will be
determined by the auditor. In incidences where it is difficult to
determine the appropriate number of accounts to be audited, auditors
should be authorized by the State Director to audit the lesser of 10
loans or 10 percent of total loans.
(a) Nonprofit organizations and others. If determined necessary
these organizations are to be audited in accordance with FmHA
requirements OMB Circular A-110, A-133, and 7 CFR part 3015. These
requirements also apply to public hospitals, public colleges, and
universities if they are excluded from the audit requirements of
paragraph (b) of this section.
(1) An audit conducted by the grantee's auditor shall be supplied to
the FmHA District Director as soon as possible but in no case later than
ninety (90) days following the period covered by the grant agreement.
(2) Auditors shall promptly notify United States Department of
Agriculture's Office of the Inspector General Regional Inspector General
and the FmHA District Office, in writing, of any indication of fraud,
abuse, or illegal acts in grantees use of grant funds or in the handling
of borrowers accounts.
(3) Nonprofit organizations that receive less than $25,000 a year in
Federal financial assistance need not be audited.
(b) State and local governments and Indian tribes. These
organizations are to be audited in accordance with this subpart and 7
CFR part 3016. The grantee will forward completed audits to the
appropriate Federal cognizant agency and a copy to the FmHA District
Director. ''Cognizant agency'' means the Federal agency assigned by OMB
Circular A-128. Within USDA, and OIG shall fulfill cognizant agency
responsibilities. Smaller grantees not assigned a cognizant agency by
OMB should contact the Federal agency that provided the most funds.
When USDA is designated as the cognizant agency or when it has been
determined by the borrower that FmHA provided the major portion of
Federal financial assistance, the State Director will contact the
appropriate USDA OIG Regional Inspector General. FmHA and the borrower
shall coordinate all proposed audit plans with the appropriate USDA OIG.
(1) State and local governments and Indian tribes that receive
$25,000 or more a year in Federal financial assistance shall have an
audit made in accordance with 7 CFR part 3016.
(2) State and local and Indian tribes that receive less than $25,000
a year in Federal financial assistance shall be exempt from 7 CFR part
3016.
(3) Public hospitals and public colleges and universities may be
excluded by the State Director from OMB Circular A-128 audit
requirements. If such entities are excluded, audits shall be made in
accordance with paragraph (a) of this section.
(55 FR 41833, Oct. 16, 1990; 56 FR 19253, Apr. 26, 1991)
07 CFR 1944.423 Loan packaging and 502 RH application submittal.
A grantee is required to assist 502 RH applicants in submitting their
application for a RH loan. Loan packaging will be performed in
accordance with Exhibit A of subpart A of part 1944 of this chapter;
therefore, it is important that the grantee be trained at an early date
in the packaging of RH loans. Typically, this training should take
place before the first applications are submitted to the County Office
and before the grant is closed. A grantee should become very
knowledgeable of FmHA's eligibility requirements but must understand
that only FmHA can approve or deny an applicant assistance. Grantee
must work cooperatively with FmHA in the 502 loan approval process and
must work within the regulations for the 502 program and recognize
FmHA's ultimate decision making authority to approve or deny loans.
However, the grantee may ask for clarification that may be helpful in
working with future applicants. Grant funds may not be used to pay any
expense in connection with an appeal that the applicant may file or
pursue.
07 CFR 1944.424 Dwelling construction and standards.
All construction will be performed in accordance with subpart A of
part 1924 of this chapter. The planned work must meet the building
requirements of subpart A of part 1944 of this chapter and meet the
Development Standards as defined in subpart A of part 1924 of this
chapter and in any local codes. Sites and site developments must
conform to the requirements of subpart C of part 1924 of this chapter.
07 CFR 1944.425 Handling and accounting for borrower loan funds.
Grantees will be required to administer borrower loan funds during
the construction phases. The extent of their involvement will depend on
the experience of the grantee and the amount of authority delegated to
them by the District Director in accordance with 1924.6(c) of subpart A
of part 1924 of this chapter. Training should include FmHA's
non-discrimination policies in receiving applications.
07 CFR 1944.426 Grant closeout.
(a) Grant purposes completed. Promptly after the date of completion,
grant closeout actions will be taken to allow the orderly discontinuance
of grantee activity.
(1) The grantee will immediately refund to FmHA any balance of grant
funds advanced that are not committed for the payment of authorized
expenses as prescribed in 1951.58(j) of FmHA Instruction 1951-B
(available in any FmHA office).
(2) The grantee will furnish Form SF-269A, ''Financial Status Report
(short form)'' to FmHA within 90 days after the date of completion of
the grant. All other financial, performance, and other reports required
as a condition of the grant also will be completed.
(3) After the grant closeout, FmHA retains the right to recover any
disallowed costs which are discovered as a result of the final audit.
Subpart M of part 1951 of this chapter will be used by FmHA to recover
any unauthorized expenditures.
(4) The grantee will provide FmHA an audit conforming to those
requirements established in this part, including audits of self-help
borrower accounts.
(5) Upon request from the recipient, any allowable reimbursable cost
not covered by previous payments shall be promptly paid by FmHA.
(b) Grant purposes not completed -- (1) Notification of termination.
The State Director will promptly notify the grantee and the National
Office in writing of the termination action including the specific
reasons for the decision and the effective date of the termination. The
notification to the grantee will specify that if the grantee believes
the reason for the proposed termination can be resolved, the grantee
should, within 15 calendar days of the date of this notification,
contact the State Director in writing requesting a meeting for further
consideration. The meeting will be an informal proceeding at which the
grantee will be given the opportunity to provide whatever additional
information it believes should be considered in reaching a decision
concerning the case. The grantee may have an attorney or any other
person present at the meeting if desired. Within 7 calendar days of the
meeting, the State Director will determine what action to take.
(i) If the State Director determines that termination is not
necessary, the grantee will be informed by letter along with the
District Director.
(ii) If the State Director determines that termination of the grant
is appropriate, he/she will promptly inform the grantee by the use of
Exhibit B-3 of subpart B of part 1900 of this chapter.
(2) National Office review. (i) Upon receipt of a request from a
grantee that the decision of the State Director be reconsidered, the
National Office will make a preliminary decision concerning the
continued funding of the grantee during the appeal period. Written
notification of the decision will be given to the State Director and
grantee.
(ii) The National Office will then obtain a comprehensive report on
the matter from the State Office. This information will be considered
together with any additional information that may be provided by the
grantee.
(c) Grant suspension. When the grantee has failed to comply with the
terms of the agreement, the District Director will promptly report the
facts to the State Director. The State Director will consider
termination or suspension of the grant usually only after a Grantee has
been classified as ''high risk'' in accordance with 1944.417(b)(2) of
this subpart. When the State Director determines that the grantee has a
reasonable potential to correct deficiencies the grant may be suspended.
The State Director will request written authorization from the National
Office to suspend a grantee. The suspension will adhere to 7 CFR parts
3015 and 3016. The grantee will be notified of the grant suspension in
writing by the State Director. The State Director will also promptly
inform the grantee of its rights to appeal the decision by use of
Exhibit B-3 of subpart B of part 1900 of this chapter.
(d) Grant termination. The State Director may terminate the grant
agreement whenever FmHA determines that the grantee has failed to comply
with terms of the Agreement. The reasons for termination may include,
but are not limited to, such problems as listed in paragraph (e)(3)(i)
of Exhibit A of this subpart. The State Director may also withhold
further disbursement of grant funds and prohibit the grantee from
incurring additional obligations of grant funds with written approval of
the National Office. FmHA will allow all necessary and proper costs
which grantee could not reasonably avoid.
(i) Termination for cause. The grant agreement may be terminated in
whole, or in part, at any time before date of completion, whenever FmHA
determines that the grantee has failed to comply with terms of the
Agreement. The State Director will notify the grantee in writing giving
the reasons for the action and inform the grantee of its rights of
appeal by use of Exhibit B-3 of subpart B of part 1900 of this chapter.
(ii) Termination for convenience. FmHA or the grantee may terminate
the grant in whole, or in part, when both parties agree that the
continuation of the grant would not produce beneficial results. The two
parties will agree in writing to the termination conditions including
the effective date. No notice of rights of appeal will be issued by
FmHA.
07 CFR 1944.427 Grantee self-evaluation.
Annually or more often, the board of directors will evaluate their
own self-help program. Exhibit E of this subpart is provided for that
purpose. It is also recommended that they review their personnel
policy, any audits that may have been conducted and other reports to
determine if they need to make adjustments in order to prevent fraud and
abuse, and meet the goals in the current grant agreement.
1944.428 -- 1944.449 (Reserved)
07 CFR 1944.450 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have ben approved by the Office of Management and Budget and
have been assigned OMB control number 0575-0043. Public reporting
burden for this collection of information is estimated to vary from 10
minutes to 18 hours per response, with an average of 1.17 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. Send comments regarding
this burden estimate or any other aspect of this collection of
information, including suggestions for reducing this burden, to
Department of Agriculture, Clearance Officer, OIRM, room 404-W,
Washington, DC 20250; and to the Office of Management and Budget,
Paperwork Reduction Project (OMB 0575-0043), Washington, DC 20503.
07 CFR 1944.450 Exhibits to Subpart I
07 CFR 1944.450 Pt. 1944, Subpt. I, Exh. A
07 CFR 1944.450 Exhibit A -- Self-Help Technical Assistance Grant
Agreement
THIS GRANT AGREEMENT dated XXXX, 19XX, is between XXXXXX
--
a nonprofit corporation (''Grantee''), organized and operating under
--
(authorizing State statute)
and the United States of America acting through the Farmers Home
Administration, Department of Agriculture (''FmHA'').
In consideration of financial assistance in the amount of $XXXX
(called ''Grant Funds'') to be made available by FmHA to Grantee under
section 523(b)(1)(A) of the Housing Act of 1949 to be used in (specify
area to be served) XXXX for the purpose of providing a program of
technical and supervisory assistance which will aid low-income families
in carrying out mutual self-help housing efforts. Grantee will provide
such a program in accordance with the terms of this Agreement and FmHA
regulations.
Date of Completion means the date when all work under a grant is
completed or the date in the TA Grant Agreement, or any supplement or
amendment thereto, on which Federal assistance ends.
Disallowed costs are those charges to a grant which the FmHA
determines cannot be authorized.
Grant Closeout is the process by which the grant operation is
concluded at the expiration of the grant period or following a decision
to terminate the grant.
Termination of a grant means the cancellation of Federal assistance,
in whole of in part, under a grant at any time prior to the date of
completion.
(a) This Agreement shall terminate XXXX years from this date unless
extended or sooner terminated under paragraphs (e) and (f) of this
Agreement.
(b) Grantee shall carry out the self-help housing activity described
in the application docket which is attached to and made a part of this
Agreement. Grantee will be bound by the conditions set forth in the
docket, 7 CFR part 1944, subpart I, and the further conditions set forth
in this Agreement. If any of the conditions in the docket are
inconsistent with those in the Agreement or subpart I of part 1944, the
latter will govern. A waiver of any condition must be in writing and
must be signed by an authorized representative of FmHA.
(c) Grantee shall use grant funds only for the purposes and
activities specified in FmHA regulations and in the application docket
approved by FmHA including the approved budget. Any uses not provided
for in the approved budget must be approved in writing by FmHA in
advance.
(d) If Grantee is a private nonprofit corporation, expenses charged
for travel or per diem will not exceed the rates paid FmHA employees for
similar expenses. If Grantee is a public body, the rates will be those
that are allowable under the customary practice in the government of
which Grantee is a part; if none are customary, the FmHA rates will be
the maximum allowed.
(e) Grant closeout and termination procedures will be as follows:
(1) Promptly after the date of completion or a decision to terminate
a grant, grant closeout actions are to be taken to allow the orderly
discontinuation of Grantee activity.
(i) Grantee shall immediately refund to FmHA any uncommitted balance
of grant funds.
(ii) Grantee will furnish to FmHA within 90 days after the date of
completion of the grant a ''Financial Status Report'', Form SF-269A.
All financial, performance, and other reports required as a condition of
the grant will also be completed.
(iii) Grantee shall account for any property acquired with technical
assistance (TA) grant funds, or otherwise received from FmHA.
(iv) After the grant closeout, FmHA retains the right to recover any
disallowed costs which may be discovered as a result of any audit.
(2) When there is reasonable evidence that Grantee has failed to
comply with the terms of this Agreement, the State Director may
determine Grantee as ''high risk''. A ''high risk'' Grantee will be
supervised to the extent necessary to protect the Government's interest
and to help Grantee overcome the deficiencies.
(3) Grant termination will be based on the following:
(i) Termination for cause. This grant may be terminated in whole, or
in part, 90 days after a Grantee has been classified as ''high risk'' if
the State Director determines that Grantee has failed to correct
previous deficiencies and is unlikely to correct such items if
additional time is allowed. The reasons for termination may include,
but are not limited to, such problems as:
(A) Actual TA costs significantly exceeding the amount stipulated in
the proposal.
(B) The number of homes being built is significantly less than
proposed construction or is not on schedule.
(C) The cost of housing not being appropriate for the self-help
program.
(D) Failure of Grantee to only use grant funds for authorized
purposes.
(E) Failure of Grantee to submit adequate and timely reports of its
operation.
(F) Failure of Grantee to require families to work together in groups
by the mutual self-help method in the case of new construction.
(G) Serious or repetitive violation of any of the provisions of any
laws administered by FmHA or any regulation issued under those laws.
(H) Violation of any nondiscrimination or equal opportunity
requirement administered by FmHA in connection with any FmHA programs.
(I) Failure to establish an accounting system acceptable to FmHA.
(J) Failure to serve very low-income families.
(K) Failure to recruit families from substandard housing.
(ii) Termination for convenience. FmHA or Grantee may terminate the
grant in whole, or in part, when both parties agree that the
continuation of the project would not produce beneficial results
commensurate with the further expenditure of funds. The two parties
shall agree upon the termination conditions, including the effective
date and, in case of partial termination, the portion to be terminated.
(4) To terminate a grant for cause, FmHA shall promptly notify
Grantee in writing of the determination and the reasons for and the
effective date of the whole or partial termination. Grantee will be
advised of its appeal rights under 7 CFR part 1900, subpart B.
(f) An extension of this grant agreement may be approved by FmHA
provided, in its opinion, the extension is justified and there is a
likelihood that the Grantee can accomplish the goals set out and
approved in the application docket during the period of the extension.
(g) Grant funds may not be used to pay obligations incurred before
the date of this Agreement. Grantee will not obligate grant funds after
the grant termination or completion date.
(h) As requested and in the manner specified by FmHA, the Grantee
must make quarterly reports, Exhibit C of this subpart (on 1/15, 4/15,
7/15 and 10/15 of each year), and a financial status report at the end
of the grant period, and permit on-site inspections of program progress
by FmHA representatives. FmHA may require progress reports more
frequently if it deems necessary. Grantee must also comply with the
audit requirements found in 1944.422 of subpart I of 7 CFR part 1944,
if applicable. Grantee will maintain records and accounts, including
property, personnel and financial records, to assure a proper accounting
of all grant funds. These records will be made available to FmHA for
auditing purposes and will be retained by Grantee for three years after
the termination or completion of this grant.
(i) Acquisition and disposal of personal equipment and supplies
should comply with subpart R of 7 CFR part 3015 and subpart C of 7 CFR
part 3016.
(j) Results of the program assisted by grant funds may be published
by Grantee without prior review by FmHA, provided that such publications
acknowledge the support provided by funds pursuant to the provisions of
Title V of the Housing Act of 1949, 42 U.S.C. 1471, et seq., and that
five copies of each such publication are furnished to the local
representative of FmHA.
(k) Grantee certifies that no person or organization has been
employed or retained to solicit or secure this grant for a commission,
percentage, brokerage, or contingent fee.
(l) Grantee shall comply with all civil rights laws and the FmHA
regulations implementing these laws.
(m) In all hiring or employment made possible by or resulting from
this grant, Grantee: (1) Will not discriminate against any employee or
applicant for employment because of race, religion, color, sex, marital
status, national origin, age, or mental or physical handicap, and (2)
will take affirmative action to insure that applicants are employed, and
that employees are treated during employment without regard to their
race, religion, color, sex, marital status, national origin, or mental
or physical handicap. This requirement shall apply to, but not be
limited to, the following: Employment, upgrading, demotion, or
transfer; recruitment or recruitment advertising; layoff or
termination; rates of pay or other forms of compensation; and
selection for training, including apprenticeship. In the event Grantee
signs a contract which would be covered by any Executive Order, law, or
regulation prohibiting discrimination, Grantee shall include in the
contract the ''Equal Employment Clause'' as specified by FmHA.
(n) It is understood and agreed by Grantee that any assistance
granted under this Agreement will be administered subject to the
limitations of Title V of the Housing Act of 1949 as amended, 42 U.S.C.
1471 et seq., and related regulations, and that rights granted to FmHA
in this Agreement or elsewhere may be exercised by it in its sole
discretion to carry out the purposes of the assistance, and protect
FmHA's financial interest.
(o) Grantee will maintain a code or standards of conduct which will
govern the performance of its officers, employees, or agents. Grantee's
officers, employees, or agents will neither solicit nor accept
gratuities, favors, or anything of monetary value from suppliers,
contractors, or others doing business with the grantee. To the extent
permissible by State or local law, rules, or regulations such standards
will provide for penalties, sanctions, or other disciplinary actions to
be taken for violations of such standards.
(p) Grantee shall not hire or permit to be hired any person in a
staff position or as a participant if that person or a member of that
person's immediate household is employed in an administrative capacity
by the organization, unless waived by the State Director. (For the
purpose of this section, the term ''household'' means all persons
sharing the same dwelling, whether related or not).
(q) Grantee's board members or employees shall not directly pr
indirectly participate, for financial gain, in any transactions
involving the organization or the participating families. This includes
activities such as selling real estate, building material, supplies, and
services.
(r) Grantee will retain all financial records, supporting documents,
statistical records, and other records pertinent to this agreement for 3
years, and affirms that it is fully aware of the provisions of the
Administrative Remedies for False Claims and Statements Act, 31 U.S.C.
3801, et seq.
By
(Signature)
--
(Title)
GRANTEE
By
(Signature)
--
(Title)
FARMERS HOME ADMINISTRATION
07 CFR 1944.450 Pt. 1944, Subpt. I, Exh. B
07 CFR 1944.450 Exhibit B -- Evaluation Report of Self-Help Technical
Assistance (TA) Grants
Evaluation for Quarter Ending: (1) XXX, 19 XXX
1. a. Name of Grantee: (2) XXX
b. Address: (3) XXX
c. Area the grant serves: (4) XXX
2. Date of Agreement: (5) XXX Time Extended (6) XXX
3. a. Equivalent unit increase during quarter:
(7)
First Month
(8)
Second Month
(9)
Third Month
b. Cumulative total number of Equivalent Units since beginning of
grant:
(10)
Total to Date
4. a. Method of Construction:
Stick built XXX%, Panelized XXX%, Combined XXX%
b. Number of bedrooms per house built this grant period:
2BR,
3BR,
--
c. Household size this Quarter:
1 person XXX,
2 persons XXX,
3 persons XXX,
4 persons XXX,
5 persons XXX.
d. Number of houses under construction this grant period, but started
during previous grant period: XXX
5. a. Number of houses proposed under this grant:
(11)
b. Number of houses completed under this grant:
(12)
c. Number of houses currently under construction:
(13)
d. Number of families in pre construction:
(14)
e. Number of Construction Supervisors:
(15)
f. Number of TA employees:
(16)
6. a. Average time needed to construct a single house:
(17)
b. Number of months between submission of self-help borrower's docket
and approval/rejection:
(18)
c. Number and percentage of loan docket rejections during reporting
period: XXX
(19)
7. a. Did any of the following adversely affect the Grantee's ability
to accomplish program objectives?
8. Attach information concerning number of families contacted, number
who have indicated a willingness to be a participating family, number of
mutual self-help groups organized, progress on any construction started,
and any problems relating to the operation of this grant.
I certify that the statements made above are true to the best of my
knowledge and belief.
(20)
(Date)
(21)
(Title)
GRANTEE
(22)
(Signature)
I have reviewed the above information which I have found to be
substantially correct. Must be completed by County Office.
Comment: Must be completed (23)
Average appraisal value of units financed this Quarter:
--
Average amount loan per unit financed this Quarter:
--
(24)
(Date)
(25)
County Supervisor
Comment: Must be completed (26)
(27)
Date
(28)
District Director
Comments: Must be completed (29)
(30)
Date
(31)
State Office Representative
07 CFR 1944.450 Pt. 1944, Subpt. I, Exh. B-1
07 CFR 1944.450 Exhibit B-1 -- Instructions for Preparation of
Evaluation Report of Self-Help Technical Assistance Grants
Exhibit B will be used by all Technical Assistance (TA) Grantees
obtaining self-help TA grants. This attachment provides the grantee and
FmHA a uniform method of reporting the performance progress of self-help
projects. The TA Grantee will prepare an original and 4 copies of the
attachment. The TA Grantee will sign the original and 3 copies and
forward it to the local FmHA County Office. The TA Grantee will keep
the unsigned copy for its records.
The evaluation report will be completed in accordance with the
following:
1. Enter the date the quarter ends either March 31, June 30,
September 30, or December 31 and the year.
2. Enter the full name of the TA Grantee organization.
3. Enter the complete mailing address of the TA Grantee organization.
4. Enter the area served by the grant.
5. Enter the date of the initial self-help TA grant agreement.
6. Enter the time of any extension self-help TA grant agreement(s).
7. Insert the number of equivalent units (EU) completed the
first/second/third month of the quarter using steps 1, 2, and 3 of
Exhibit B-3.
8. Insert the number of EU's completed the second month of the
quarter by using steps 1, 2, and 3 of Exhibit B-3.
9. Insert the number of EU's completed the third month of the quarter
by using steps 1, 2, and 3 of Exhibit B-3.
10. Add items (7), (8), and (9) to the total from the previous
quarterly report to obtain the cumulative total number of EU's. This
total is the cumulative total number of EU's for the project.
11. Enter the number of houses planned in the TA Grantee proposal(s).
12. Enter the number of houses completed and occupied since the
beginning of the grant.
13. Enter the number of houses that are under construction at the end
of this quarter.
14. Enter the number of families in the pre-construction phase.
15. Enter the total number of construction supervisor(s) paid with TA
grant funds.
16. Enter the number of employees paid with TA grant funds including
those listed in item 15.
17. Insert the average elapsed time needed per house from excavation
to final inspection by FmHA to complete construction of a house. If no
self-help homes have been completed by this grantee, use other projects
or your best estimate as a guide.
18. Enter the number of months it takes on average to approve or
reject a borrower's docket once it's submitted.
19. Enter number and percent of dockets submitted and rejected this
quarter.
20. Enter date of Exhibit submittal.
21. Insert title of the Grantee or authorized representative.
22. Signature of Grantee or authorized representative.
23. County Supervisor must answer questions concerning market value
and loan amount and also should insert comments concerning progress of
construction, success of the project and any problems that the
organization may have.
24. Insert date of County Supervisor's review.
25. Signature of County Supervisor.
26. District Director representative should insert his/her comments
concerning items listed in 1944.417(b)(1) of 1944-I.
27. Insert date of District Director review.
28. Signature of District Director or representative.
29. Insert State Office comments.
30. Insert date of State Office review.
31. Signature of State Office representative.
07 CFR 1944.450 Pt. 1944, Subpt. I, Exh. B-2
07 CFR 1944.450 -- Pt. 1944, Subpt. I, Exh. B-3
07 CFR 1944.450 -- Exhibit B-3 -- Pre-Construction and Construction
Phase Breakdown
I. General. This Exhibit will be used by Farmers Home Administration
(FmHA) and the Grantee in determining Grantee performance as required in
1944.417(b) of this subpart.
II. Determining technical assistance (TA) cost per unit.
A. Equivalent units are used to measure progress at any time during
the period of the grant. It is necessary because self-help grantees
have several groups of families in various stages of progress during the
period of the grant. The following formula has been developed to
provide a more accurate method of determining progress.
B. Using the Description of Phase Breakdown as a guide, the project
staff selects the total percentage pertinent to the stage the self-help
group is in and multiplies that percentage by the number of families
(units) in the group. The result is the equivalent number of units
completed. No credit may be given for Phase I, if the application is
rejected. When this computation has been completed for each group that
falls within Phases I-III, the total number of equivalent units is
divided into the total grant funds expended to that date. The result is
the TA cost per unit at that stage of the program's progress.
C. The definition of pre-construction and construction phases
described are follows:
Phase I: Hold community meetings; conduct interviews; obtain house
plans; prepare cost estimates; begin search for land; submit family
applications to the lender; lender runs credit check; applications.
Lender either approves or rejects.
Phase II: Organize an association of section 502 Rural Housing
eligible families; association conducts weekly meetings at which
required lender forms are discussed and completed; house plans and land
sites are selected; outside speakers explain and discuss taxes,
insurance, how to keep a checking account, how interest is computed,
home maintenance, decorating, and landscaping; etc.; completed loan
dockets for each family are submitted to the lender. Family loan
dockets are reviewed and recommendations made as to the loan amounts
requested; the lender reviews family loan dockets; preliminary title
search of each proposed building site is begun; requests loan check
from Finance Office; when check arrives, final title search is made,
loan closed, checking accounts opened, and construction begun.
Construction: The grantee will utilize Exhibit B-2 which outlines 27
construction tasks to determine the percentage of completed construction
activities.
D. The computation of equivalent units and TA costs will be computed
as follows:
Exhibit C will be used for recording the following information and
construction in this example which starts January 1.
Both the grantee and FmHA review the FmHA loan application records to
determine the percentage of completion for each family in the
pre-construction phase of the program. These are Phases I-III. Total
these percentages to find the number of ''equivalent units'' (EUs)
completed at that date during pre-construction. For example, if there
are eight families in Group 2 and all have completed the 20 percent
phase of pre-construction, then there would be 1.6 EUs in the
pre-construction phase of the program as of that date. Each phase must
be completed before it is considered in the calculation.
Refer to the records of construction progress for families in the
construction Phase III. As of that date, the director totals the
percentage of completion figures for each family as follows:
Total production in the construction phase is therefore 2.92 EUs as
of that date.
Add the pre-construction and construction subtotals together:
This provides the total EUs of production during the first three
months of operation. Steps 1, 2, and 3 will be used to complete items
7, 8 and 9 of Exhibit B of this subpart.
III. Preparation:
Compile Exhibit B of this subpart in an original and four copies.
The exhibit will be signed by the TA Grantee. Submit the original and
three copies of the exhibit quarterly to FmHA County Office on or before
January 15, April 15, July 15, and October 15, of each year for the
quarters ending March 31, June 30, September 30, and December 31 of each
year. The District Director will keep the original and forward two
copies to the State Office. The State Office will forward one copy to
the National Office. The State Office will prepare information
concerning TA grants closed within 30 days of the end of a quarter on
the next quarterly report.
07 CFR 1944.450 -- Pt. 1944, Subpt. I, Exh. C
07 CFR 1944.450 -- Exhibit C -- Amendment to Self-Help Technical
Assistance Grant Agreement
This Agreement dated, XXXX 19XX
between
a nonprofit corporation (''Grantee''), organized and operating under
(authorizing State Statute)
and the United States of America acting through the Farmers Home
Administration, Department of Agriculture (''FmHA''), amends the
''Self-Help Technical Assistance Grant Agreement'' between the parties
dated XXXX 19XX, (''Agreement'').
The Agreement is amended by providing additional financial assistance
in the amount of XXXX to be made available by FmHA to Grantee pursuant
to section 523 of Title V of the Housing Act of 1949 for the purpose of
assisting in providing a program of technical and supervisory assistance
which will aid low-income families in carrying out mutual self-help
housing efforts; or
The Agreement is amended by changing the completion date specified in
convenant 1 from XXXX to XXXX and by making the following attachments to
this amendment: (List and identify proposal and any other documents
pertinent to the grant.)
Agreed to this XX day of XX 19XX.
--
(Name of Grantee)
By
(Signature)
(Title)
United States of America
By
(Signature)
--
(Title)
Farmers Home Administration
07 CFR 1944.450 -- Pt. 1944, Subpt. I, Exh. E
07 CFR 1944.450 -- Exhibit D -- Self-Help Technical Assistance Grant
Predevelopment Agreement
This grant predevelopment agreement dated, XX 19 XX, is between
XXXXXXXXXXXX
a nonprofit corporation (''Grantee''), organized and operating under
XXXXXXXXXXXX
(authorizing State statute)
and the United States of America acting through the Farmers Home
Administration, Department of Agriculture (''FmHA'').
In consideration of financial assistance in the amount of $XX
(''Grant Funds'') to be made available by FmHA to Grantee under section
523 (b)(1)(A) of the Housing Act of 1949 to be used in (specify area to
be served) XXXXXXXX for the purpose of developing a program of technical
and supervisory assistance which will aid low-income families in
carrying out mutual self-help housing efforts, Grantee will provide such
a program in accordance with the terms of this Agreement and FmHA
regulations.
Grant funds will be used for authorized purposes as contained in
1944.410(d) of 7 CFR part 1944, subpart I, as necessary, to develop a
complete program for a self-help TA grant. This will include
recruitment, screening, loan packaging and related activities for
prospective self-help participants.
Agreed to this XX day of XX 19XX.
--
(Name of Grantee)
By
(Signature)
(Title)
United States of America
By
(Signature)
--
(Title)
Farmers Home Administration
07 CFR 1944.450 -- Pt. 1944, Subpt. I, Exh. E
07 CFR 1944.450 -- Exhibit E -- Guidance for Recipients of Self-Help
Technical Assistance Grants (Section 523 of Housing Act of 1949)
7 CFR part 1944, subpart I provides the specific details of this
grant program. The following is a list of some functions of the grant
recipients taken from this subpart. With the list are questions we
request to be answered by the recipients to reduce the potential for
fraud, waste, unauthorized use or mismanagement of these grant funds.
We suggest the Board of Directors answer these questions every six
months by conducting their own review. Paid staff should not be
permitted to complete this evaluation.
What, if any, problems exist that need to be corrected for effective
management of the grant project?
--
Date
--
President, Board of Directors
(Period covered by report XXX)
The following answers should help your organization in assessing its
vulnerability to fraud, waste, and abuse. You should take actions to
correct practices that now generate an answer different from the key.
07 CFR 1944.450 -- Pt. 1944, Subpt. I, Exh. F
07 CFR 1944.450 -- Exhibit F -- Site Option Loan to Technical
Assistance Grantees
I. Objectives. The objective of a Site Option (SO) loan under Section
523(b)(1)(B) of Title V of the Housing Act of 1949 is to enable
technical assistance (TA) grantees to establish revolving fund accounts
to obtain options on land needed to make sites available to families
that will build their own homes by the self-help method. An SO loan
will be considered only when sites cannot be made available by other
means including a regular Rural Housing Site (RHS) loan.
II. Eligibility requirements. To be eligible for an SO loan, the
applicant must be a TA grantee that is currently operating in a
satisfactory manner under a TA grant agreement. If the SO loan
applicant has applied for TA funds but is not already a TA grantee and
it appears that the TA grant will be made, the SO loan may be approved
but not closed until the TA grant is closed.
III. Loan purposes. Loans may be made only as necessary to enable
eligible applicants to establish revolving accounts with which to obtain
options on land that will be needed as building sites by self-help
families participating in the TA self-help housing program. Loans will
not be made to pay the full purchase price of land but only for the
minimum amounts necessary to obtain an option from the seller. The
option should be for as long as necessary but in no case should the
option be for less than 90 days.
IV. Limitations.
(A) If the amount of an SO loan will exceed $10,000, the prior
consent of the National Office shall be obtained before approval.
(B) The amount of the SO loan should not exceed 15 percent of the
purchase price of the land expected to be under option at any one time,
unless a higher percent is authorized by the State Director when other
land in not available or the particular area requires more down payment
than elsewhere or similar circumstances exist.
(C) Form FmHA 440-34, ''Option to Purchase Real Property,'' will be
used without modification in all cases for obtaining options under this
subpart.
(D) The limitations of 1822.266(b) (1) and (2) of subpart F of part
1822 of this chapter (FmHA Instruction 444.8, paragraphs VI B (1) and
(2)) concerning land purchase will apply to options purchased under this
subpart.
V. Rates and terms.
(A) Interest. Loans will be made at an interest rate of 3 percent.
(B) Repayment period. Each SO loan will be repaid in one installment
which will include the entire principal balance and accrued interest.
The maximum repayment period for each SO loan will be the applicant's
remaining TA grant funding period.
(1) A shorter repayment period will be established if SO funds will
not be needed for the entire TA grant funding period.
(2) If a regular RHS loan is to be processed, the SO loan should be
scheduled for repayment when RHS loan funds will be available to
purchase the land and repay the amount of SO funds advanced on the
option, unless SO loan funds will still be needed to purchase other
options. Under no circumstances, however, will the repayment period
exceed the applicant's remaining TA grant funding period.
VI. Processing application.
(A) Form of application: The application for assistance will be in
the form of a letter to the FmHA County Supervisor having jurisdiction
over the area of the proposed site to be optioned. The letter will be
signed by the applicant or its authorized representative and contain, as
a minimum, the following information:
(1) A copy of the proposed option that shows a legal description of
the land, option price, purchase price, and terms of the option. If
more than one site is to be purchased, a schedule of the proposed
options should be included.
(2) Information to verify that a regular RHS loan cannot be processed
in time to secure the option.
(3) Proposed method repayment of the SO loan.
(4) Resolution from the applicant's governing body authorizing the
application for an SO loan from FmHA.
(B) Responsibility of the County Supervisor. Upon receipt of an SO
loan application, the County Supervisor will:
(1) Determine whether the applicant is eligible. If the applicant is
not eligible, or the loan cannot be made for other reasons, the
application may be rejected by the County Supervisor with the
concurrence of the District Director. The reasons for the rejection
should be clearly stated and provided, in writing to the applicant. The
applicant will have the right to have the decision reviewed following
the procedure established in subpart B of part 1900 of this chapter.
(2) Review and verify the accuracy of the information provided.
(3) Make an inspection and a memorandum appraisal of each proposed
site ''as is.'' The appraisal will include a narrative statement as to
whether the site has been recently sold, verify that the seller is the
owner of the property, and indicate whether the purchase price is
acceptable based on the selling price of similar properties in the area.
(4) Indicate whether or not it appears that, considering the location
and cost of development, adequate building sites can be provided at
reasonable costs.
(5) If the option is for a tract of land on which 5 or more sites are
proposed, the County Supervisor will forward to the District Director
with recommendations as defined in 1924.119 of subpart C of part 1924
of this chapter.
(6) If approval is recommended, prepare and have the applicant
execute Form FmHA 1940-1, ''Request for Obligation of Funds,'' for the
amount needed. Copies of the form will be distributed as provided in
the Forms Manual Insert (FMI).
(7) Forward the SO loan application and the applicant's TA
application or TA docket to the State Director. The submission will
include the appraisal report and the County Supervisor's comments and
recommendations.
VII. Loan approval authority and State Office actions.
The State Director is authorized to approve SO loans developed in
accordance with this Exhibit. The approval or disapproval of the loan
will be handled in the same manner as provided in 1822.272 of subpart F
of part 1822 of this chapter (FmHA Instruction 444.8, paragraph XII).
SO loans will be established in Automated Multiple Housing Accounting
System (AMAS) using Form FmHA 1944-51, ''Multiple Family Housing
Obligation Fund Analysis''. The Issue loan/Grant checks transaction
will be used to request a check for SO loans.
VIII. Loan closing.
(A) General. Loan closing instructions will be provided by the
Office of the General Counsel (OGC) to assure that the Promissory Note
is properly completed and executed. The County Supervisor may then
close the loan.
(B) Security for the loan. The loan will be secured by a Promissory
Note properly executed by the grantee using Form FmHA 1940-16,
''Promissory Note.'' A lien on the optioned real estate will not be
taken.
(1) The ''kind of loan'' block on the note will read ''SO loan.''
(2) The note will be modified to show that the only installment on
the loan will be the final installment.
(C) Loan is closed. The loan will be considered closed when the note
is executed and the loan check delivered to the grantee.
IX. Establishment of SO loan revolving account.
(A) Supervised bank accounts will not be used for SO loans.
(B) Grantee will deposit SO loan funds in a depository institution of
its choice. The use of minority institutions is encouraged. Such funds
will remain separate from any other account of the grantee and shall be
established as an SO revolving account.
(C) Checks drawn on the revolving account will be for the sole
purpose of purchasing land options and must be signed by at least two
authorized officials of the grantee who have been properly bonded in
accordance with 1944.411 (e) and (g) of this subpart.
(D) Grantees will not expend funds for any options until the site and
the option form have been reviewed and approved by the County
Supervisor.
(1) SO funds will not be left unused in the revolving account in
excess of 60 days.
(2) If the funds are not used for the intended purpose within the 60
days specified above, the unused portion will be refunded on the
account.
(E) When funds become available for repayment of the SO loan, such
funds will be deposited in the revolving account for the purchase of
additional site options if needed. If such funds are not needed to
purchase more options, they will be applied on the SO loan.
X. Source of funds.
SO loans will be funded from the self-help housing land development
fund.
07 CFR 1944.450 -- Subpart J -- Section 504 Rural Housing Loans and Grants
07 CFR 1944.451 General.
This subpart sets forth the policies and procedures and delegates
authority for making initial and subsequent Rural Housing (RH) loans
and/or grants to individuals under section 504 (a) of Title V of the
Housing Act of 1949, as amended. The objective of the section 504
loan/grant program is to assist eligible, very low income,
owner-occupants repair single family homes located in rural areas.
Repairs may be made to improve or modernize the home, to make it safer
and more sanitary, or to remove health and safety hazards. Grants are
only available for repairs that remove health or safety hazards. Homes
repaired with section 504 loan or grant funds must be modest in size and
design.
(54 FR 14632, Apr. 12, 1989)
07 CFR 1944.452 Equal credit opportunity.
Farmers Home Administration (FmHA) assistance and services will not
be denied to any person based on race, sex, national origin, color,
religion, marital status, age, handicap (provided the applicant
possesses the capacity to enter into a a legally binding contract),
receipt of income from public assistance, or because an applicant has,
in good faith, exercised any right under the Consumer Credit Protection
Act.
(54 FR 14632, Apr. 12, 1989)
07 CFR 1944.453 Definitions.
The terms used in this subpart are defined in Subpart A of Part 1944
of this chapter unless otherwise specified.
(a) Hazard. A condition of the home or site which jeopardizes the
health or safety of the occupants and/or the members of the community.
(b) Major hazard. A condition of the home or site so severe that it
is unfit for habitation.
(c) Mobile Home. A mobile home is an older manufactured unit often
referred to as a ''trailer,'' designed to be used as a dwelling but
built prior to the enactment of Pub. L. 96-399 (October 8, 1980).
(54 FR 14632, Apr. 12, 1989)
1944.454 -- 1944.455 (Reserved)
07 CFR 1944.456 Loan and grant purposes.
Section 504 grant funds may be used only to pay costs for repairs and
improvements which will remove identified health or safety hazards.
Loan funds may be used to improve or modernize dwellings regardless of
the removal of health or safety hazards. Dwellings repaired with
section 504 loan or grant funds need not be brought to agency
development standards or thermal performance standards, nor must all of
the existing hazards be removed provided the dwelling does not continue
to have major health or safety hazards after the planned repairs are
made. All work shall be in accordance with local codes and standards.
When potentially hazardous equipment or materials (e.g. woodburning
stoves) are being installed, all materials and installations shall be in
accordance with applicable development standards of Subpart A of Part
1924 of this chapter. Authorized loan and grant purposes include but
are not limited to the following:
(a) Installation or repair of sanitary water and waste disposal
systems, together with related plumbing and fixtures, which will meet
local health department requirements. Water supply and sewage disposal
systems should be determined acceptable under Subparts A and C of Part
1924 of this chapter. However, those requirements may be waived by the
State Director provided:
(1) The County Supervisor determines that the identified health
hazard is severe and that the requirements in paragraph (a) of this
section cannot be met, and
(2) The State Director agrees with the determination of the County
Supervisor that the planned work is necessary and the requirements of
paragraph (a) of this section (other than local health department
requirements) are impractical.
(b) Payment of reasonable connection fees or prorata installation
costs, which may include assessments for utilities (i.e., water, sewer,
electricity or gas) which are required to be paid by the applicant and
which cannot be paid from other funds.
(c) Energy conservation measures such as:
(1) Insulation; and
(2) Combination screen-storm windows and doors.
(d) Repair or replacement of the heating system including installing
alternative systems such as woodburning stoves or space heaters, when
appropriate.
(e) Electrical wiring.
(f) Repair of, or provision for, structural supports.
(g) Repair or replacement of the roof.
(h) Replacement of deteriorated siding.
(i) Payment of incidental expenses such as surveys, title clearance,
loan closing, and architectural or other technical services.
(j) Necessary repairs to mobile/manufactured homes provided:
(1) The applicant owns the home and site and has occupied the home
prior to filing an application with FmHA.
(2) The mobile/manufactured home is on a permanent foundation or will
be put on a permanent foundation with section 504 funds. A permanent
foundation will be either:
(i) A full below-grade foundation, or
(ii) A home on blocks, piers, or some similar type foundation, with
skirting, and anchoring with tie-downs.
(3) The mobile/manufactured home is in need of repairs to remove
health or safety hazards.
(k) Additions to dwellings with grant funds (conventional,
manufactured or mobile) only when it is clearly necessary to remove
health or safety hazards to the occupants.
(l) Repair or remodel houses to make accessible and usable for
handicapped or disabled persons.
(m) Payment of application packaging fees if all of the following
conditions are met:
(1) The services provided results in significant financial savings to
the Government, either directly or by reducing the workload involved in
processing applications or loans/grants,
(2) The charges are reasonable, considering,
(i) The amount and purpose of the assistance,
(ii) The repayment ability of the recipient, and
(iii) The cost of similar services in the same or a similar rural
area; and
(3) The packager is not receiving other compensation for the
services, such as, a real estate commission, grant funds, etc.
(54 FR 14633, Apr. 12, 1989)
07 CFR 1944.457 Loan and grant restrictions.
(a) Maximum loan or grant. (1) Maximum assistance outstanding to any
individual for initial or subsequent section 504 loans may not exceed a
cumulative total of $15,000.
(2) Lifetime assistance to any individual for initial or subsequent
section 504 grants may not exceed a cumulative total of $5,000.
(3) Transferees assuming section 504 loans are limited in the same
manner to subsequent loans in amounts not to exceed the difference
between the unpaid principal balance of the debt assumed and $15,000.
(4) Document the amount of assistance provided each borrower/grantee
on a list of section 504 recipients and retain it in the office
operational file. Maintenance of the list will permit destruction of
closed section 504 assistance case folders as prescribed in
2033.10(b)(4)(i) of FmHA Instruction 2033-A (available in any FmHA
office). The list must include the following information recorded at
the time a section 504 loan/grant is made.
(i) Borrower or grantee name, address, and case number.
(ii) Name of co-borrower/grantee(s), if any.
(iii) Amount of the loan and/or grant.
(iv) Date loan and/or grant was made.
(b) Limitation on use of loan or grant funds. Section 504 loan or
grant funds may not be used to:
(1) Assist in the construction of a new dwelling.
(2) Make repairs to a dwelling of such poor condition that when the
repairs are completed, the dwelling will continue to be a major hazard
to the safety and health of the occupants.
(3) Move a mobile/manufactured home from one site to another.
(4) Pay for any off-site improvements except for those purposes in
1944.456(b) of this subpart.
(5) Refinance any debt or obligation of the borrower/grantee other
than obligations incurred for items covered by 1944.456 of this subpart
entered into after date of application (except for the payment of
assessments for the installation cost of sewer and water facilities).
(c) Limitation on use of grant funds. In addition to the
restrictions in paragraph (b) of this section, section 504 grant funds
may not be used to make changes to the dwelling for cosmetic or
convenience purposes, unless the work is directly related to the removal
of hazards. Cosmetic and convenience changes might include, but are not
limited to:
(1) Painting;
(2) Paneling;
(3) Carpeting;
(4) Improving clothes closets or shelving;
(5) Improving kitchen cabinets;
(6) Air conditioning; or
(7) Landscape plantings.
(54 FR 14633, Apr. 12, 1989)
07 CFR 1944.458 Eligibility requirements.
Section 504 applicants must meet the following requirements:
(a) Meet the requirement of 1944.9 (c) and (d) of Subpart A of this
part.
(b) Meet the requirements of 1944.9 (f) of Subpart A of this part.
However, general credit requirements may be less stringent than those
for section 502 loans. Very low-income applicants often have higher
short-term debt loans in relation to income than persons with higher
incomes which many times causes more late payments. Such a fact should
not necessarily disqualify an applicant for a loan. The credit
worthiness determination will depend on the particular situation
involved and the amount of assistance requested.
(c) Own and occupy a single family dwelling located in a rural area
that is in need of repair. Evidence of ownership will be presented as
outlined in 1944.461 (a) of this subpart.
(d) Be unable to obtain financial assistance from other non FmHA
credit or grant sources, and lack personal resources that can be
utilized to meet their needs. Personal resources such as cash, stocks,
bonds, certificates of deposit, real estate assets, etc., will be
considered in the following manner:
(1) Evaluation of personal resources will exclude the dwelling and a
minimum adequate site, personal automobile, household goods, and liquid
assets up to $5,000. Liquid assets are cash or any other asset that can
be converted to cash in 90 days or less.
(2) In cases where the family is experiencing unusually high medical
expenses, the District Director may waive requiring the use of liquid
assets down to $5,000.
(3) Personal assets which the applicant's livelihood are dependent
upon (a major source of income essential to pay basic living expenses)
or assets that are not economically feasible to liquidate may be
exempted by the District Director.
(e) Have an adjusted annual income at the time of loan/grant
approval, as defined in 1944.6 of Subpart A of this part, which does
not exceed the applicable very low-income limits in Exhibit C of Subpart
A of this part (available in any FmHA office).
(f) Have sufficient and dependable income to repay the section 504
loan. An applicant whose income is not sufficient to fully meet the
loan payments may obtain as a co-signer(s) a person(s) with dependably
available income which will be sufficient to repay the loan. Form
1944-3, ''Budget and/or Financial Statement'' will be prepared for
section 504 applicants to determine repayment ability.
(g) For grant assistance be an applicant/co-applicant that is 62
years of age or older and unable to repay a section 504 loan amortized
over the maximum number of years for that cost of the repairs. In all
cases involving a section 504 grant, Form FmHA 1944-3 will be completed
before approval to determine loan repayment ability, and grant amount.
The budget must evidence the applicant's lack of repayment ability for
any part of the assistance to be received as a grant.
(54 FR 14633, Apr. 12, 1989
1944.459 -- 1944.460 (Reserved)
07 CFR 1944.461 Security and other requirements.
(a) Evidence of ownership. Applicants must submit evidence of
ownership for retention in the case file. This evidence may be a
certified or photocopy of the original ownership instrument. County
Supervisors may seek advice from the Regional Attorney when necessary to
determine the validity or adequacy of the evidence of ownership.
(1) The following will represent ownership:
(i) Full marketable title.
(ii) A land purchase contract.
(iii) An undivided interest in the property to be repaired when:
(A) The County Supervisor has no reason to believe the applicant's
position of owner/occupant will be jeopardized as a result of the
improvements to be made with loan/grant funds.
(B) In the case of a loan to be secured by a mortgage, any co-owner
living or planning to live in the household will sign the mortgage.
(C) In the case of a grant, any co-owner living or planning to live
in the household will sign the repayment agreement.
(iv) A leasehold interest in the property to be repaired. When the
applicant's ''ownership'' interest in the property is based on a
leasehold interest, the lease must be in writing and a copy must be
included in the case file. The unexpired portion of the lease must not
be less than 2 years beyond the term of the Promissory Note or, in the
case of a grant, a period of not less than 5 years. The lease must also
meet the requirements of 1944.15(a)(5)(iv) of Subpart A of this part.
(v) A life estate, with the right of present possession, control, and
beneficial use of the property.
(vi) Grazing permits or land assignments may be accepted only for
unsecured loans or grants made to Indians living on a reservation, when
historically the documents have been used by the Tribe and have had the
comparable effect of a life estate.
(2) The following may also be accepted as evidence of ownership:
(i) Any instrument, whether or not recorded, which is commonly
considered evidence of ownership.
(ii) Evidence that the applicant is listed as the owner of the
property by the local taxing authority and that real estate taxes for
the property are paid by the applicant.
(iii) Affidavits by others in the community that the applicant has
occupied the property as the apparent owner for a period of not less
than 10 years, and is generally believed to be the owner.
(b) Real estate mortgage. A section 504 loan of $2,500 or more will
be secured by a mortgage on the property (or any leasehold interest or
land purchase contract) being improved with the loan. The total of all
debts secured by the property may not exceed the value of the security.
In the case of possessory rights on an Indian reservation or State-owned
land, exceptions to the usual security requirements must be made in
accordance with 1944.18(b) (2) or (3) of Subpart A of this part.
(1) Subsequent loans. Subsequent loans will be secured by a mortgage
when the subsequent loan plus any outstanding loan balance is $2,500 or
more. When a real estate mortgage is required, each outstanding
promissory note will be described in the mortgage.
(2) Undivided ownership interest. Security on an undivided ownership
interest may exclude mortgaging the co-owner's interests when:
(i) One or more of the co-owners are not legally competent, cannot be
located, or the ownership rights are divided among such a large number
of co-owners that it is not practical for all interests to be mortgaged;
(ii) The interests excluded do not represent more than 50 percent of
all ownership interests;
(iii) All legally competent co-owners using or occupying the dwelling
sign the mortgage; and
(iv) The loan does not exceed the portion of market value of the
property represented by the interests of the owners who sign the
mortgage.
(3) Life estates. Security on a life estate ownership interest may
exclude mortgaging the remaindermen's interests when:
(i) One or more of the remaindermen are not legally competent, cannot
be located, or the remainder rights are divided among such a large
number of remaindermen that it is not practical to obtain the signatures
of all remaindermen;
(ii) The interests excluded do not represent more than 50 percent of
all remainder interests;
(iii) All legally competent remaindermen using or occupying the
dwelling sign the mortgage; and
(iv) The loan does not exceed the portion of market value of the
property represented by the interests of the remaindermen who sign the
mortgage.
(c) Note only. Loans of less than $2,500 may be unsecured. In such
cases, only a promissory note need be obtained.
(d) Repayment agreement. (1) Grant recipients will be required to
sign a repayment agreement (See Exhibit A of this subpart) which
requires that if the property is sold by the grantee or the grantee's
heirs or estate before the end of a three-year period, the full amount
of the grant will be repaid to the Government. When ownership is a life
estate interest, or an undivided ownership interest in the property, all
co-owners living or planning to live in the household must sign the
repayment agreement.
(2) In the event the property is sold before the expiration of the
three-year period, the County Supervisor will service the account to the
extent possible and practical, to protect the Government's interest and
promote FmHA's recovery of grant funds.
(54 FR 14634, Apr. 12, 1989)
07 CFR 1944.462 Rates and terms.
(a) The interest rate for all section 504 loans is one (1) percent
per annum.
(b) Loan terms will not exceed 20 years and should be based on the
borrower's repayment ability. Loans made in combination with grants
should be amortized for 20 years, thereby maximizing the loan amount
while minimizing the grant amount.
(54 FR 14635, Apr. 12, 1989)
07 CFR 1944.463 Technical services.
(a) Planning and performing development work. Cost estimates or bid
prices for the removal of health or safety hazards will be based on the
list of essential repairs prepared by the FmHA representative after an
inspection visit of the property. Exhibit B of this subpart or a
similar format will be used to submit bids or cost estimates.
Borrower-method construction dockets will contain written cost estimates
describing materials and specifications with a complete cost breakdown
on materials and labor for each item of development. For development
work covered by contract, Form FmHA 1924-6, ''Construction Contract'',
and Form FmHA 1924-2, ''Description of Materials,'' will be used. In
the case of substantial rehabilitation or new construction, Form FmHA
1924-19, ''Builder's Warranty,'' is required.
(1) Specifications of materials must include details such as
quantity, quality, sizes, grades, styles, model numbers, etc., as
appropriate. Each item developed must be described specific enough to
clearly identify the work and material to be furnished.
(2) Contractors, builders, or tradespersons must be competent to
perform the specified development work. All development work will be in
accordance with 1924.6 of Subpart A of Part 1924 of this chapter.
(b) Development plans. The County Supervisor will prepare Form FmHA
1924-1, ''Development Plan,'' according to 1924.5(b) of Subpart A of
Part 1924 of this chapter.
(c) Inspections. In addition to the initial property inspection, the
authorized FmHA representative will make development inspections of work
in place as follows:
(1) On new construction, such as room additions, make inspections in
compliance with 1924.9 of Subpart A of Part 1924 of this chapter.
(2) Make a final inspection on individual major items of development
before issuing payment.
(3) Make a final inspection of all section 504 loan and grant
development work before payment-in-full.
(4) Record all development inspections of Form FmHA 1924-12,
''Inspection Report.''
(d) Appraisal. An appraisal of the real estate or leasehold interest
in required when the total indebtedness (including land sale contracts)
is more than $7,500. When an appraisal is not made, the County
Supervisor will document the estimated market value of the property in
the case file.
(1) On a nonfarm tract or small farm, or on a leasehold interest in a
nonfarm tract or small farm, an abbreviated appraisal will be made in
accordance with Subpart C of Part 1922 of this chapter using the
comparable sales data approach only. A small farm for the purpose of
this subpart is a farm as defined in 1944.2(g) of Subpart A of this
part which has value primarily as a residence rather than for the
production of agricultural commodities, and repayment of the RH loan is
not dependent on farm income.
(2) On a farm tract or leasehold interest in a farm tract the
appraisal will be made in accordance with Subpart A of Part 1809 of this
chapter (FmHA Instruction 422.1).
(e) Title clearance requirements. (1) Total FmHA indebtedness of
$7,500 or less, secured with a real estate mortgage, need not meet the
title requirements of subpart B of part 1927 of this chapter. In those
cases the County Supervisor will use all practical means to verify that
title and lien information is complete and accurate. In most cases,
this can be accomplished by a search of the courthouse records.
(2) Total FmHA indebtedness of more than $7,500, secured with a real
estate mortgage, title clearance and legal services for making and
closing the loan will be provided in accordance with subpart B of part
1927 of this chapter.
(54 FR 14635, Apr. 12, 1989; 56 FR 67483, Dec. 31, 1991)
Effective Date Note: At 56 FR 67483, Dec. 31, 1991, 1944.463 was
amended by revising the first sentence of paragraph (e)(1) and paragraph
(e)(2), effective January 30, 1992. For the convenience of the user,
the superseded text follows:
1944.463 Technical services.
(e) * * *
(1) Total FmHA indebtedness of $7,500 or less, secured with a real
estate mortgage, need not meet the title requirements of Part 1807 of
this chapter (FmHA Instruction 427.1). * * *
(2) Total FmHA indebtedness of more than $7,500, secured with a real
estate mortgage, title clearance and legal services for making and
closing the loan will be provided in accordance with Part 1807 of this
chapter (FmHA Instruction 427.1).
07 CFR 1944.464 Insurance requirements.
All applicants will be counseled and encouraged to have adequate
hazard and flood insurance. All borrowers for repair loans of more than
$7,500, will be required to have adequate hazard insurance and flood
insurance, where applicable, unless documentation is provided by a
reputable insurance company that coverage is unavailable or FmHA
determines it will be an excessive cost to obtain insurance. Borrowers
are required to escrow funds for the payment of insurance if requested
by FmHA.
(a) National flood insurance. Repairs of less than $7,500 under this
subpart are considered nonsubstantial improvements under the National
Flood Insurance Program, and, therefore, flood insurance is not
required.
(b) Real property insurance. Buildings on the property which are to
be taken as security for assistance of more than $7,500 will be insured
in accordance with Subpart A of Part 1806 of this chapter (FmHA
Instruction 426.1).
(54 FR 14632, Apr. 12, 1989, as amended at 56 FR 6946, Feb. 21, 1991)
07 CFR 1944.465 Taxes and assessments.
All applicants who have received financial assistance in situations
where FmHA has taken a mortgage on their property will escrow funds for
the payment of taxes if requested by FmHA. Servicing real estate taxes
will be handled in accordance with 1965.105 of subpart C of part 1965
of this chapter.
(56 FR 6946, Feb. 21, 1991)
07 CFR 1944.466 Accountability.
Applicants should be made aware of the accountability requirements of
persons paid to influence the making of an FmHA housing loan and/or
grant as described in subpart S of part 1940 of this chapter.
(56 FR 66961, Dec. 27, 1991)
Effective Date Note: At 56 FR 66961, Dec. 27, 1991, 1944.466 was
added, effective January 27, 1992.
07 CFR 1944.467 Processing applications.
(a) Application. Application for section 504 assistance will be made
on Form FmHA 410-4, ''Application for Rural Housing Loan Assistance (Non
Farm Tract),'' or Form FmHA 410-1, ''Application for FmHA Service,''
which are available at local County Offices, and processed in accordance
with Subpart A of Part 1910 of this chapter.
(1) When the request for assistance involves the removal of health or
safety hazards the County Supervisor must visit the property within 30
days of receipt of the application to determine and identify what
repairs are essential.
(2) The visit will be made prior to the applicant's eligibility
determination, unless the applicant is clearly not eligible, and will be
documented in the running case record identifying the existing hazards
and essential repairs needed. Applications for assistance to remove
health or safety hazards will receive priority processing.
(3) The County Supervisor must review with the applicant, and assure
that the applicant signs Form FmHA 1910-11, ''Applicant Certification,
Federal Collection Policies for Consumer or Commercial Debts''.
(b) Family budget. Form FmHA 1944-3, ''Budget and/or Financial
Statement'', will be prepared for all section 504 applicants. When
determining repayment ability, the budget will consider and account for
items such as:
(1) Non-cash benefits (food stamps, scholarships, free clothing,
meals on wheels, free transportation, etc.) which help reduce the
applicant's budgeted expenses. Receipt of benefits will be properly
documented, and the appropriate budgeted expenses will be reduced to
reflect these benefits.
(2) Income from sources not used to determine adjusted income such as
earnings from employment of minors or from a full-time student, who is
neither the applicant nor spouse, foster care payments, or any similar
income. These sources of income will be considered to the extent that
they are used to offset budgeted expenses even though not included in
''annual income''.
(c) Credit investigation. Credit reports will be used for all loans
of more than $7,500, and will be ordered at no cost to the applicant in
accordance with Subpart B of Part 1910 (available in any FmHA office).
Credit reports will not be used for grant assistance or loans of $7,500
or less.
(d) Verification of income. Income from employment will be verified
by use of Form FmHA 1910-5, ''Request for Verification of Employment''.
Income from Social Security (SS), Supplemental Security Income (SSI),
welfare, pension and other similar sources will be verified by the most
convenient method for reasonable accuracy.
(e) Cost estimates. Written cost estimates will be required as
outlined in 1944.463 of this subpart for all work to be performed. If,
in the judgment of the County Supervisor the cost estimates are not
competitive, additional cost estimates will be obtained. All cost
estimates will be prepared and submitted according to 1944.463(a) of
this subpart.
(f) Use of packagers. Governmental entities or non-profit groups,
such as churches, civic organizations, and Community Action Programs
(CAP), etc., may package section 504 loan and grant applications. Each
County Supervisor should actively seek the assistance of these
organizations and provide adequate orientation and training concerning
the responsibilities of a packager and the information required to
package applications. See Exhibit C of this subpart (available in any
FmHA office).
(g) Determination of eligibility. Eligibility for all section 504
loan and grant applicants will be determined under 1944.458 of this
subpart.
(h) Notification. Give notification of eligibility or adverse action
to all applicants under 1910.6 of Subpart A of Part 1910 of this
chapter. Adverse actions will be processed under Subpart B of Part 1900
of this chapter.
(54 FR 14635, Apr. 12, 1989, as amended at 54 FR 29332, July 12,
1989)
07 CFR 1944.468 Loan or grant approval.
(a) Section 504 loans or grants will be approved in accordance with
Subpart A of Part 1901 of this chapter.
(b) The loan/grant approving official is responsible for reviewing
the case file to determine that the proposed loan/grant complies with
established policies and regulations, and that funds are available.
Income and financial information used in eligibility determinations or
loan/grant approvals must not be over 90 days old.
(c) At loan approval, the loan/grant approving official will prepare
Forms FmHA 1940-1, ''Request for Obligation of Funds,'' and 1944-2,
''Single Family Housing Fund Analysis,'' and complete Form FmHA 1940-41,
''Truth in Lending Disclosure Statement,'' using the actual terms of the
transaction, and deliver it to the applicant. For transactions that are
subject to cancellation, all property owners with the right to cancel
will receive Form FmHA 1940-43, ''Notice of Right to Cancel.''
(54 FR 14636, Apr. 12, 1989)
07 CFR 1944.469 Loan closing or grant settlement.
All grants and loans of $7,500 or less may be closed or settled by
the County Supervisor or designee.
(a) Effective date of loan closing or grant settlement. A loan
secured by a real estate mortgage is closed when the mortgage is filed
for record. In other cases, the loan and/or grant is closed or settled
when the promissory note or repayment agreement and any other required
instrument is executed by the borrower/grantee.
(b) Promissory note. Form FmHA 1940-16, ''Promissory Note,'' will be
used for each loan made under this subpart. The note will be prepared
and signed according to subpart B of part 1927 of this chapter,
including co-signers when appropriate. Each promissory note will be
prepared for monthly payment.
(c) Repayment agreement. Exhibit A of this subpart, prepared in
original and one copy, will be used for grant assistance. The original
signed document will be retained in position 2 of the County Office case
file, and a copy given to the grantee.
(d) Mortgage. Form FmHA 1927-1, ''Real Estate Mortgage for
(state),'' will be used for each loan to be secured by a real estate
mortgage. Each change made in the text by deletion, substitution or
addition (excluding filling in the blanks) will be initialed in the
margin by each person signing the mortgage and by the FmHA official
making the change. Mortgages for loans on leasehold interests will be
taken according to 1944.18(b)(5) and 1944.15(a)(5) (iv) and (v) of
Subpart A of this part. For loans secured by a real estate mortgage
subject to the right to cancel, Form FmHA 1940-43 will be given at
closing to all entitled individuals according to Subpart I of Part 1940
of this chapter.
(e) Supervised bank accounts. A supervised bank account will be
established in accordance with Subpart A of Part 1902 of this chapter,
unless all the proceeds are disbursed to a supplier or contractor at
closing. Funds from other sources deposited in supervised bank accounts
will be accounted for by using columns 5 through 14 of Form FmHA 402-2,
''Statement of Deposits and Withdrawals.''
(f) Disbursement of funds. Loan funds secured by a real estate
mortgage may not be disbursed until the right to cancel time period has
expired. Funds will be disbursed as follows:
(1) Payments for work completed will be in accordance with 1924.6 of
Subpart A of Part 1924 of this chapter.
(2) Funds deposited in supervised bank accounts will be disbursed in
the following order of priority:
(i) Applicant contribution;
(ii) Funds from sources other than FmHA;
(iii) FmHA section 504 loan funds.
(iv) FmHA section 504 grant funds.
(g) Unused funds. Unused section 504 grant funds will be handled as
follows:
(1) When all planned development has been completed, remaining funds
may be used for any additional authorized purposes, as agreed upon by
the recipient and FmHA. If no such agreement can be reached, the funds
will be returned to FmHA as prescribed in FmHA Instruction 1951-B.
(2) The funds also will be returned to the Finance Office when:
(i) All planned development cannot be completed because the
contractor is unable or unwilling to do so and the recipient -- even
with the assistance of the County Supervisor -- is unable to obtain
another contractor; or
(ii) the purpose of the loan/grant cannot be accomplished because the
borrower/grantee no longer resides in the dwelling.
(3) Funds will be returned to Finance Office in the following manner:
(i) Any funds returned shall first be applied to reducing a grant.
The collecting office will enter payment code 21 (other) on Form FmHA
451-2, with a brief explanation (''Recovery of Section 504 Housing
Repairs Grants'').
(ii) If a grant was not involved or the amount of any grant has
already been returned, then remaining funds shall be returned to the
Finance Office and applied to the borrower's loan account as a refund.
(h) Deceased borrower/grantee. (1) When a borrower/grantee dies
prior to disbursement of funds for development work performed, payment
may be authorized when:
(i) There is evidence the recipient or their authorized
representative accepted the work as complete and satisfactory, and
(ii) An inspection of the development work is completed by an
authorized FmHA representative.
(2) When a loan is secured by a real estate mortgage, the State
Director may withdraw funds to pay commitments for goods delivered or
services performed, in accordance with 1902.15(d)(1)(iii) of Subpart A
of Part 1902 of this chapter.
(3) In any other instance not covered by paragraphs (1) or (2), the
funds will be returned to Finance Office.
(54 FR 14636, Apr. 12, 1989, as amended at 54 FR 39728, Sept. 28,
1989; 56 FR 67483, Dec. 31, 1991)
Effective Date Note: At 56 FR 67483, Dec. 31, 1991, 1944.469 was
amended by revising paragraph (b) and the first sentence of paragraph
(d), effective January 30, 1992. For the convenience of the user, the
superseded text follows:
1944.469 Loan closing or grant settlement.
(b) Promissory note. Form FmHA 1940-16, ''Promissory Note,'' will be
used for each loan made under this subpart. The note will be prepared
and signed according to Part 1807 of this chapter (FmHA Instruction
427.1), including co-signers when appropriate. Each promissory note
will be prepared for monthly payment.
(d) Mortgage. Form FmHA 427-1, ''Real Estate Mortgage for (State)
,'' will be used for each loan to be secured by a real estate mortgage.
* * *
1944.470 -- 1944.471 (Reserved)
07 CFR 1944.472 Subsequent section 504 loans and/or grants.
Subsequent section 504 loans or grants may be made for the same
purposes and under the same conditions and limitations as initial
section 504 loans and grants.
(54 FR 14637, Apr. 12, 1989)
07 CFR 1944.473 Unauthorized loans and/or grants.
Unauthorized loans and/or grants are those where it is determined the
recipient was not eligible for the assistance received or where the loan
and/or grant was approved for unauthorized purposes. Cases of these
types will be serviced according to Subpart M of Part of 1951 of this
chapter.
(54 FR 14637, Apr. 12, 1989)
07 CFR 1944.474 Exception authority.
The Administrator may, in individual cases, make an exception to any
requirement or provision of this subpart which is not inconsistent with
the authorizing statute or other applicable law if the Administrator
determines that application of the requirement or provision would
adversely affect the Government's interest. The Administrator will
exercise this authority only at the request of the State Director and
recommendation of the Assistant Administrator, Housing. Requests for
exceptions must be made in writing by the State Director and supported
with documentation to explain the adverse effect on the Government's
interest, propose alternative course of action, and show how the adverse
effect will be eliminated or minimized if the exception is granted.
(54 FR 14637, Apr. 12, 1989)
1944.475 -- 1944.499 (Reserved)
07 CFR 1944.500 OMB control number.
Collection of information requirements contained in this subpart have
been approved by the Office of Management and Budget and have been
assigned OMB control number 0575-0062.
(54 FR 14637, Apr. 12, 1989)
07 CFR 1944.500 Pt. 1944, Subpt. J, Exh. A
07 CFR 1944.500 Exhibits to Subpart J
07 CFR 1944.500 Exhibit A -- Section 504 Repayment Agreement
I/we the undersigned, hereby agree not to sell the property located
at XXXXXXXX being repaired with grant funds provided by the Farmers Home
Administration for a period of three years from the date of this
agreement. Should I/we sell the above-described property within three
years, I/we agree to repay to the Farmers Home Administration, at the
time of the sale, the full amount of the grant, which is $XX. I/we
further agree that if within three years from the date of this agreement
the property is sold by either my estate or my heirs, the person or
estate selling the property will repay the grant to FmHA.
-- (Grantee) -- (Grantee) -- (Date) -- (Representative, Farmers
Home Administration) -- (Date)
(54 FR 14637, Apr. 12, 1989)
07 CFR 1944.500 Pt. 1944, Subpt. J, Exh. B
07 CFR 1944.500 Exhibit B -- Cost Estimate or Bid
(Home owner)
(Address)
(Contract or bidder)
(Address)
Date:
(Contractor Bidder/Signature)
(47 FR 40400, Sept. 14, 1982)
Exhibit C (Guidance on Packaging Applications for Section 504 Rural
Housing Assistance) is not published in the CFR or the Federal Register
but is available in any FmHA office.
07 CFR 1944.500 Subpart K -- Technical and Supervisory Assistance
Grants
Source: 44 FR 36891, June 22, 1979, unless otherwise noted.
07 CFR 1944.501 General.
(a) This subpart sets forth the policies and procedures for making
grants under Section 525(a) of the Housing Act of 1949, 42 U.S.C.
1490e(a), to provide funds to eligible applicants to conduct programs of
technical and supervisory assistance (TSA) for low-income rural
residents to obtain and/or maintain occupancy of adequate housing. This
financial assistance may pay part or all of the cost of developing,
conducting, administering, or coordinating effective and comprehensive
programs of technical and supervisory assistance which will aid needy
low-income individuals and families in benefiting from federal, state,
and local programs in rural areas.
(b) The Farmers Home Administration (FmHA) will provide technical and
supervisory grant assistance to applicants without discrimination
because of race, color, religion, sex, national origin, age, marital
status, or physical or mental handicap.
07 CFR 1944.502 Policy.
(a) The policy of the FmHA is to provide Technical and Supervisory
Assistance to eligible applicants to do the following:
(1) Provide homeownership and financial counseling to reduce both the
potential for delinquency by loan applicants and the level of payment
delinquency by present FmHA housing loan borrowers; and
(2) Facilitate the delivery of housing programs to serve the most
needy low-income families in rural areas of greatest need for housing.
(b) FmHA intends to fund projects which include counseling and
delivery of housing programs.
(c) State Directors are given a strong role in the selection of
grantees so this program can complement FmHA's policies of targeting
FmHA resources to areas of greatest need within their States.
(d) FmHA expects grant recipients to implement a TSA program and not
to use TSA funds to prepare housing plans and strategies except as
necessary to accomplish the specific objectives of the TSA project.
07 CFR 1944.503 Objectives.
The objectives of the TSA Grant Program are to assist low-income
rural families in obtaining adequate housing to meet their family's
needs and/or to provide the necessary guidance to promote their
continued occupancy of already adequate housing. These objectives will
be accomplished through the establishment or support of housing delivery
and counseling projects run by eligible applicants. This program is
intended to make use of any available housing program which provides the
low-income rural resident access to adquate rental properties or
homeownership.
1944.504 -- 1944.505 (Reserved)
07 CFR 1944.506 Definitions.
References in this subpart to County, District, State, National and
Finance Offices and to County Supervisor, District Director, State
Director, and Administrator refer to FmHA offices and officials and
should be read as prefaced by FmHA. Terms used in this Subpart have the
following meanings:
(a) Adequate housing. A housing unit of adequate size and design to
meet the specific needs of low-income families and the requirements
governing the particular housing program providing the services or
financial assistance.
(b) Applicant or grantee. Any eligible organization which applies
for or receives TSA funds under a grant agreement.
(c) Grant agreement. The contract between FmHA and the applicant
which sets forth the terms and conditions under which TSA funds will be
made available.
(d) Low-income family. Any household, including those with one
member, whose adjusted annual income, computed in accordance with
1944.5 and 1944.6 of Part 1944, Subpart A, of this chapter, does not
exceed the maximum low-income limit specified in Exhibit C of Subpart A
of Part 1944 (available in any FmHA office).
(e) Organization. (1) A State or political subdivision or public
nonprofit corporation (including Indian Tribes or tribal corporations)
authorized to receive and administer TSA funds; or
(2) A private nonprofit corporation with local representation from
the area being served that is owned and controlled by private persons or
interests and is organized and operated by private persons or interests
for purposes other than making gains or profits for the corporation and
is legally precluded from distributing any gains or profits to its
members.
(f) Rural area. The definition in 1944.10 of Part 1944, Subpart A
applies.
(g) Sponsored applicant. An eligible applicant which has a
commitment of financial and/or technical assistance to apply for the TSA
program and to implement such a program from a state, county,
municipality, or other governmental entity or public body.
(h) Supervisory assistance. Any type of assistance to low-income
families which will assist those families in meeting the eligibility
requirements for, or the financial and managerial responsibilities of,
homeownership or tenancy in an adequate housing unit. Such assistance
must include, but is not limited to, the following activities:
(1) Assisting individual FmHA borrowers with financial problems to
overcome delinquency and/or prevent foreclosure and assisting new
low-income applicants to avoid financial problems through:
(i) Financial and budget counseling including advice on debt levels,
credit purchases, consumer and cost awareness, debt adjustment
procedures, and availablity of other financial counseling services;
(ii) Monitoring payment of taxes and insurance;
(iii) Home maintenance and managment; and
(iv) Other counseling based on the needs of the low-income families.
(2) Contracting and assisting low-income families in need of adequate
housing by:
(i) Implementing an organized outreach program using available media
and personal contacts;
(ii) Explaining available housing programs and alternatives to
increase the awareness of low-income families and to educate the
community as to the benefits which can accrue from improved housing;
(iii) Assisting low-income families locate adquate housing;
(iv) Providing construction supervision, training, and guidance to
low-income families not involved in mutual self-help projects who are
otherwise being assisted by the TSA project;
(v) Organizing local public or private nonprofit groups willing to
provide adequate housing for low-income families; and
(vi) Providing assistance to families and organizations in processing
housing loan and/or grant applications generated by the TSA program,
including developing and packaging such applications for new
construction, rehabilitation, or repair to serve low-income families.
(i) Technical assistance. Any specific expertise necessary to carry
out housing efforts by or for low-income families to improve the
quantity and/or quality of housing available to meet their needs. Such
assistance should be specifically related to the supervisory assistance
provided by the project, and may include, as appropriate, the following
activities:
(1) Develop, or assist eligible applicants to develop, multi-housing
loan and/or grant applications for new construction, rehabilitation, or
repair to serve low-income families.
(2) Market surveys, engineering studies, cost estimates, and
feasibility studies related to applications for housing assistance to
meet the specific needs of the low-income families assisted under the
TSA program.
(44 FR 36891, June 22, 1979, as amended at 46 FR 61990, Dec. 21,
1981; 50 FR 39967, Oct. 1, 1985; 51 FR 6393, Feb. 26, 1986)
1944.507 -- 1944.509 (Reserved)
07 CFR 1944.510 Applicant eligibility.
To be eligible to receive a grant, the applicant must:
(a) Be an organization as defined in 1944.506(e).
(b) Have the financial, legal, administrative, and operational
capacity to assume and carry out the responsibilities imposed by the
grant agreement. To meet this requirement of actual capacity, it must
either:
(1) Have necessary background and experience with proven ability to
perform responsibly in the field of low-income rural housing development
and counseling, or other business management or administrative
experience which indicates an ability to provide responsible technical
and supervisory assistance; or
(2) Be assisted by an organization which has such background
experience and ability and which agrees in writing that it will provide,
without charge, the assistance the applicant will need to carry out its
responsibilities.
(c) Legally obligate itself to administer TSA funds, provide an
adequate accounting of the expenditure of such funds, and comply with
the grant agreement and FmHA regulations;
(d) Demonstrate an understanding of the needs of low-income rural
families;
(e) Have the ability and willingness to work within established
guidelines; and
(f) If the applicant is engaged in or plans to become engaged in any
other activities, it must be able to provide sufficient evidence and
documentation that it has adequate resources, including financial
resources, to carry on any other programs or activities to which it is
committed without jeopardizing the success and effectiveness of its TSA
project.
1944.511 (Reserved)
07 CFR 1944.512 Authorized representative of the applicant.
FmHA will deal only with authorized representatives designed by the
applicant. The authorized representatives must have no pecuniary
interest in any of the following as they would relate in any way to the
TSA grant: the award of any engineering, architectural, management,
administration, or construction contracts; purchase of the furnishings,
fixtures or equipment; or purchase and/or development of land.
Note: (FmHA has designated the District Office as the primary point
of contact for all matters relating to the TSA program and as the office
responsbile for the administration of approved TSA projects.
1944.513 (Reserved)
07 CFR 1944.514 Comprehensive TSA grant projects.
(a) The rural area to be covered by the TSA project must be
realistically serviceable by the applicant in terms of funding
resources, manpower, and distances and generally should be limited to
one to four counties within the service area of one District Office.
(b) Consideration of the following items may assist applicants
develop TSA projects which meet the needs of low-income families in the
proposed TSA service area: present population distribution, projected
population growth or decline, the amount of inadequate housing, economic
conditions, and trends of the rural areas concerned, and any other
factors affecting the quantity and quality of housing currently
available or planned for the area. Consideration must also be given to
the needs and desires of the community; the financial and social
condition of the individuals within the community; the needs of areas
with a concentration of low-income minority families and the needs of
FmHA borrowers who are delinquent in their housing loan payments; the
availability of supporting services such as water, sewerage, health and
educational facilities, transportation, recreational and community
facilities, and the types of housing facilities and services presently
available or planned to which the low-income families have or will have
ready access.
(c) Each TSA applicant should consider the alternatives available to
provide needed housing facilities and services for the area.
Consideration should also be given to the recommendations and services
available from local, state, federal governmental entities, and from
private agencies and individuals.
(1) In no case should the TSA project deliberately conflict with or
duplicate housing studies, plans, projects, or any other housing related
activities in a rural area unless documentation shows these activities
do not meet the needs of low-income families.
(2) Each TSA project should be coordinated to the extent possible
with any comprehensive or special purpose plans and projects affecting
low-income housing in the area.
(3) To the fullest extent possible, TSA projects should be
coordinated with any housing-related activities currently being carried
out in the area.
(d) TSA applicants must coordinate their proposals with the
appropriate County and District Offices to be fully familiar with the
needs of those offices and of the low-income families currently served
by the County Offices.
1944.515 (Reserved)
07 CFR 1944.516 Grant purposes.
Grant funds are to be used for a housing delivery system and
counseling program to include a comprehensive program of technical and
supervisory assistance as set forth in the grant agreement and any other
special conditions as required by FmHA. Uses of grant funds may
include, but are not limited to:
(a) The development and implementation of a program of technical and
supervisory assistance as defined in 1944.506 (h) and (i).
(b) Payment of reasonable salaries of professional, technical, and
clerical staff actively assisting in the delivery of the TSA project.
(c) Payment of necessary and reasonable office expenses such as
office supplies and office rental, office utilities, telephone services,
and office equipment rental.
(d) Payment of necessary and reasonable administrative costs such as
workers' compensation, liability insurance, audit reports, travel to and
attendance at FmHA approved training sessions, and the employer's share
of Social Security and health benefits. Payments to private retirement
funds are prohibited unless prior written authorization is obtained from
the Administrator.
(e) Payment of reasonable fees for necessary training of grantee
personnel. This may include the cost of travel and per diem to attend
regional training sessions when authorized by the State Director.
(f) Other reasonable travel and miscellaneous expenses necessary to
accomplish the objectives of the specific TSA grant which were
anticipated in the individual TSA grant proposal and which have been
included as eligible expenses at the time of grant approval.
1944.517 (Reserved)
07 CFR 1944.518 Term of grant.
TSA projects will be funded under one Grant Agreement for two years
commencing on the date of execution of the Agreement by the State
Director.
1944.519 (Reserved)
07 CFR 1944.520 Ineligible activities.
(a) Grant funds may not be used for:
(1) Acquisition, construction, repair, or rehabilitation of
structures or acquisition of land, vehicles, or equipment.
(2) Replacement of or substitution for any financial support which
would be available from any other source.
(3) Duplication of current services in conflict with the requirements
of 1944.514(c).
(4) Hiring personnel to perform construction.
(5) Buying property of any kind from families receiving technical or
supervisory assistance from the grantee under the terms of the TSA
grant.
(6) Paying for or reimbursing the grantee for any expenses or debts
incurred before FmHA executes the grant agreement.
(7) Paying any debts, expenses, or costs which should be the
responsibility of the individual families receiving technical and
supervisory assistance.
(8) Any type of political activities.
(9) Other costs including contributions and donations, entertainment,
fines and penalties, interest and other financial costs, legislative
expenses and any excess of cost from other grant agreements.
(b) Advice and assistance may be obtained from the National Office
where ineligible costs are proposed as part of the TSA project or where
a proposed cost appears ineligible.
(c) The grantee may not charge fees or accept compensation or
gratuities from TSA recipients for the grantee's assistance under this
program.
1944.521 (Reserved)
07 CFR 1944.522 Equal opportunity requirements.
The policies and regulations contained in Subpart E of Part 1901 of
this chapter apply to grants made under this subpart.
07 CFR 1944.523 Other administrative requirements.
The following policies and regulations apply to grants made under
this subpart:
(a) The policies and regulations contained in Subpart F of Part 1901
of this chapter regarding historical and archaeological properties.
(b) The policies and regulations contained in Subpart G of Part 1940
of this chapter regarding Environmental Assessments.
(44 FR 36891, June 22, 1979, as amended at 48 FR 29121, June 24,
1983; 49 FR 3763, Jan. 30, 1984)
1944.524 (Reserved)
07 CFR 1944.525 Targeting of TSA funds to States.
(a) The Administrator will determine, based on the most current
available information (generally that information used to determine the
allocation to States of FmHA housing loan funds), those States with the
highest degree of substandard housing and persons in poverty in rural
areas eligible to receive FmHA housing assistance. The Administrator
will distribute a portion of the available funds for TSA to these
States, leaving the balance available for national competition.
(b) The Administrator will provide annual notice through a published
Notice on the distribution of appropriated TSA funds, the number of
preapplications to be submitted to the National Office from the State
Offices, and the maximum grant amount per project.
07 CFR 1944.526 Preapplication procedure.
(a) Preapplication submission. (1) All applicants will file an
original and two copies of SF 424.1, ''Application for Federal
Assistance (For Non-construction),'' and supporting information detailed
below with the appropriate District Office serving the proposed TSA
area. A preapplication packet including SF 424.1 is available in all
District and State Offices.
(i) The applicant will provide informational copies of the
preapplication to the County Supervisor(s) of the area to be served by
the TSA project at the time of submittal to the appropriate District
Office.
(ii) If the TSA area encompasses more than one District Office, the
preapplication will be filed at the District Office which serves the
area in which the grantee will provide the greatest amount of TSA
efforts. Additional informational copies of the preapplication will be
sent by the applicant to the other affected District Office(s).
(2) All preapplications shall be accompanied by the following
information which will be used to determine the applicant's eligibility
to undertake a TSA program and to determine whether the applicant might
be funded.
(i) A narrative presentation of the applicant's proposed TSA program,
including:
(A) The technical and supervisory assistance to be provided;
(B) The time schedule for implementing the program;
(C) The staffing pattern to execute the program and salary range for
each position, existing and proposed;
(D) The estimated number of low-income and low-income minority
families the applicant will assist in obtaining affordable adequate
housing;
(E) The estimated number of FmHA borrowers who are delinquent or
being foreclosed that the applicant will assist in resolving their
financial problems relating to their delinquency;
(F) The estimated number of households which will be assisted in
obtaining adequate housing in the TSA area through new construction
and/or rehabilitation;
(G) Annual estimated budget for each of the two years based on the
financial needs to accomplish the objectives outlined in the proposal.
The budget should include proposed direct and indirect costs for
personnel, fringe benefits, travel, equipment, supplies, contracts, and
other costs categories, detailing those costs for which the grantee
proposes to use the TSA grant separately from non-TSA resources, if any;
(H) The accounting system to be used;
(I) The method of evaluation proposed to be used by the applicant to
determine the effectiveness of its program;
(J) The sources and estimated amounts of other financial resources to
be obtained and used by the applicant for both TSA activities and
housing development and/or supporting facilities; and
(K) Any other information necessary to explain the manner of
delivering the TSA assistance proposed.
(ii) Complete information about the applicant's previous experience
and capacity to carry out the objectives of the proposed TSA program;
(iii) Evidence of the applicant's legal existence, including, in the
case of a private nonprofit organization, a copy of, or an accurate
reference to, the specific provisions of State law under which the
applicant is organized; a certified copy of the applicant's Articles of
Incorporation and Bylaws or other evidence of corporate existence;
certificate of incorporation for other than public bodies; evidence of
good standing from the State when the corporation has been in existence
one year or more; the names and addresses of the applicant's members,
directors, and officers; and, if another organization is a member of
the applicant-organization, its name, address, and principal business.
(iv) For a private nonprofit entity, a current financial statement
dated and signed by an authorized officer of the entity showing the
amounts and specific nature of assets and liabilities together with
information on the repayment schedule and status of any debt(s) owed by
the applicant. If the applicant is an organization being assisted by
another private nonprofit organization, the same type of financial
statement should also be provided by that organization.
(v) A brief narrative statement which includes information about the
area to be served and the need for improved housing (including both
percentage and actual number of both low-income and low-income minority
families and substandard housing), the need for the type of technical
and supervisory assistance being proposed, the method of evaluation to
be use by the applicant in determining the effectiveness of its efforts
(as related to paragraph (a)(2)(i) of this section), and any other
information necessary to specifically address the selection criteria in
1944.529.
(vi) A list of other activities the applicant is engaged in and
expects to continue and a statement as to any other funding and whether
it will have sufficient funds to assure continued operation of the other
activities for at least the period of the TSA grant agreement.
(3) An applicant should submit written statements from the county,
parish, or township governments of the area affected that the project is
beneficial and does not duplicate current activities. If the local
governmental units will not provide such statements, the applicant will
prepare and include with its preapplication a summary of its analysis of
alternatives considered under 1944.514(c). However, Indian nonprofit
organization applicants should obtain the written concurrence of the
Tribal governing body in lieu of the concurrence of the county
governments.
(4) Sponsored applicants should submit a written commitment for
financial and/or technical assistance from their sponsoring entity.
(5) An original and one copy of Form FmHA 1940-20, ''Request for
Environmental Information.''
(b) District Office processing of preapplications. (1) The District
Director with whom the preapplication is filed will review the
preapplication, SF 424.1, and any other supporting information from the
applicant. The District Director will also:
(i) Complete any required environmental review procedures as
specified in Subpart G of Part 1940 of this chapter and attach to the
application.
(ii) Prepare a review of the project in accordance with Subpart F of
Part 1901 of this chapter and attach it to the preapplication.
(2) All District Directors and County Supervisors receiving
informational copies of the preapplication should submit their comments
within five working days to the District Director with whom the
preapplication if filed.
(3) The original and one copy of the preapplication, together with
the District Director's written comments and recommendations, reflecting
the criteria used in 1944.529 and Exhibit C of this subpart, will be
forwarded to the State Director within ten working days of receipt of
the preapplication.
(c) State Office processing of preapplications. (1) Upon receipt of
a preapplication, the State Office will review and evaluate the
preapplication and accompanying documents in accordance with the project
selection criteria of 1944.529 and Exhibit B of this subpart. The
State Office will also:
(i) Make a determination on Form FmHA 1940-21, Form FmHA 1940-22 or
Class II Environmental Assessment in accordance with Subpart G of Part
1940 of this chapter.
(ii) Prepare an historical and archaeological assessment in
accordance with 1901.255 (b) and (c) of Subpart F of Part 1901 of this
chapter.
(2) Within 30 days of the closing date for receipt of preapplications
as published in the Federal Register, the State Director will forward to
the National Office the original preapplication(s) and supporting
documents of the selected applicant(s), including any comments received
in accordance with 7 CFR Part 3015 Subpart V, ''Intergovernmental Review
of Department of Agriculture Programs and Activities'' (See FmHA
Instruction 1940-J, available in any FmHA Office), and the comments and
recommendations of the County Office(s), District Office(s), and the
State Office. The State Office will submit the preapplication(s) in
accordance with the annual notice provided for by 1944.525 (b) of this
subpart.
(3) Concurrently the State Office will send a copy of the selected
applicant's(s') SF 424.1 and relevant documents to the Regional Office
of the General Counsel (OGC) requesting a legal determination be made of
the applicant's legal existence and authority to conduct the proposed
program of technical and supervisory assistance.
(4) The State Office will notify other applicants that their
preapplications will not selected and advise them of their appeal rights
under Subpart B of Part 1900 of this chapter.
(d) National Office processing of preapplications. (1)
Preapplications for this program from those States targeted under
1944.525 will be reviewed by the National Office for completeness and
compliance with this subpart. If a grant is recommended, the National
Office will return the preapplication(s) with any comments and
recommendations to the State Office and advise that office to proceed
with the issuance of Form AD-622, ''Notice of Preapplication Review
Action,'' and to request the applicant to prepare SF 424.1 for
submission to the District Office. If a grant is not recommended, the
National Office will advise the State Office of action to take.
(2) Preapplications from States which are not targeted in accordance
with 1944.525 will be reviewed for completeness and compliance with
this subpart and then evaluated in accordance with the project selection
criteria of 1944.529. Those preapplications which are selected, and for
which funds are available, will be returned to the appropriate State
Office with any National Office comments and recommendations. The State
Office will be advised to proceed with the issuance of SF 424.1 and to
request the applicant to prepare Form AD-623 for submission to the
District Office as detailed in 1944.531.
(3) Those preapplications for which funds are not available will be
returned to the appropriate State Office which will notify each
applicant and advise the applicant of its appeal rights under Subpart B
of Part 1900 of this chapter.
(4) State Directors will be advised of the National Office's action
on their selected preapplication within 30 days of receipt of all
preapplications.
(47 FR 40400, Sept. 14, 1982, as amended at 48 FR 29121, June 24,
1983; 49 FR 3763, Jan. 30, 1984; 55 FR 13503 and 13504, Apr. 11, 1990;
55 FR 50081, Dec. 4, 1990)
1944.527 (Reserved)
07 CFR 1944.528 Preapplication submission deadline.
Dates governing the review and selection of TSA grant preapplications
will be published annually in the Federal Register. Preapplications
received after that time will not be considered for funding. For use of
fiscal year 1979 funds, the deadline for submission of preapplications
will be 45 calendar days from date of publication of final regulations.
07 CFR 1944.529 Project selection.
(a) Projects must meet the following criteria:
(1) Provide a program of supervisory assistance as defined in
1944.506(h), and
(2) Serve areas with a concentration of substandard housing and
low-income and low-income minority households.
(b) In addition to the items listed in paragraph (a) of this section,
the following criteria will be considered in the selection of grant
recipients:
(1) The extent to which the project serves areas with concentrations
of FmHA single family housing loan borrowers who are delinquent in their
housing loan payments and/or threatened with foreclosure.
(2) The capability and past performance demonstrated by the applicant
in administering its programs.
(3) The effectiveness of the current efforts by the applicant to
assist low-income families in obtaining adequate housing.
(4) The extent to which the project will provide or increase the
delivery of housing resources to low-income and low-income minority
families in the area who are not currently occupying adequate housing.
(5) The services the applicant will provide that are not presently
available to assist low-income families in obtaining or maintaining
occupancy of adequate housing and the extent of duplication of technical
and supervisory assistance activities currently provided for low-income
families.
(6) The extent of citizen and local government participation and
involvement in the development of the preapplication and project.
(7) The extent of planned coordination with other Federal, State, or
local technical and/or supervisory assistance programs.
(8) The extent to which the project will make use of other financial
and contributions-in-kind resources for both technical and supervisory
assistance and housing development and supporting facilities.
(9) Any comments received in accordance with 7 CFR Part 3015 Subpart
V, ''Intergovernmental Review of Department of Agriculture Programs and
Activities.'' See FmHA Instruction 1940-J, available in any FmHA office.
(10) The extent to which the project will be cost effective,
including but not limited to the ratio of personnel to be hired by the
applicant to the cost of the project, the cost, both direct and
indirect, per person benefiting from the project, and the expected
benefits to low-income families from the project.
(11) The extent to which the proposed staff and salary ranges,
including qualifications, experience, proposed hiring schedule and
availability of any prospective employees, will meet the objectives of
the proposed TSA program.
(12) The anticipated capacity of the applicant to implement the
proposed time schedule for starting and completing the TSA program and
each phase thereof.
(13) The adequacy of the records and practices, including personnel
procedures and practices, that will be established and maintained by the
applicant during the term of the agreement.
(c) Among the projects proposed by private nonprofit entities,
preference will be given to sponsored applicants.
(47 FR 40400, Sept. 14, 1982, as amended at 48 FR 29121, June 24,
1983)
1944.530 (Reserved)
07 CFR 1944.531 Applications submission.
(a) Upon notification that the applicant has been tentatively
selected for funding, the State Office will forward to the applicant a
signed Form AD-622 and provide SF 424.1 with instructions to the
applicant for preparation of an application.
(b) Upon receipt of Form AD-622, the applicant will submit an
application in an original and 2 copies on Form SF 424.1, and provide
whatever additional information is requested to the District Office
within 30 days.
(c) Upon receipt of an application on SF 424.1 by the District
Office, a docket shall be assembled which will include the following:
(1) Form SF 424.1 and the information submitted in accordance with
1944.526(a)(2).
(2) Form AD-622.
(3) Any comments received in accordance with 7 CFR Part 3015 Subpart
V, ''Intergovernmental Review of Department of Agriculture Programs and
Activities.'' See FmHA Instruction 1940-J, available in any FmHA office.
(4) SF 424.1.
(5) OGC legal determination made pursuant to 1944.526(c)(3).
(6) Grant Agreement.
(7) Form FmHA 1940-1, ''Request for Obligation of Funds.''
(8) Form FmHA 400-1, ''Equal Opportunity Agreement.''
(9) Form FmHA 400-4, ''Assurance Agreement.''
(10) Form FmHA 1940-20, ''Request for Environmental Information.''
(11) Form FmHA 1940-22, ''Environmental Checklist for Categorical
Exclusions,'' Form FmHA 1940-21, ''Environmental Assessment for Class I
Actions'' or Exhibit H, Subpart G of Part 1940 entitled, Environmental
Assessment for Class II Actions.
(12) The historical and archaeological assessment.
(13) The detailed budget for the agreement period based upon the
needs outlined in the proposal and the comments and recommendations by
FmHA.
(47 FR 40400, Sept. 14, 1982, as amended at 48 FR 29121, June 24,
1983; 49 FR 3763, Jan. 30, 1984; 55 FR 13503 and 13504, April 11,
1990)
1944.532 (Reserved)
07 CFR 1944.533 Grant approval and announcement.
Grant approval and announcement will be accomplished under the
following procedure. The Administrator may modify this section if
necessary to obligate funds in a timely and efficient manner.
(a) The District Office will review the docket to determine whether
the application complies with these regulations and is consistent with
the information and supporting documents submitted with the
preapplication and any comments and recommendations of the State and
National Offices.
(b) If major problems occur during the development of the docket, the
District Office will call upon the State Office for assistance.
(c) If a grant is recommended, Form FmHA 1940-1 and the Grant
Agreement will be prepared by the District Office and forwarded to the
applicant for signature as authorized in its authorizing resolution.
Exhibit A, Grant Agreement, is a part of these regulations.
(d) When Form FmHA 1940-1 and the Grant Agreement are received from
the applicant and signed by the applicant, the docket will be forwarded
to the State Director.
(e) Exhibit A to FmHA Instruction 2015-C (available in any FmHA
office) will be prepared and sent to the Director of Information in the
National Office.
(f) If the State Director approves the project, the following actions
will be taken in the order listed:
(1) The State Director, or the State Director's designee, will
telephone the Finance Office Check Request Station requesting that grant
funds for a particular project be obligated. Immediately after
contacting the Finance Office, the requesting official will furnish the
requesting office's security identification code. Failure to furnish
the security code will result in the rejection of the request for
obligation. After the security code is furnished, the required
information from Form FmHA 1940-1 will be furnished to the Finance
Office. Upon receipt of the telephone request for obligation of funds,
the Finance Office will record all information necessary to process the
request for obligation in addition to the date and time of the request.
(2) The individual making the request will record the date and time
of the request and sign Section 37 of Form FmHA 1940-1.
(i) The Finance Office will notify the State Office by telephone when
funds are reserved and of the date of obligation. If funds cannot be
reserved for a project, the Finance Office will notify the State Office
that funds are not available. The obligation date will be six working
days from the date the request for obligation is processed.
(ii) The Finance Office will terminally process telephone obligation
requests. Those requests received prior to 2:30 p.m. Central Time will
be processed on the date of the request. Those requests received after
2:30 p.m., to the extent possible, will be processed on the day
received; however, there may be instances where the obligation will be
processed on the next working day.
(iii) The Finance Office will mail Form FmHA 440-57,
''Acknowledgement of Obligated Funds/Check Request,'' to the State
Director, confirming the reservation of funds with the obligation date
inserted as required by Item 9 on the Forms Manual Insert (FMI) for Form
FmHA 440-57.
(iv) Form FmHA 1940-1 will not be mailed to the Finance Office.
(3) The State Director will notify the Director of Information in the
National Office with a recommendation that the project announcement be
released.
(4) An executed form FmHA 1940-1 will be sent to the applicant along
with an executed copy of the Grant Agreement and scope of work on or
before the date funds are obligated.
(i) The actual date of applicant notification will be entered on the
original of Form FmHA 1940-1 and the original of the form will be
included as a permanent part of the file.
(ii) Standard Form 270, ''Request for Advance or Reimbursement,''
will be sent to the applicant for completion and returned to FmHA.
(5) If it is determined that a project will not be funded or if major
changes in the scope of the project are made after release of the
approval announcement, the State Director will notify the Administrator
and the Director, Legislative Affairs and Public Information Staff
(LAPIS) by telephone or electronic mail, giving the reasons for such
action. The Director, LAPIS, will inform all parties who were notified
by the project announcement if the project will not be funded or of
major changes in the project using the procedure similar to the
announcement process. Form FmHA 1940-10, ''Cancellation of U.S.
Treasury Check and/or Obligation,'' will not be submitted to the Finance
Office until five working days after notifying the Administrator and the
Director, LAPIS.
(6) Upon receipt from the grantee of a properly completed SF-270,
Form FmHA 440-57 will be completed and the check request will be called
to the Finance Office Check Request Station in accordance with the FMI
for Form FmHA 440-57.
(44 FR 36891, June 22, 1979, as amended at 47 FR 36415, Aug. 20,
1982; 48 FR 30946, July 6, 1983; 55 FR 13504, Apr. 11, 1990)
1944.534 (Reserved)
07 CFR 1944.535 Cancellation of an approved grant.
(a) The District Director will prepare Form FmHA 1940-10,
''Cancellation of U.S. Treasury Check and/or Obligation,'' in an
original and two copies (three copies if the technical and supervisory
assistance (TSA) check has been received in the District Office from the
Disbursing Office). Form FmHA 1940-10 will be sent to the State
Director (original and two copies with the check if the Treasury check
is being canceled) with the reasons for requesting cancellation.
(b) If the State Director approves the request for cancellation,
he/she will forward the original request for cancellation (original and
one copy of Form FmHA 1940-10 with the check if the Treasury check is
being canceled) to the Finance Office. If the TSA check is received in
the District Office, the District Director will return it to the Finance
Office with an original and one copy of Form FmHA 1940-10.
(c) The District Director will notify the applicant of the
cancellation and, unless the applicant requested the cancellation, its
right to appeal in accordance with the FmHA Appeal Procedure contained
in Subpart B of Part 1900 of this chapter.
(44 FR 36891, June 22, 1979, as amended at 47 FR 36415, Aug. 20,
1982)
07 CFR 1944.536 Grant closing.
Closing is the process by which FmHA determines that applicable
administrative actions have been completed and the Grant Agreement is
signed. The Grant Agreement (Exhibit A) will be executed by the State
Director at the time the Form FmHA 1940-1 and Grant Agreement is sent to
the Grantee in accordance with 1944.533 (f)(4). An executed original of
the Grant Agreement shall be sent to the District Director and one copy
to the grantee.
(44 FR 36891, June 22, 1979, as amended at 55 FR 13504, April 11,
1990)
1944.537 (Reserved)
07 CFR 1944.538 Extending and revising grant agreements.
(a) All requests extending the original grant agreement or revising
the TSA program must be in writing. Such requests will be processed
through the District Director. Any such requests will be processed in
accordance with the processing procedure specified in 1944.526 (b) and
(c) of this subpart. The State Office will respond to the applicant
within 30 days of receipt of the request in the State Office.
(b) An extension of a grant beyond the two year term may be granted
by the State Director when:
(1) There are grant funds remaining and the grantee requests an
extension at the end of the grant period,
(2) The grantee has demonstrated its ability to conduct a
comprehensive program of technical and supervisory assistance in
accordance with the terms of its grant agreement and in a manner
satisfactory to FmHA,
(3) The grantee is likely to complete the goals outlined in the
initial proposal,
(4) There is an unmet need to continue the delivery of the technical
and supervisory assistance being provided by the grantee, and
(5) The District Director recommends continuation of the grant until
the grantee has expended all of the remaining grant funds.
(c) Upon approval of the extension, the State Director will authorize
the District Director to amend the ending date of the grant agreement
and revise the budgets, if necessary, on behalf of the Government.
(d) If the grant agreement must be revised and amended other than by
extension, including any changes in the scope and objectives of the TSA
program, the grantee will submit a revised budget and TSA program
together with any information necessary to justify its requests. Such
requests will be submitted to the State Director through the District
Director.
(e) The State Office will advise the National Office of all requests
to extend or modify the original grant agreement. Prior concurrence of
the National Office is not required unless the State Director so
desires, in which case the State Director will advise the applicant that
the request has been forwarded to the National Office for concurrence.
The State Director's recommendation will accompany such requests.
(f) Exhibit D to this subpart shall be executed upon approval of an
extension of the grant period, or significant change in either the
project budget or the objectives of the approved technical and
supervisory activities.
(g) If extension or modification is not approved, the State Office
will notify the applicant in writing of the decision and advise the
applicant of the appeal procedures under Subpart B of Part 1900 of this
chapter.
1944.539 (Reserved)
07 CFR 1944.540 Requesting TSA checks.
(a) The initial TSA check may cover the applicant's needs for the
first calendar month. If the first calendar month is a partial month,
the check will cover the needs for the partial month and the next whole
month.
(b) The initial advance of TSA grant funds may not be requested
simultaneously with the request for obligation of TSA grant funds. The
initial advance must be requested on Form FmHA 440-57 in accordance with
the FMI after it has been received from the Finance Office indicating
that funds have been obligated.
(c) All advances will be requested only after receipt of Standard
Form 270 from the grantee. The amount requested must be in accordance
with the detailed budget, including amendments, as approved by FmHA.
Standard Form 270 will not be submitted more frequently than once every
30 days. In no case will additional funds be advanced if the grantee
fails to submit required reports or is in violation of the grant
agreement.
07 CFR 1944.541 Reporting requirements.
(a) Standard Form 269, ''Financial Status Report,'' and a project
performance report will be required of all grantees on a quarterly
basis. All grantees shall submit an original and two copies of these
reports to the District Director. The project performance reports will
be submitted not later than January 15, April 15, July 15, and October
15 of each year.
(b) As part of the grantee's preapplication submission required by
1944.526(a)(2)(i), the grantee established the objectives of its TSA
program including the estimated number of low-income families to be
assisted by the TSA program and established its method of evaluation to
determine the effectiveness of its program. The project performance
report should relate the activities during the report period to the
project's objectives and analyze the effectiveness of the program.
Accordingly, the report should include, but need not be limited to the
following:
(1) A comparison of actual accomplishments to the objectives
established for that period, including:
(i) The number of low-income families assisted in improving their
housing conditions or in obtaining affordable adequate housing.
(ii) The number of FmHA borrowers who were delinquent or being
foreclosed who were assisted in resolving their financial problems.
(iii) The number of households assisted in obtaining adequate housing
by the TSA program through new construction and/or rehabilitation.
(2) Reasons why, if established objectives are not met.
(3) Problems, delays, or adverse conditions which will materially
affect attainment of the TSA grant objectives, prevent the meeting of
time schedules or objectives, or preclude the attainment of project work
elements during established time periods. This disclosure shall be
accompanied by a statement of the action taken or contemplated and any
Federal assistance needed to resolve the situation.
(4) Objectives established for the next reporting period,
sufficiently detailed to identify the type of assistance to be provided,
the number and type of families to be assisted, etc.
(c) These reports will be reviewed by the District Director to
determine satisfactory progress. The District Director will work with
the grantee to resolve any problems. The District Director will forward
the original and one copy of the reports with any comments and
recommendations to the State Director within ten working days of
receipt.
(d) The State Director will review the reports, comments, and
recommendations forwarded by the District Director within five working
days of receipt.
(1) If the reports indicate satisfactory progress, the State Director
will forward the original to the National Office with any comments or
suggestions and return the remaining copy to the grantee through the
District Director with a copy of the comments or recommendations.
(2) If the reports indicate unsatisfactory progress, the State
Director will recommend appropriate action to resolve the indicated
problem(s). The State Director has the discretion to not authorize
further advances where the progress of the project is unsatisfactory.
The State Director will notify the grantee through the District Director
of a decision not to authorize further advances and advise the grantee
of its appeal rights under Subpart B of Part 1900 of this chapter.
(3) A copy of the memorandum returning the unsatisfactory reports
will be forwarded to the National Office together with the State
Director's decision, comments and recommendations, if appropriate.
(e) The grantee will complete a final Standard Form 269 and a final
performance report upon termination or expiration of the grant
agreement.
1944.542 (Reserved)
07 CFR 1944.543 Grant monitoring.
Each grant will be monitored by FmHA to ensure that the grantee is
complying with the terms of the grant and that the TSA project activity
is completed as approved. Ordinarily, this will involve a review of
quarterly and final reports by FmHA and review by the appropriate
District Director.
1944.544 (Reserved)
07 CFR 1944.545 Additional grants.
An additional grant may be made to an applicant that has previously
received a TSA grant and has achieved or nearly achieved the goals
established for the previous grant by submitting a new proposal for TSA
funds. The additional grant application will be processed as if it were
an initial application. Upon approval, a new grant agreement will be
required and the grant will be coded as an initial grant on Form FmHA
440-1.
1944.546 (Reserved)
07 CFR 1944.547 Management assistance.
The District Director will see that each TSA grantee receives
management assistance to help achieve a successful program.
(a) TSA employees who will be contacting and assisting families will
receive training in packaging single family housing and Rural Rental
Housing loans when, or very shortly after, they are hired so that they
can work effectively.
(b) TSA employees who will provide counseling, outreach, and other
technical and supervisory assistance will receive training on FmHA
policies, procedures, and requirements appropriate to their positions
and the type of assistance the grantee will provide at the outset of the
grant.
(c) Training will be provided by FmHA employees and/or outside
sources approved by FmHA when the technical and supervisory assistance
involves rural housing programs other than FmHA programs. Appropriate
training of TSA employees should be anticipated during the planning
stages of the grant and the reasonable cost of such training included in
the budget.
(d) The District Director, in cooperation with the appropriate County
Supervisor(s), should coordinate the management assistance given to the
TSA grantee in a manner which is timely and effective. This will
require periodic meetings with the grantee to discuss problems being
encountered and offer assistance in solving these problems; to discuss
the budget, the effectiveness of the grant, and any other unusual
circumstances affecting delivery of the proposed TSA services; to keep
the grantee aware of procedural and policy changes, availability of
funds, etc.; and to discuss any other matters affecting the availability
of housing opportunities for low-income families.
(e) The District Director will advise the grantee of the options
available to bring the delinquent borrowers' accounts current and advise
the grantee that the appropriate County Supervisor retains all approval
authority for any resolution of the delinquent accounts and all other
authority currently available to remedy delinquent accounts.
07 CFR 1944.548 Counseling consent by FmHA single family housing
borrowers.
(a) Subsequent to execution of the TSA grant agreement, the County
Supervisor(s) serving the TSA project area will contact the delinquent
FmHA single family housing borrowers who appear to be in need of
supervisory assistance as defined in 1944.506(h)(1). Such contact will
indicate the availability of the counseling services of the grantee and
solicit the borrower's participation in the program. Exhibit E should
be used in contacting and/or discussing counseling with the borrowers.
(b) Upon indication of the borrower's willingness to participate in
the program by his or her signature on Exhibit E or similar letter or
statement, the County Supervisor will make available to the grantee (at
no cost) the borrower's FmHA loan history including the following
information:
(1) Name, address, and telephone number;
(2) Status of the account including the amount of the loan, the
repayment schedule, and the amount of the delinquency; and
(3) Other information needed for counseling purposes which may be
provided in accordance with FmHA Instruction 2018-F.
07 CFR 1944.549 Grant evaluation, closeout, suspension, and
termination.
(a) Grant evaluation will be an ongoing activity performed by both
the grantee and FmHA. The grantee will perform self-evaluations by
preparing periodic project performance reports in accordance with
1944.541. FmHA will also review all reports prepared and submitted by
the grantee in accordance with the grant agreement and this part.
(b) Within forty-five (45) days after the grant ending date, the
grantee will complete closeout procedures as specified in the grant
agreement.
(c) The grant can also be terminated before the grant ending date for
the causes specified in the grant agreement. No further grant funds
will be disbursed when grant suspension or termination procedures have
been initiated in accordance with the grant agreement.
1944.550 (Reserved)
07 CFR 1944.549 Pt. 1944, Subpt. K, Exh. A
07 CFR 1944.549 Exhibits to Subpart K
07 CFR 1944.549 Exhibit A -- Grant Agreement Technical and Supervisory
Assistance
This Agreement dated ---------- is between ------------------------
(name), ------------------------ (address), (Grantee) and the United
States of America acting through the Farmers Home Administration
(Grantor or FmHA). The Grantor agrees to grant to Grantee a sum not to
exceed $ -------- subject to the terms and conditions established by the
Grantor: Provided, however, That the proportionate share of any grant
funds actually advanced and not needed for grant purposes shall be
returned immediately to the Grantor. The Grantor may terminate the
grant in whole, or in part, at any time before the date of completion,
whenever it is determined that the Grantee has failed to comply with the
conditions of the grant. The grantee may appeal this decision in
accordance with the FmHA Appeal Procedure contained in Subpart B of Part
1900 of this chapter. In consideration of said grant by Grantor to
Grantee, to be made pursuant to Section 525(a) of the Housing Act of
1949 for the purpose of providing funds to eligible nonprofit applicants
(grantees) to pay part or all of the cost of developing, conducting,
administering, or coordinating comprehensive programs of technical and
supervisory assistance (TSA) which will aid needy low-income individuals
and families in benefiting from Federal, State and local housing
programs in rural areas, the Grantee will provide such a program in
accordance with the terms of this agreement and applicable Farmers Home
Administration (FmHA) regulations.
Part A Definitions:
1. ''Beginning date'' means the date when work under this grant will
commence. Such date is set forth in Paragraph 2 of Part B of this
Agreement.
2. ''Ending date'' means the date when all work under this agreement
is scheduled to be completed. It is also the latest date grant funds
will be provided under this agreement, without an approved extension.
Such date is set forth in Paragraph 2 of Part B of this Agreement.
3. ''Disallowed costs'' are those charges to a grant which the FmHA
determines cannot be authorized in accordance with applicable Federal
costs principles or other conditions contained in this Agreement.
4. ''Grant closeout'' is the process by which the grant operation is
concluded at the expiration of the grant period or following a decision
to terminate the grant.
5. ''Termination'' of a grant means the cancellation of Federal
assistance, in whole or in part, under a grant at any time before the
date of completion.
Part B Terms of agreement:
Grantor and grantee agree:
1. This agreement shall be effective when executed by both parties.
2. The TSA activities approved by FmHA shall commence not later than
------------ , and shall be completed by ------------ , unless earlier
terminated under paragraph B 18 below, or extended.
3. Grantee shall carry out the TSA activities described in the
application docket which is made a part of this Agreement. Grantee will
be bound by the conditions set forth in the docket and the further
conditions set forth in this Agreement. If any of the conditions in the
docket are inconsistent with those in the Agreement, the latter will
govern. A change of any conditions must be in writing and must be
signed by an authorized representative of FmHA.
4. Grantee shall use grant funds only for the purpose and activities
specified in FmHA regulations and in the application docket approved by
FmHA including the approved budget. Any uses not provided for in the
approved budget must be approved in writing by FmHA in advance.
5. If the Grantee is a private nonprofit corporation, expenses
charged for travel or per diem will not exceed the rates paid FmHA
employees for similar expenses. If the Grantee is a public body, the
rates will be those that are allowable under the customary practice in
the government of which the grantee is a part; if none are customary,
the FmHA rates will be the maximum allowed.
6. Grant funds will not be used for any of the following:
(a) To pay obligations incurred before the effective date of this
Agreement.
(b) To pay obligations incurred after the grant termination or ending
date.
(c) Entertainment purposes.
(d) To pay for capital assets, the purchase of real estate or
vehicles, improvement or renovation of space, or repair or maintenance
of privately owned vehicles.
(e) Any other purpose specified in 7 CFR 1944.520.
7. Grant funds shall not be used to replace any financial support
previously provided or assured from any other source.
8. Disbursal of grants will be governed as follows:
(a) In accordance with Treasury Circular 1075 (fourth revision) Part
205, Chapter II of Title 31 of the Code of Federal Regulations, grant
funds will be provided by FmHA as cash advances on an as needed basis
not to exceed one advance every 30 days. The advance will be made by
direct Treasury check to the Grantee. The financial management system
of the recipient organization shall provide for effective control over
and accountability for all Federal funds as stated in OMB Circular A-102
(42 FR 45828, September 12, 1977) for State and local governments and
OMB Circular A-110 (41 FR 32016, July 30, 1976) for nonprofit
organizations.
(b) Cash advances to the Grantee shall be limited to the minimum
amounts needed and shall be timed to be in accord only with the actual,
immediate cash requirements of the Grantee in carrying out the purpose
of the planned project.
(c) Grant funds should be promptly refunded to the FmHA and redrawn
when needed if the funds are erroneously drawn in excess of immediate
disbursement needs. The only exceptions to the requirement for prompt
refunding are when the funds involved:
(i) Will be disbursed by the recipient organization within seven
calendar days from the date of the Treasury check, or
(ii) Are less than $10,000 and will be disbursed within 30 calendar
days from the date of the Treasury check.
(d) Grantee shall provide satisfactory evidence to FmHA that all
officers of the Grantee organization authorized to receive and/or
disburse Federal funds are covered by satisfactory fidelity bonds
sufficient to protect the Grantor's interests.
(e) Grant funds will be placed in the Grantee's bank account(s) until
disbursed.
9. the Grantee will submit Performance and Financial reports as
indicated below to the appropriate FmHA District Office:
(a) As needed, but not more frequently than once every 30 days, an
original and 2 copies of Standard Form 270, ''Request for Advance or
Reimbursement.''
(b) Quarterly, (not later than January 15, April 15, July 15, and
October 15 of each year) an original and 2 copies of Standard Form 269,
''Financial Status Report,'' and a Project Performance report in
accordance with 1944.541 of this subpart.
(c) Within forty-five (45) days after the termination or expiration
of the grant agreement, an original and 2 copies of Standard Form 269,
and a final Project Performance report which will include a summary of
the project's accomplishments, problems, and planned future activities
of the Grantee for TSA. Final reports may serve as the last quarterly
report.
(d) FmHA may require performance reports more frequently if it deems
necessary.
10. In accordance with FMC 74-4, Attachment B, compensation for
employees will be considered reasonable to the extent that such
compensation is consistent with that paid for similar work in other
activities of the State or local government.
11. If the grant exceeds $100,000, transfers among direct cost budget
categories totaling more than 5 percent of the total budget must have
prior written approval by the appropriate District Director.
12. Results of the program assisted by grant funds may be published
by the grantee without prior review by FmHA, provided that such
publications acknowledge the support provided by funds pursuant to the
provisions of Title V of the Housing Act of 1949 and that five copies of
each such publication are furnished to the District Director.
13. Grantee certifies that no person or organization has been
employed or retained to solicit or secure this grant for a commission,
percentage, brokerage, or contingent fee.
14. No person in the United States shall, on the grounds of race,
creed, color, sex, marital status, age, national origin, or mental or
physical handicap, be excluded from participating in, be denied the
proceeds of, or be subject to discrimination in connection with the use
of grant funds. Grantee will comply with pertinent nondiscrimination
regulations of FmHA.
15. In all hiring or employment made possible by or resulting from
this grant, Grantee: (a) Will not discriminate against any employee or
applicant for employment because of race, creed, color, sex, marital
status, national origin, age, or mental or physical handicap, and (b)
will take affirmative action to insure that employees are treated during
employment without regard to their race, creed, color, sex, marital
status, national origin, age, or mental or physical handicap. This
requirement shall apply to, but not be limited to, the following:
Employment, upgrading, demotion, or transfer; recruitment or
recruitment advertising; layoff or termination; rates of pay or other
forms of compensation; and selection for training, including
apprenticeship. In the event Grantee signs a contract related to this
grant which would be covered by any Executive Order, law, or regulation
prohibiting discrimination, Grantee shall include in the contract the
''Equal Employment Clause'' as specified by FmHA.
16. The grantee accepts responsibility for accomplishing the TSA
program as submitted and included in the application docket. The
Grantee shall also:
(a) Endeavor to coordinate and provide liaison with State and local
housing organizations, where they exist.
(b) Provide continuing information to FmHA on the status of Grantee
programs, projects, related activities, and problems.
(c) The Grantee shall inform the Grantor as soon as the following
types of conditions become known:
(i) Problems, delays, or adverse conditions which materially affect
the ability to attain program objectives, prevent the meeting of time
schedules or goals, or preclude the attainment of project work units by
established time periods. This disclosure shall be accompanied by a
statement of the action taken or contemplated, and any Grantor
assistance needed to resolve the situation.
(ii) Favorable developments or events which enable meeting time
schedules and goals sooner than anticipated or producing more work units
than originally projected.
17. Grant closeout and termination procedures will be as follows:
(a) Promptly after the date of completion or a decision to terminate
a grant, grant closeout actions are to be taken to allow the orderly
discontinuation of Grantee activity.
(i) The grantee shall immediately refund to FmHA any uncommitted
balance of grant funds.
(ii) The Grantee will furnish to FmHA within 45 days after the date
of completion of the grant a Standard Form 269 and all financial,
performance, and other reports required as a condition of the grant.
(iii) The Grantee shall account for any property acquired with TSA
grant funds, or otherwise received from FmHA.
(iv) After the grant closeout, FmHA retains the right to recover any
disallowed costs which may be discovered as a result of an audit.
(b) When there is reasonable evidence that the Grantee has failed to
comply with the terms of this Agreement, the State Director can, on
reasonable notice, terminate the grant pursuant to paragraph (c) below
and withhold further payments or prohibit the Grantee from further
obligating grant funds. FmHA may allow all necessary and proper costs
which the Grantee could not reasonably avoid.
(c) Grant termination will be based on the following:
(i) Termination for cause. This grant may be terminated in whole, or
in part, at any time before the date of completion, whenever FmHA
determines that the Grantee has failed to comply with the terms of the
Agreement. The reasons for termination may include, but are not limited
to, such problems as:
(A) Failure to make satisfactory progress in attaining grant
objectives.
(B) Failure of Grantee to use grant funds only for authorized
purposes.
(C) Failure of Grantee to submit adequate and timely reports of its
operation.
(D) Violation of any of the provisions of any laws administered by
FmHA or any regulation issued thereunder.
(E) Violation of any nondiscrimination or equal opportunity
requirement administered by FmHA in connection with any FmHA programs.
(F) Failure to maintain an accounting system acceptable to FmHA.
(ii) Termination for convenience. FmHA or the Grantee may terminate
the grant in whole, or in part, when both parties agree that the
continuation of the project would not produce beneficial results
commensurate with the further expenditure of funds. The two parties
shall agree upon the termination conditions, including the effective
date and, in case of partial termination, the portion to be terminated.
(d) Procedure for termination of grant for cause. FmHA shall notify
the Grantee in writing of the determination and the reasons for and the
effective date of the whole or partial termination in accordance with 7
CFR 1900.53.
18. Extension and/or revision of this grant agreement may be approved
by FmHA provided, in its opinion, the extention and/or revision is
justified and there is a likelihood that the Grantee can accomplish the
goals set out and approved in the application docket during the period
of the extension and/or revision as specified in 7 CFR 1944.538.
Part C -- Grantee agrees:
1. To comply with property management standards for expendable and
nonexpendable personal property established by Attachment N of OMB
Circular A-102 or Attachment N of OMB Circular A-110 for State and local
governments or nonprofit organizations respectively. ''Personal
property'' means property of any kind except real property. It may be
tangible -- having physical existence -- or intangible -- having no
physical existence, such as patents, inventions, and copyrights.
''Nonexpendable personal property'' means tangible personal property
having a useful life of more than one year and an acquisition cost of
$300 or more per unit. A Grantee may use its own definition of
nonexpendable personal property provided that such definition would at
least include all tangible personal property as defined above.
''Expendable personal property'' refers to all tangible personal
property other than nonexpendable personal property. When nonexpendable
tangible personal property is acquired by a Grantee with project funds,
title shall not be taken by the Federal Government but shall vest in the
Grantee subject to the following conditions:
(a) Right to transfer title. For items of nonexpendable personal
property having a unit acquisition cost of $1,000 or more, FmHA may
reserve the right to transfer title to the Federal Government or to a
third party named by the Federal Government when such third party is
otherwise eligible under existing statutes. Such reservation shall be
subject to the following standards:
(i) The property shall be appropriately identified in the grant or
otherwise made known to the Grantee in writing.
(ii) FmHA shall issue disposition instructions within 120 calendar
days after the end of the Federal support of the project for which it
was acquired. If FmHA fails to issue disposition instructions within
the 120 calendar day period, the Grantee shall apply the standards of
paragraph 1(c) below.
(iii) When FmHA exercises its right to take title, the personal
property shall be subject to the provisions for federally owned
nonexpendable property discussed in paragraph 1(a)(iv) below.
(iv) When title is transferred either to the Federal Government or to
a third party and the Grantee is instructed to ship the property
elsewhere, the Grantee shall be reimbursed by the benefitting Federal
agency with an amount which is computed by applying the percentage of
the Grantee participation in the cost of the original grant project or
program to the current fair market value of the property, plus any
reasonable shipping or interim storage costs incurred.
(b) Use of other tangible nonexpendable property for which the
Grantee has title.
(i) The Grantee shall use the property in the project or program for
which it was acquired as long as needed, whether or not the project or
program continues to be supported by Federal funds. When it is no
longer needed for the original project or program, the Grantee shall use
the property in connection with its other federally sponsored
activities, in the following order of priority:
(A) Activities sponsored by FmHA.
(B) Activities sponsored by other Federal agencies.
(ii) Shared use. During the time that nonexpendable personal
property is held for use on the project or program for which it was
acquired, the Grantee shall make it available for use on other projects
or programs if such other use will not interfere with the work on the
project or program for which the property was originally acquired.
First preference for such other use shall be given to other projects or
programs sponsored by FmHA; second preference shall be given to
projects or programs sponsored by other Federal agencies. If the
property is owned by the Federal Government, use on other activities not
sponsored by the Federal Government shall be permissible if authorized
by FmHA. User charges should be considered if appropriate.
(c) Disposition of other nonexpendable property. When the Grantee no
longer needs the property, the property may be used for other activities
in accordance with the following standards:
(i) Nonexpendable property with a unit acquisition cost of less than
$1,000. The Grantee may use the property for other activities without
reimbursement to the Federal Government or sell the property and retain
the proceeds.
(ii) Nonexpendable personal property with a unit acquisition cost of
$1,000 or more. The Grantee may retain the property for other use
provided that compensation is made to FmHA or its successor. The amount
of compensation shall be computed by applying the percentage of Federal
participation in the cost of the original project or program to the
current fair market value of the property. If the Grantee has no need
for the property and the property has further use value, the Grantee
shall request disposition instructions from the original Grantor agency.
FmHA shall determine whether the property can be used to meet the
agency's requirements. If no requirement exists within that agency, the
availability of the property shall be reported, in accordance with the
guidelines of the Federal Property Management Regulations (FPMR) to the
General Services Administration by FmHA to determine whether a
requirement for the property exists in other Federal agencies. FmHA
shall issue instructions to the Grantee no later than 120 days after the
Grantee request and the following procedures shall govern:
(A) If so instructed or if disposition instructions are not issued
within 120 calendar days after the Grantee's request, the Grantee shall
sell the property and reimburse FmHA an amount computed by applying to
the sales proceeds the percentage of Federal participation in the cost
of the original project or program. However, the Grantee shall be
permitted to deduct and retain from the Federal shares $100 or ten
percent of the proceeds, whichever is greater, for the Grantee's selling
and handling expenses.
(B) If the Grantee is instructed to dispose of the property other
than as described in paragraph 1(a)(iv) above, the Grantee shall be
reimbursed by FmHA for such costs incurred in its disposition.
(C) The Grantee's property management standards for nonexpendable
personal property shall include the following procedural requirements:
(1) Property records shall be maintained accurately and shall
include:
(a) A description of the property.
(b) Manufacturer's serial number, model number, Federal stock number,
national stock number, or other identification number.
(c) Sources of the property including grant or other agreement
number.
(d) Whether title vests in the Grantee or the Federal Government.
(e) Acquisition date (or date received, if the property was furnished
by the Federal Government) and cost.
(f) Percentage (at the end of the budget year) of Federal
participation in the cost of the project or program for which the
property was acquired. (Not applicable to property furnished by the
Federal Government).
(g) Location, use, and condition of the property and the date the
information was reported.
(h) Unit acquisition cost.
(i) Ultimate disposition data, including date of disposal and sales
price or the method used to determine current fair market value when a
Grantee compensates the Federal agency for its share.
(2) Property owned by the Federal Government must be marked to
indicate Federal ownership.
(3) A physical inventory of property shall be taken and the results
reconciled with the property records at least once every two years. Any
difference between quantities determined by the physical inspection and
those shown in the accounting records shall be investigated to determine
the causes of the difference. The Grantee shall, in connection with the
inventory, verify the existence, current utilization, and continued need
for the property.
(4) A control system shall be in effect to ensure adequate safeguards
to prevent loss, damage, or theft of the property. Any loss, damage, or
theft of nonexpendable property shall be investigated and fully
documented; if the property was owned by the Federal Government, the
Grantee shall promptly notify FmHA.
(5) Adequate maintenance procedures shall be implemented to keep the
property in good condition.
(6) When the Grantee is authorized or required to sell the property,
proper sales procedures shall be established which will provide for
competition to the extent practicable and result in the highest possible
return.
(7) Expendable personal property shall vest in the Grantee upon
acquisition. If there is a residual inventory of such property
exceeding $1,000 in total aggregate fair market value, upon termination
or completion of the grant and if the property is not needed for any
other federally sponsored project or program, the Grantee shall retain
the property for use on nonfederally sponsored activities, or sell it,
but must in either case compensate the Federal Government for its share.
The amount of compensation shall be computed in the same manner as
nonexpendable personal property.
2. To provide a financial management system which will include:
(a) Accurate, current, and complete disclosure of the financial
results of each grant. Financial reporting will be on an accrual basis.
(b) Records which identify adequately the source and application of
funds for grant-supported activities. Those records shall contain
information pertaining to grant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays, and income.
(c) Effective control over and accountability for all funds,
property, and other assets. Grantee shall adequately safeguard all such
assets and shall assure that they are solely for authorized purposes.
(d) Accounting records supported by source documentation.
3. To retain financial records, supporting documents, statistical
records, and all other records pertinent to the grant for a period of at
least three years after the submission of the final Project Performance
report pursuant to paragraph B(9)(c) of this agreement except in the
following situations:
(a) If any litigation, claim, or audit is commenced before the
expiration of the three year period, the records shall be retained until
all litigations, claims, or audit findings involving the records have
been resolved.
(b) Records for nonexpandable property acquired with Federal funds
shall be retained for three years after final disposition.
(c) When records are transferred to or maintained by FmHA, the three
year retention requirement is not applicable.
Microfilm copies may be substituted in lieu of original records. The
Grantor and the Comptroller General of the United States, or any of
their duly auhthorized representatives, shall have access to any books,
documents, papers, and records of the Grantee which are pertinent to the
specific grant program for the purpose of making audits, examinations,
excerpts, and transcripts.
4. To provide information as requested by the Grantor concerning the
Grantee's actions in soliciting citizen participation in the application
process, including published notice of public meetings, actual public
meetings held, and content of written comments received.
5. Not encumber, transfer, or dispose of the property or any part
thereof, furnished by the Grantor or acquired wholly or in part with
Grantor funds without the written consent of the Grantor except as
provided in Part C 1.
6. To provide Grantor with such periodic reports of Grantee
operations as may be required by authorized representatives of the
Grantor.
7. To execute Form FmHA 400-1, ''Equal Opportunity Agreement,'' and
to execute any other agreements required by Grantor to implement the
civil rights requirements.
8. To include in all contracts in excess of $100,000 a provision for
compliance with all applicable standards, orders, or regulations issued
purusant to the Federal Clean Air Act as amended. Violations shall be
reported to the Grantor and the Regional Office of the Environmental
Protection Agency.
9. That, upon any default under its representations or agreements set
forth in this instrument, Grantee, at the option and demand of Grantor,
will, to the extent legally permissible, repay to the Grantor forthwith
the grant funds received with interest at the rate of five percentum per
annum from the date of the default. The provisions of this Grant
Agreement may be enforced by Grantor, at its option and without regard
to prior waivers by it of previous defaults of Grantee, by judicial
proceedings to require specific performance of the terms of this Grant
Agreement or by such other proceedings in law or equity, in either
Federal or State Courts, as may be deemed necessary by Grantor to assure
compliance with the provisions of this Grant Agreement and the laws and
regulations under which this grant is made.
10. That no member of Congress shall be admitted to any share or part
of this Grant or any benefit that may arise therefrom; but this
provision shall not be construed to bar as a contractor under the Grant
a publicly held corporation whose ownership might include a member of
Congress.
11. That all nonconfidential information resulting from its
activities shall be made available to the general public on an equal
basis.
12. That the purpose for which this grant is made may complement, but
shall not duplicate programs for which monies have been received, are
committed, or are applied for from other sources, public and private.
13. That the Grantee shall relinquish any and all copyrights and/or
privileges to the materials developed under this grant, such material
being the sole property of the Federal Government. In the event
anything developed under this grant is published in whole or in part,
the material shall contain notice and be identified by language to the
following effect: ''The material is the result of tax-supported
research and as such is not copyrightable. It may be freely reprinted
with the customary crediting of the source.''
14. That the Grantee shall abide by the policies promulgated in OMB
Circular A-102, Attachment O, or OMB Circular A-110, Attachment O, which
provides standards for use by Grantees in establishing procedures for
the procurement of supplies, equipment, and other services with Federal
grant funds.
15. That it is understood and agreed that any assistance granted
under this Agreement will be administered subject to the limitations of
Title V of the Housing Act of 1949 as amended, 42 USC 1471 et. seq.,
and related regulations, and that rights granted to FmHA herein or
elsewhere may be exercised by it in its sole discretion to carry out the
purposes of the assistance, and protect FmHA's financial interest.
16. Standard of Conduct. No employee, officer or agent of Grantee
shall participate in the selection, award or administration of a
contract in which Federal funds are used where, to the knowledge of such
employee, officer or agent, the employee, officer or agent or such
person's immediate family members, partners or any organization in which
such person or such person's immediate family award or administration of
the contract, or (2) when such person is negotiating or has any
arrangement concerning future employment. The recipient's officers,
employees or agents shall neither solicit nor accept gratuities, favors
or anything of monetary value from landlords or developers of rental or
ownership housing projects in which the persons receiving TSA assistance
may be placed as a result of such assistance.
Part D -- Grantor agrees:
1. That it may assist Grantee, within available appropriations, with
such technical and management assistance as needed in planning the
project and coordinating the plan with local officials, comprehensive
plans, and any State or area plans for improving housing for low-income
families in the area in which the project is located.
2. That at its sole discretion, Grantor may at any time give any
consent, deferment, subordination, release, satisfaction, or termination
of any or all of Grantee's grant obligations, with or without valuable
consideration, upon such terms and conditions as Grantor may determine
to be (a) advisable to further the purposes of the grant or to protect
Grantor's financial interests therein, and (b) consistent with the
statutory purposes of the grant and the limitations of the statutory
authority under which it is made and Grantor's regulations.
This Agreement is subject to current Grantor regulations and any
future regulations not inconsistent with the express terms hereof.
Grantee on -------- , 19 -- , has caused this Agreement to be executed
by its duly authorized -------- and attested and its corporate seal
affixed by its duly authorized -------- .
Attest:
Grantee
By
(Title)
By
(Title)
Grantor
United States of America
Farmers Home Administration
By
(Title)
07 CFR 1944.549 Pt. 1944, Subpt. K, Exh. B
07 CFR 1944.549 Exhibit B -- Administrative Instructions for State
Offices Regarding Their Responsibilities in the Administration of the
Technical and Supervisory Assistance Grant Program
A. The State Office will maintain for distribution to potential
applicants, upon request, a supply of preapplication packets consisting
of:
1. SF 424.1.
2. Form FmHA 400-1, ''Equal Opportunity Agreement.''
3. Form FmHA 400-4, ''Assurance Agreement.''
4. Form FmHA 1940-20, ''Request for Environmental Information.''
5. Subpart K of Part 1944 of this Chapter.
B. The State Office should inform all potential applicants, at the
time they pick up forms, that:
1. The preapplication must be submitted to the District Office
serving the area in which the applicant proposes to operate the
Technical and Supervisory Assistance (TSA) program.
2. The State Office will refer all requests for assistance in
completing the preapplication to the appropriate District Office.
C. Beyond the responsibilities of the State Office in the selection
of grantees and the administration of the program, and as stated in
1944.502 of this subpart, the TSA program provides an opportunity for
the State Director to give priority to applicants serving the rural
areas of greatest need as well as use the program cooperatively with
other Federal and State agencies in addressing the housing needs of the
residents of a proposed TSA service area. Therefore, the State Office
should be prepared, before receipt of preapplications, to advise the
District Directors, potential applicants and other Federal and State
agencies which part(s) of the State has the greatest need for the TSA
program. The State Director should identify target areas in a similar
manner to the process used by the Administrator pursuant to 1944.525 of
this subpart. Proposals which are clearly inappropriate and do not meet
the basic priorities of 1944.529 (a) of this subpart should not be
encouraged due to the complexity of the preapplication submission.
D. In addition to the instructions of 1944.526 of this subpart, the
State Office should follow the procedures outlined below:
1. Review preapplications for completeness and adequacy and make
assessments required by 1944.526(c)(1) of this subpart.
2. Request clarifications from the District Office if necessary.
3. Evaluate the proposals in light of 1944.529 of this subpart and
select the proposal(s) which best meets the priorities established under
the project selection criteria in 1944.529 (a), (b) and (c) of this
subpart.
4. The State Office must provide written comments to be attached to
the preapplication(s) justifyng the selection(s) and addressing the
items in 1944.529 of this subpart.
5. The State Office will forward the original SF 424.1 and
accompanying documents of the selected preapplication(s) as quickly as
possible to the National Office, Attention: Special Authorities
Division, Multi-Family Housing. In no case should the State Office
forward their selected TSA preapplication(s) later than thirty (30) days
after the closing date for receipt of preapplications.
6. Preapplications not selected by the State Office will be returned
to the applicants through the appropriate District Offices with notice
of appeal rights.
7. In accordance with 1944.525 of this subpart, State Offices will
be advised of the number of preapplications to be submitted from each
state to the National Office.
E. Sections 1944.531 and 1944.533 of this subpart detail the
responsibilities of the State Office after tentative selection or
concurrence of the TSA grantees by the National Office. Those
preapplicants not selected will be promptly notified and their
preapplication returned with notice of appeal rights. Form AD-622,
''Notice of Preapplication Review Action,'' will be mailed from the
State Office to the applicants. District Offices will receive a copy
from the State Office.
F. After execution of the grant agreement, the State Office will work
closely with the District Office and the grantee to obtain additional
resources from other Federal and State agencies to meet the needs of the
TSA service area. The State Office should closely review the quarterly
project performance reports and assist the District Director, as
appropriate, in resolving any problems or taking advantage of favorable
funding or program opportunities.
(44 FR 36891, June 22, 1979, as amended at 48 FR 29121, June 24,
1983; 49 FR 3763, Jan. 30, 1984; 55 FR 13503 and 13504, Apr. 11, 1990)
07 CFR 1944.549 Exhibit C -- Instructions for District Offices Regarding Their Responsibilities in the Administration of the Technical and Supervisory Assistance Grant Program
07 CFR 1944.549 Pt. 1944, Subpt. K, Exh. C
A. The District Office will maintain for distribution to potential
applicants, upon request, a supply of preapplication packets consisting
of:
1. SF 424.1.
2. Form FmHA 400-1, ''Equal Opportunity Agreement.''
3. Form FmHA 400-4, ''Assurance Agreement.''
4. Form FmHA 1940-20, ''Request for Environmental Information.''
5. Subpart K of Part 1944 of this chapter.
B. District Directors will provide any necessary assistance in
completing preapplication forms.
C. All applicants will submit preapplications to District Offices.
Upon receipt of the preapplication the District Director will review it
to ensure that the preapplication is complete and make assessments
required by 1944.526(b)(1) of this subpart.
D. The District Director will provide written comments to be attached
to the preapplication. These comments will, at a minimum, address the
following items:
1. Whether the area to be covered by the project is a ''rural area''
as defined by FmHA regulations.
2. The District Director's knowledge of the applicant's past history.
3. The need for the proposed activity, and its relationship to the
targeting strategies for the District.
4. Appropriateness and applicability of this proposal for FmHA
implementation funds.
5. Extent of citizen involvement in development of preapplication,
particularly the involvement of minority and/or low-income groups.
6. All other criteria specified in 1944.529 of this subpart.
7. The comments and recommendations of the County Supervisors for the
proposed TSA service area.
E. The District Director will forward the original and one copy of
the preapplication and accompanying documents along with the comments
and a summary recommendation to the State Director within ten (10)
working days of receipt of the preapplication.
F. Those applicants invited to submit applications will submit their
applications to the District Office with two copies. The District
Office will retain the original for the docket and forward one copy to
the appropriate State Office after making sufficient copies to forward
one copy to each of the appropriate County Offices.
G. The District Director, upon receipt of the application, will
prepare a docket in accordance with 1944.531 of this subpart. The
procedures for approval and project servicing are detailed in this
subpart.
(44 FR 36891, June 22, 1979, as amended at 48 FR 29121, June 24,
1983; 49 FR 3763, Jan. 30, 1984; 55 FR 13504, Apr. 11, 1990)
07 CFR 1944.549 Exhibit D -- Amendment to Technical and Supervisory Assistance Grant Agreement
07 CFR 1944.549 Pt. 1944, Subpt. K, Exh. D
This Amendment to Agreement dated ------------ 19 -- between
herein called ''Grantee,'' organized and operating under
(authorizing State Statute)
and the United States of America acting through the Farmers Home
Administration, Department of Agriculture, herein called ''FmHA,''
amends the Technical and Supervisory Assistance Grant Agreement''
between the parties hereto dated ------------ 19 -- , hereinafter called
the ''Agreement.''
Said Agreement is amended by changing the ending date specified in
Paragraph 2 of Part B of the Agreement from ------------ to --------
and/or by making the following changes noted in the attachments hereto:
(List and identify proposal and any other documents pertinent to the
grant which are attached to the Amendment.)
Agreed to this ---- day of ------------ 19 -- .
(Name of Grantee)
By
(Signature) (Title)
United States of America
By
(Signature) (Title)
Farmers Home Administration
(Date)
07 CFR 1944.549 Pt. 1944, Subpt. K, Exh. E
07 CFR 1944.549 Exhibit E -- Guide Letter to Delinquent FmHA Single
Family Housing Loan Borrowers
Dear
(name of borrower)):
This is to advise you that (name of TSA grantee) is available to
provide independent counseling services to Farmers Home Administration
(FmHA) borrowers in need of financial management assistance. These
services may assist you in resolving your present delinquency in your
housing loan.
This organization is prepared to provide financial and budget
counseling at no charge to you. Their counseling services include
advice on debt levels and credit purchases, consumer and cost awareness,
debt adjustment procedures, and other financial information and
services.
You are urged to take advantage of this program. However, your
participation is voluntary and does not relieve you of any of your loan
obligations to FmHA or limit the remedies FmHA has to bring your loan
current or recover the loan in full. Any plan altering your repayment
schedule in any way must be approved by this office. However, it is our
intention to work with you and the counseling organization in every way
we can to resolve your delinquency.
If you want to participate in this program, please sign the attached
copy of this letter and return it to this office. At that time we will
advise (name of TSA grantee) that you are interested in their services
and provide them with the information they need to contact you. Only
information available to the general public will be released.
We are sure you agree that it is in your interest to make every
effort to bring your account current. We look forward to your return of
the attached copy of this letter.
Sincerely,
County Supervisor
Farmers Home Administration
Enclosure
(On attached copy only:)
I desire to participate in the counseling program with (name of TSA
grantee).
Borrower Date
07 CFR 1944.549 Subpart L -- Farmers Home Administration Tenant
Grievance and Appeals Procedure
Source: 48 FR 56177, Dec. 19, 1983, unless otherwise noted.
07 CFR 1944.551 Purpose.
The purpose of this subpart is to set forth uniform requirements for
grievance and appeals procedures in all Rural Rental Housing (RRH),
Rural Cooperative Housing (RCH), and Labor Housing (LH) projects
financed by the Farmers Home Administration (FmHA) under sections 514,
515, and 516 of the Housing Act of 1949. The objective of this subpart
is to ensure the fair treatment of persons residing in multiple family
projects while providing for an equitable manner by which borrowers can
operate, maintain, and safeguard housing projects. The right to appeal
under this subpart will also extend to persons who seek admission to the
projects.
(56 FR 2256, Jan. 22, 1991)
07 CFR 1944.552 Definitions.
(a) Applicant. A person who has submitted an application to
occupancy in a RRH, RCH, or LH project, and is not a tenant or member.
This includes persons who have been denied an application for admission,
except when applications are not being processed due to the fact that it
will be awhile before additional applicants can be reached on a waiting
list. In such cases, applicant inquiries can be reached on a waiting
list. In such cases, applicant inquiries will be handled in accordance
with paragraph VI D 1 b of Exhibit B of subpart C of part 1930 of this
chapter.
(b) Borrower. The borrower (landlord) is the owner of the owner's
authorized representative of a RRH, RCH, or LH project.
(c) Consumer cooperative. A corporation which (1) Is organized under
the cooperative laws of a State or Federally recognized Indian tribe;
(2) will own and operate the housing on a cooperative basis solely for
the benefit of the members; (3) will operate at cost and, for this
purpose, any patronage refunds accruing to members in accordance with
1944.215(i) of this subpart will not be considered gains or profits;
and (4) will restrict membership in the housing to eligible persons and,
to any extent the cooperative and FmHA permit, to others in special
circumstances.
(d) Eviction. Dispossession of the tenant by judicial action
pursuant to State or local law from a RRH or LH unit as a result of
termination of the tenancy, including a termination before or at the end
of the lease term.
(e) Grievance. A dispute which a tenant has with the borrower's
action, or failure to act, according to the lease and/or FmHA
regulations which results or may result in denial, significant
reduction, or termination of benefits (other than eviction by judicial
action pursuant to State or local law).
(f) Hearing. An informal proceeding at which a tenant's grievance or
appeal of a borrower's adverse action or decision, or an applicant's
appeal of a rejected application, or denial of an application for
admission is heard before an impartial hearing officer or hearing panel.
(g) Lease. The written agreement, approved by FmHA, between the
borrower and tenant.
(h) Tenant. An eligible lessee/occupant of a RRH or LH project who
has executed a lease agreement. For the purposes of this subpart, the
term ''tenant'' will also mean ''cooperative member.''
(i) Termination of tenancy. The termination of the lease, either
before or at the end of the lease term, as the result of material
noncompliance with the terms of the lease, rules for occupancy, or
violation of FmHA regulations applicable to conditions for occupancy.
(48 FR 56177, Dec. 19, 1983, as amended at 56 FR 2256, Jan. 22, 1991)
07 CFR 1944.553 Exceptions.
This subpart does not apply to:
(a) Rent changes authorized by FmHA. Rent changes must be authorized
by FmHA in accordance with the requirements of Exhibit C to Subpart C of
Part 1930 of this Chapter where tenants are provided an opportunity to
provide comments to FmHA on a borrower's Notice of Proposed Rent Change.
(b) Discrimination complaints. Any tenant/member of prospective
tenant/member seeking occupancy or use of RRH, RCH, or related
facilities who believes he/she has been discriminated against because of
age, race, color, religion, sex, marital or familial status, handicap or
national origin may file a complaint in person with, or by mail to the
Office of Fair Housing and Equal Opportunity, Department of Housing and
Urban Development (HUD), Washington, DC, 20410, or any HUD office, or to
the Secretary of Agriculture, Washington, DC, 20250. If a complaint is
made to an FmHA County, District or State Office, it must be directed to
the Director of Equal Opportunity Staff, National Office, by the FmHA
employee in charge of that office. When a complaint is sent to FmHA-EOS
by a county or district office, the State Director will be made aware of
the complaint.
(c) Projects in which an association of all tenants has been duly
formed. In projects where an association of all tenants has been duly
formed and the association and the borrower have agreed to an alternate
method of settling grievances, that method will be used.
(d) Changes in rules required by FmHA. Changes in rules required by
FmHA in which proper notice and opportunity have been given according to
law and the provisions of the lease.
(e) Notification of termination of tenancy and eviction.
Notification of termination of tenancy and eviction is to be handled in
accordance with paragraph XIV B of Exhibit B of Subpart C of Part 1930
of this Chapter and according to State or local law.
(f) Termination of tenancy and eviction by judicial action as
prescribed by State or local law. Termination of tenancy and eviction
must be based on material violation of the lease terms or for other good
cause as determined by the borrower or the project manager in accordance
with paragraph XIV A of Exhibit B of Subpart C of Part 1930. The
borrower shall not evict any tenant except by judicial action pursuant
to State or local law and in accordance with the requirements of this
subpart.
(g) Disputes between tenants. This subpart dose not apply to
disputes between tenants not involving the borrower.
(48 FR 56177, Dec. 19, 1983, as amended at 56 FR 2256, Jan. 22, 1991)
07 CFR 1944.554 Reasons for grievance and appeal.
(a) Tenants. Grievance and appeal procedures provide a means for a
tenant, in an FmHA financed rental project, to meet with a borrower and
to obtain a hearing if the tenant has a grievance. This opportunity
relates to a borrower's action or failure to act, in accordance with the
lease and/or FmHA regulations and results in a denial, significant
reduction or, termination of benefits; or, when a tenant contests a
borrower's notice of proposed adverse action as provided in 1944.555(b)
of this subpart. This may include:
(1) Failure to maintain the premises in such manner that provides
decent, safe, and sanitary housing.
(2) Violation of lease covenants and rules.
(3) Modification of lease.
(4) Rule changes.
(5) Rent changes not authorized by FmHA according to Exhibit C of
Subpart C of Part 1930 of this chapter.
(6) Failure to maintain the premises according to State and local
laws, statutes, or ordinances in effect at the date of final
construction unless new or amended laws and ordinances are made
retroactive to, or prior to, the date of final construction.
(7) Denials of RA.
(b) Applicant. Grievance and appeal procedure provides an appeal
right for a person whose application for admission to occupancy in a RRH
or LH project has been rejected, as well as for a person who has been
denied an application for admission, except in those cases where
applications are not being processed as provided for in paragraph VI D I
b of Exhibit B of Subpart C of Part 1930 of this Chapter. This appeal
right does not apply to those persons who are clearly not eligible for
occupancy under FmHA regulations.
(48 FR 56177, Dec. 19, 1983, as amended at 50 FR 8596, Mar. 4, 1985)
07 CFR 1944.555 Settlement of grievances and appeals.
(a) General. Borrowers and applicants/tenants are encouraged to
attempt to settle disputes through informal meetings without resorting
to the hearing process further described in this subpart.
(b) Notice to applicant/tenant. In the case of a borrower's proposed
adverse action including denial of admission to occupancy, the borrower
shall notify the applicant/tenant in writing. The notice must be
delivered by certified mail return receipt requested, or a
hand-delivered letter with a signed and dated acknowledgement of receipt
from the applicant/tenant, giving specific reasons for the proposed
action. The notice must also advise the applicant or tenant of the
right to respond to the notice within 10 calendar days after receipt, in
accordance with paragraph (c) of this Section and of the right to a
hearing in accordance with 1944.556 of the subpart. In projects where
there is a concentration of non-English speaking individuals, the notice
must also be in the non-English concentration language, when necessary,
for the tenant's understanding.
(c) Presentation of grievances or responses to notice of proposed
adverse actions. If the adverse action cannot be resolved otherwise,
the applicant/tenant shall personally present to the borrower or
borrower's designee any grievance or response, either orally or in
writing, within 10 calendar days after occurrence of the grievance or
receipt of a notice of proposed adverse action. If requested, the
borrower shall meet with the tenant within 5 working days of the request
in an attempt to resolve the grievance. The meeting shall be informal
and the borrower shall be responsible for keeping appropriate notes
relative to the meeting. If the grievance is not resolved to the
applicant's/tenant's satisfaction, the borrower shall prepare a summary
of the problem, including the borrower's position, the
applicant's/tenant's position, and the results of the meeting (Exhibit A
of this subpart must be used as the format for the summary) within 10
calendar days after the informal meeting. Two copies of the summary
must be given to the applicant/tenant, one retained in the borrower's
files and one sent to the District Director.
07 CFR 1944.556 Procedure for obtaining a hearing.
(a) Request for hearing. If the applicant or tenant desires a
hearing, a written request for a hearing must be submitted to the
borrower within 10 calendar days after receipt of the summary of any
informal meeting. The written request must specify:
(1) The reasons for the grievance or contest of the borrower's
proposed action, and
(2) The action or relief sought.
(b) Selection of hearing officer or hearing panel. In order to
properly evaluate grievances and appeals, the borrower and tenant shall
select a hearing officer or hearing panel. The hearing officer shall be
an impartial, disinterested person selected jointly by the borrower and
the tenant. If the borrower and the tenant cannot agree on a hearing
officer, they shall each appoint a member to a hearing panel and the
members so selected shall select a third member. If within 30 days from
the date of the request for a hearing the tenant and borrower, or their
designee, have not agreed upon the selection of a hearing officer or
hearing panel, the borrower shall notify the District Director by mail
of the facts of the matter. The District Director shall, within 10
working days of receipt of the letter, appoint a person to serve as the
sole hearing officer. The District Director's selection of a hearing
officer is final. The person selected by the District Director should
not be an individual previously considered by the tenant or borrower.
Members of the hearing panel or the hearing officer must be willing to
render their service without compensation. The hearing officer or
hearing panel has the authority to reverse the borrower's decision.
(c) Standing hearing panel. In lieu of the procedure set forth in
paragraph (b) of this section for each grievance or appeal presented, a
borrower may provide that a standing panel be organized for each
project. Such a panel may be organized soon after initial rent-up or at
any time in the case of existing projects. Such a panel will be
selected and have a membership as follows:
(1) Standing panelist(s) of the tenants would be elected by a
majority of the tenants. Either two alternates could be elected or
three panelists of the tenants could be elected with equal status. The
tenant, in this latter case, would designate one of the three tenant
panelists to participate in the hearing. All tenants would be notified
of the time, date, and purpose of the meeting to elect permanent hearing
panelists at least two weeks before the appointed date. The notice must
be conspiculously posted in the rental office and in each apartment
building or structure. The meeting must be held at a place which is
convenient and accessible to the tenants.
(2) Standing borrower panelist(s) selected by the borrower. One or
two alternates may also be designated.
(3) A standing mutual panelist, to serve as the chair, selected by
the other two persons or groups, including alternates, in which case
each ''group'' gets one vote.
(4) All standing hearing panel members serve one year and may be
re-elected. They must be willing to render their services without
compensation.
(5) A panel for a hearing shall consist of 3 members, one tenant
panelist, one borrower panelist and the chair.
(d) Examination of records. When the borrower has provided the
applicant/tenant with a notice of proposed adverse action, the borrower
shall allow the tenant to have the opportunity, at a reasonable time
before the hearing and, at the expense of the tenant, to examine and/or
copy all documents, records, and regulations of the borrower which the
borrower intends to use at the meeting unless otherwise prohibited by
law.
(e) Scheduling of hearing. A hearing shall be scheduled to be held
within 15 days after receipt of the tenant's request for a hearing at a
time and place mutually convenient to both parties. If the parties
cannot agree on a meeting place or time, the hearing officer or hearing
panel will designate the place and time.
(f) Escrow deposit. Provided the tenant's rental payments are
otherwise current, an escrow deposit of rental payments may be used by
the tenant in the case of a grievance involving a rent increase not
authorized by FmHA, or if the borrower fails to maintain the property in
a decent, safe, and sanitary manner. When an escrow deposit is used,
the tenant shall deposit into escrow, when the rent is due, the amount
required by the lease. The escrow deposits must continue until the
complaint is resolved through informal discussion or by the hearing
officer or panel. The rent must be deposited in a federally insured
financial institution or with a bonded independent agent. Failure to
make timely escrow payments will result in a termination of the tenant
grievance and appeals procedure and all sums will immediately become due
and payable under the lease. Receipts of deposit must be available for
examination by the borrower or the borrower's designee.
(g) Failure to request a hearing. If the applicant/tenant does not
request a hearing within the time provided by paragraph (a) of this
section, the borrower's disposition of the grievance or appeal will
become final.
07 CFR 1944.557 Procedures governing the hearing.
(a) Subject to paragraph (b) of this section, the hearing will be an
informal proceeding before a hearing officer or hearing panel at which
evidence may be received without regard to whether that evidence could
be used in judicial proceedings.
(b) The hearing must be structured so as to provide the basic
safeguards for both the borrower and the tenant, which must include:
(1) The right of both parties to be represented by counsel or another
person(s) chosen as their representative.
(2) The right of the applicant/tenant to a private hearing unless a
public hearing is requested.
(3) The right of the applicant/tenant to present oral or written
evidence and arguments in support of their grievance or appeal and to
refute the evidence of all witnesses on whose testimony or information
the borrower relies.
(4) The right of the borrower to present oral or written evidence and
arguments in support of the decision, to refute evidence relied upon by
the applicant/tenant, and to confront and cross-examine all witnesses on
whose testimony or information the tenant relies.
(5) A decision based solely and exclusively upon the facts presented
at the hearing.
(c) At the hearing the applicant/tenant must present evidence that
he/she is entitled to the relief sought, and thereafter, the borrower
shall present evidence showing the basis of its action or failure to act
against that which the grievance or appeal is directed.
(d) The hearing officer or hearing panel shall require that the
borrower, the applicant/tenant, counsel and other participants or
spectators conduct themselves in an orderly manner. Failure to comply
with the directions of the hearing officer or hearing panel to obtain
order may result in exclusion from the proceedings, or in a decision
adverse to the interests of the disorderly party and granting or denial
of the relief sought, as appropriate.
(e) If the applicant/tenant (or his/her representative) fails to
appear at a scheduled hearing, the hearing officer or hearing panel may
make a determination to postpone the hearing for not to exceed five
business days or may make a determination that the party has waived his
or her right to a hearing under this subpart. Both the applicant/tenant
and the borrower shall be notified of the determination of the hearing
officer or hearing panel.
07 CFR 1944.558 Decision of the hearing officer or hearing panel.
(a) The hearing officer or hearing panel shall prepare a written
decision, together with the reasons therefor, within 10 calendar days
after the hearing. The written decision must be specific as to the
facts presented which were the basis upon which the decision was
rendered. Copies of the decision must be sent to the borrower, the
applicant/tenant, and the FmHA District Director.
(b) The decision of the hearing officer or hearing panel shall be
binding upon the parties to the hearing unless the parties to the
hearing are notified within 10 calendar days by the District Director
that the decision violates FmHA regulations. The notification of the
District Director will specify the FmHA regulation that the decision
violates. The hearing officer or hearing panel shall amend the decision
to comply with the regulation(s) within 10 days of receipt of the
notice. (However, the decision of the hearing officer or hearing panel
does not preclude either party's right thereafter to seek judicial
relief through the courts.)
(c) Upon receipt of written notification from the District Director
that the decision is in compliance with FmHA regulations, the decision
is binding upon the borrower and tenant, and the borrower and tenant
shall take the necessary action, or refrain from any actions, necessary
to carry out the decision.
07 CFR 1944.559 Responsibilities of the FmHA District Director.
(a) The District Director shall assure that a copy of this subpart is
sent to each borrower with a requirement that the regulations be
permanently posted in a conspicuous place for the information of
tenants, such as the rental offices, laundry areas, activities rooms, or
other places where it will be noticed by tenants. The District Director
shall also require that the borrower maintain copies of this subpart at
all times for inspection by the tenants and FmHA upon request. The
District Director shall assure that where there is a concentration of
non-English-speaking individuals, the regulation is made available in
both English and the non-English concentration language.
(b) The District Director shall encourage the borrower and
applicant/tenant to resolve grievances and appeals through informal
discussion; however, upon receipt of a summary of informal discussion
as required by 1944.555(c) of this subpart, the District Director shall
immediately review the summary to ascertain that the applicant/tenant
has received a copy of the summary and a copy of the proceedings to
obtain a hearing, if matters could not be resolved through informal
discussion.
1944.560 -- 1944.599 (Reserved)
07 CFR 1944.600 OMB control numbers.
The collections of information requirements contained in this
regulation have been approved by the Office of Management and Budget and
have been assigned OMB control number 0575-0046.
07 CFR 1944.600 Pt. 1944, Subpt L, Exh. A
07 CFR 1944.600 Exhibit to Subpart L
07 CFR 1944.600 Exhibit A -- Summary of Meeting
Name and Address of Borrower:
Name and Address of Project:
Name and Address of Complainant:
Specific Nature of Complaint:
Date of Meeting:
Participants in Meeting:
Decision and Specific Reasons Therefore:
Borrower's Signature
I hereby acknowledge receipt of a copy of this summary and have been
advised of my rights to use the attached procedures to obtain a hearing
if I so choose.
Tenant's Acknowledgment:
Tenant's signature
Procedures for Obtaining a Hearing:
The following procedures may be used to obtain a hearing if you are
not satisfied with the decision made as a result of our discussion on
(date) ------------ .
1. Request for a Hearing. Send a written request for a hearing
within ten days after you receive this notice to the project address
shown in the summary. Indicate specifically: (1) The reason for your
grievance or challenge of our proposed action, and (2) the action or
relief you seek.
2. Selection of Hearing Officer or Hearing Panel. (Strike out
paragraph not needed).
(a) As you probably already know, a Standing Hearing Panel is
available to conduct the hearing.
(b) We need to meet soon after your request for a hearing is received
to select a hearing officer/hearing panel.
3. Scheduling of Hearing: The hearing will be scheduled to be held
within 15 days after we receive your request for a hearing. It will be
held at a time and place convenient for both of us. If we cannot agree
on a time and place, the hearing officer/hearing panel will designate
the time and place.
4. Examination of Records: You have the opportunity before the
hearing to examine and, at your own expense, to copy all documents,
records, and regulations that are relevant to the hearing unless
otherwise prohibited by law.
5. Procedures Governing Hearing:
(a) The hearing will be an informal proceeding before a hearing
officer or hearing panel at which both parties will have an opportunity
to present their sides of the dispute.
(b) Both parties may be represented by legal counsel or another
person of one's choice.
(c) You have a right to a private hearing, unless you request a
public hearing.
(d) Both parties have the right to present evidence, arguments, and
witnesses to support their sides of the dispute, to refute evidence
relied upon by the other party, and to confront and cross-examine all
witnesses.
(e) A decision will be based solely and exclusively upon the facts
presented at the hearing.
07 CFR 1944.600 Subpart N -- Housing Preservation Grants
Source: 51 FR 17447, May 13, 1986, unless otherwise noted.
07 CFR 1944.651 General.
(a) This subpart sets forth the policies and procedures for making
grants under section 533 of the Housing Act of 1949, 42 U.S.C. 1490(m),
to provide funds to eligible applicants to conduct housing preservation
programs benefiting very low- and low-income rural residents. Program
funds cover part or all of the cost of providing assistance to rural
housing homeowners for loans, grants, interest reduction payments or
other assistance that will reduce the cost of repair and rehabilitation.
Such assistance will be used by the homeowner to remove or correct
health or safety, hazards of their home to meet applicable development
standards or make needed repairs to improve the general living
conditions of the resident(s), including improved accessibility by
handicapped persons.
(b) The Farmers Home Administration (FmHA) will provide Housing
Preservation Grant (HPG) assistance to applicants responsible for
providing assistance to eligible homeowners without discrimination
because of race, color, religion, sex, national origin, age, marital
status, or physical or mental handicap if such person has capacity to
contract.
07 CFR 1944.652 Policy.
(a) The policy of FmHA is to provide housing preservation grants to
eligible applicants to operate a program which finances repair and
rehabilitation to single family housing for very low- and low-income
homeowners. Applicants are expected to:
(1) Coordinate and leverage funding for the repair and rehabilitation
of such housing with housing and community development organizations
and/or activities operating in the same area; and
(2) Focus the program to rural areas and smaller communities so it
serves very low- and low-income families.
(b) FmHA intends to permit grantees considerable latitude in program
design and administration. The forms or types of assistance must
provide the greatest long term benefit to the greatest number of persons
residing in housing needing repair and rehabilitation.
(c) Repairs and rehabilitation activities affecting properties on or
eligible for listing on the National Register of Historic Places will be
accomplished in a manner that supports national historic preservation
objectives as specified in 1944.673 of this subpart.
07 CFR 1944.653 Objective.
The objective of the HPG program is to rehabilitate housing owned and
occupied by very low- and low-income rural persons. Grantees will
provide eligible homeowners with financial assistance through loans,
grants, interest reduction payments or other comparable financial
assistance for necessary repairs and rehabilitation.
1944.654 -- 1944.655 (Reserved)
07 CFR 1944.656 Definitions.
References in this subpart to District, State, National and Finance
Offices and to District Director, State Director, and Administrator
refer to FmHA offices and officials and should be read as prefaced by
FmHA. Terms used in this subpart have the following meanings:
(a) Adjusted annual income. As defined under 1944.2(k) of Subpart A
of Part 1944 of this chapter.
(b) Applicant or grantee. Any eligible organization which applies
for or receives HPG funds under a grant agreement.
(c) Grant agreement. The contract between FmHA and the applicant
which sets forth the terms and conditions under which HPG funds will be
made available. (See Exhibit A of this subpart.)
(d) Homeowner. For the purposes of the HPG program, a homeowner is
one who can meet the conditions of ownership under 1944.661 of this
subpart.
(e) Housing preservation. Repair and rehabilitation activities that
contribute to the health, safety and well-being of the occupant and
contribute to the structural integrity or long term preservation of the
unit. As a result of these activities, the overall condition of the
house must be raised to meet FmHA Thermal Standards and applicable
development standards for existing housing recognized by FmHA in Subpart
A of Part 1924 of this chapter or standards contained in any of the
voluntary national model codes acceptable upon review by FmHA.
Properties included on or eligible for inclusion on the National
Register of Historic Places are subject to the standards and conditions
of 1944.673 of this subpart.
(f) Low-income. An adjusted annual income that does not exceed the
''lower'' income limit according to size of household as established by
HUD for the county or MSA where the property is or will be located.
Maximum low-income limits are set forth in Exhibit C of Subpart A of
Part 1944 of this chapter.
(g) Organization. (1) A State, commonwealth or trust territory or
other political subdivision, or public nonprofit corporation authorized
to receive and administer HPG funds;
(2) An Indian tribe, band group, nation, including Alaskan Indians,
Aleuts, Eskimos and any Alaskan Native Village, of the United States
which is considered an eligible recipient under the Indian
Self-Determination and Education Assistance Act (Pub. L. 93-638) or
under the State and Local Fiscal Assistance Act of 1972 (Pub. L.
92-512);
(3) A private nonprofit corporation that is owned and controlled by
private persons or interests and is organized and operated by private
persons or interests for purposes other than making gains or profits for
the corporation, is legally precluded from distributing any gains or
profits to is members, and is authorized to undertake housing
development activities; or
(4) A consortium of units of governments and/or private nonprofit
organizations which is otherwise eligible to receive and administer HPG
funds and which meets the following conditions:
(i) Be comprised of units of government and/or private nonprofit
corporations that are close together, located in the same state, and
serve areas eligible for FmHA housing assistance; and
(ii) Have executed an agreement among its members designating one
participating unit of government or private nonprofit corporation as the
applicant or designating a legal entity (such as a Council of
Governments) to be the applicant.
(h) Rural area. The definition in 1944.10 of Subpart A of Part 1944
of this chapter applies.
(i) Very low-income. An adjusted annual income that does not exceed
the very low-income limit according to size of household as established
by the Department of Housing and Urban Development (HUD) for the county
or Metropolitan Statistical Area (MSA) where the property is located.
Maximum very low-income limits are set forth in Exhibit C of Subpart A
of Part 1944 of this chapter.
1944.657 (Reserved)
07 CFR 1944.658 Applicant eligibility.
To be eligible to receive a grant, the applicant must:
(a) Be an organization as defined in 1944.656(g) of this subpart.
(b) Have the necessary background and experience on the part of its
staff or governing body with proven ability to perform responsibly in
the field of low-income rural housing development, repair, and
rehabilitation, or have other business management or administrative
experience which indicates an ability to operate a program providing
repair and rehabilitation financial assistance;
(c) Legally obligate itself to administer HPG funds, provide an
adequate accounting of the expenditure of such funds in compliance with
the terms of this regulation and the grant agreement, OMB Circulars
A-102 (Uniform Requirements for Grants to State and Local Governments),
A-87 (Cost Principles for State and Local Governments), A-110 (Grants
and Agreements with Institutions of Higher Education, Hospitals, and
A-122 (Cost Principles for Nonprofit Organizations other Nonprofit
Organizations, Uniform Administrative Requirements) as appropriate which
are available in any FmHA office, and comply with the grant agreement
and FmHA regulations; and
(d) If the applicant is engaged in or plans to become engaged in any
other activities, provide sufficient evidence and documentation that it
has adequate resources, including financial resources, to carry on any
other programs or activities to which it is committed without
jeopardizing the success and effectiveness of its HPG project.
1944.659 (Reserved)
07 CFR 1944.660 Authorized representative of the HPG applicant and FmHA
point of contact.
(a) FmHA will deal only with authorized representatives designated by
the HPG applicant. If the authorized representative is a third party,
the representative must have no pecuniary interest directly or
indirectly after grant award in any of the following as they would
relate in any way to the HPG grant: the award of any engineering,
architectural, management, administration, or construction contracts;
purchase of any furnishings, fixtures or equipment; or purchases and/or
development of land.
(b) FmHA has designated the District Office as the point of initial
contact for all matters relating to the HPG program and as the office
generally responsible for the administration of HPG projects. However,
the State Director may, based on total program size or complexity of a
particular applicant, elect to process applications and service the
program at the State Office. ''Administrative Instructions for FmHA
Field Offices Regarding Their Responsibilities in the Administration of
Housing Preservation Grant Program'' (available in any FmHA Office),
provides guidance to FmHA staff on the HPG program.
07 CFR 1944.661 Homeowner eligibility for HPG assistance.
The homeowners assisted by HPG must have income that meets the low-
or very-low-income definition, be the owner of a single family dwelling
at least one year prior to the time of assistance, and be the intended
occupant of the dwelling subsequent to the time of assistance. The
dwelling must be located in a rural area and be in need of housing
preservation assistance. Determination of income will be made in
accordance with 1944.8 of Subpart A of Part 1944 of this Chapter.
Evidence of ownership may be a photostatic copy of the instrument
evidencing ownership. Methods for assuring the intention of the
homeowner to continue to occupy the unit after assistance will be
established by the grantee. Each homeowner is required to submit
evidence of income and ownership for retention in the grantee's files.
Grantees may use certifications or require additional information from
the homeowner and should seek advice from their attorney.
(a) Any of the following will satisfy or fulfill this requirement of
ownership:
(1) Full marketable title.
(2) An undivided or divided interest in the property to be repaired
when not all of the owners are occupying the property. HPG assistance
may be made in such cases when:
(i) The occupant has been living in the house for at least one year
prior to the date of requesting assistance; and
(ii) The grantee has no reason to believe the occupant's position of
owner/occupant will be jeopardized as a result of the improvements to be
made with HPG funds; and
(iii) In the case of a loan, and to the extent possible, the
co-owner(s) should also sign the security instrument.
(3) A leasehold interest in the property to be repaired. When the
potential HPG recipient's ''ownership'' interest in the property is
based on a leasehold interest, the lease must be in writing and a copy
must be included in the grantee's file. The unexpired portion of the
lease must not be less than five years and must permit the recipient to
make modifications to the structure without increasing the recipient's
lease cost.
(4) A life estate, with the right of present possession, control, and
beneficial use of the property.
(5) Land assignments may be accepted as evidence of ownership only
for Indians living on a reservation, when historically the permits have
been used by the Tribe and have had the comparable effect of a life
estate.
(b) The following items may be accepted as evidence of ownership if a
recorded deed cannot be provided:
(1) Any legal instrument, whether or not recorded, which is commonly
considered evidence of ownership.
(2) Evidence that the HPG recipient is listed as the owner of the
property by the local taxing authority and that real estate taxes, if
any, for the property are paid by the recipient.
(3) Affidavits by others in the community that the recipient has
occupied the property as the apparent owner for a period of not less
than 10 years, and is generally believed to be the owner.
07 CFR 1944.662 Accountability.
Applicants should be made aware of the accountability requirements of
persons paid to influence the making of an FmHA housing loan and/or
grant as described in subpart S of part 1940 of this chapter.
(56 FR 66961, Dec. 27, 1991)
Effective Date Note: At 56 FR 66961, Dec. 27, 1991, 1944.662 was
added, effective January 27, 1992.
1944.663 (Reserved)
07 CFR 1944.664 Housing preservation assistance.
(a) Grantees under HPG are responsible for providing loans, grants or
other comparable assistance to homeowners for housing preservation as
described in 1944.656(e) of this subpart.
(b) Authorized housing preservation assistance includes but is not
limited to cost of labor and materials for:
(1) Installation and/or repair of sanitary water and waste disposal
systems, together with related plumbing and fixtures, which will meet
local health department requirements.
(2) Energy conservation measures such as:
(i) Insulation; and
(ii) Combination screen-storm windows and doors.
(3) Repair or replacement of the heating system including the
installation of alternative systems such as woodburning stoves or space
heaters, when appropriate and if local codes permit.
(4) Electrical wiring.
(5) Repair of, or provision for, structural supports and foundations.
(6) Repair or replacement of the roof.
(7) Replacement of severely deteriorated siding, porches or stoops.
(8) Alterations of the unit's interior or exterior to provide greater
accessibility for any handicapped family members.
(9) For properties listed on or eligible for the National Register of
Historic Places, activities associated with conforming repair and
rehabilitation activities to the standards and/or design comments
resulting from the consultation process contained in 1944.673 of this
subpart.
(10) Necessary repairs to manufactured homes or mobile homes
provided:
(i) The recipient owns the home and the site on which the home is
situated and has occupied that home on that site for at least one year
prior to receiving HPG assistance; and
(ii) The manufactured home or mobile home is on a permanent
foundation or will be put on a permanent foundation with HPG funds.
Advice on the requirements for a permanent foundation is available from
FmHA.
(11) Additions to any dwelling (conventional, manufactured or mobile)
only when it is clearly necessary to alleviate overcrowding or to remove
health hazards to the occupants.
(c) HPG funds may be used for payment of incidental expenses directly
related to accomplishing authorized activities such as fees for
connection of utilities (water, sewer, gas, electric), credit reports,
surveys, title clearance, loan closing, inspections, and architectural
and other technical services. All fees will be in accordance with local
prevailing rates and so documented.
(d) HPG funds may be used to make improvements that do not contribute
to the health, safety and well being of the occupant or do not
materially contribute to the structural integrity or long term
preservation of the unit. The percentage of funds to be used for such
purposes must not exceed 25 percent of the total funding for the unit,
and such work must be combined with improvements listed as eligible
under paragraph (b) of this section. These improvements might include,
but are not limited to the following:
(1) Painting;
(2) Paneling;
(3) Carpeting;
(4) Improving clothes closets or shelving;
(5) Improving kitchen cabinets;
(6) Air conditioning; or
(7) Landscape plantings.
(e) Under the following conditions, HPG funds may be used to
reimburse the grantee for authorized housing preservation activities
performed by employees of the grantee where the grantee acts as a
construction contractor and furnishes construction services:
(1) The grantee must demonstrate that such work performed by the
grantee results in cost savings in terms of time and labor over cost for
such work prevailing in the area;
(2) The grantee has established a process for third party review of
performance by a local government, building inspector or other
independent party;
(3) The grantee has established or makes available a process that
provides for consumer protection to the homeowner assisted; and
(4) The grantee's accounting system provides a clear delineation
between administrative costs and construction contractor
(nonadministrative) costs.
(f) HPG funds may not be used to:
(1) Assist in the construction or completion of a new dwelling.
(2) Refinance any debt or obligation of the homeowner other than
obligations incurred for eligible items covered by this section entered
into after date of agreement with HPG grantee.
(3) Repair or rehabilitate any property located in the Coastal
Barrier Resources System as designated by the Coastal Barrier Resource
Act.
07 CFR 1944.665 Supervision and inspection of rehabilitation and repair
work.
Grantees are responsible for supervising all rehabilitation and
repair work financed with HPG assistance. All HPG work must be
inspected by a disinterested third party, such as local building and
code enforcement officials. If there are no such officials serving the
area where HPG activities will be undertaken, or if the grantee would
also normally make such inspections, the grantee must use qualified
contract or fee inspectors. A grantee may not inspect its own work.
07 CFR 1944.666 Administrative activities and policies.
Grant funds are to be used primarily for housing repair and
rehabilitation activities. Use of grant funds for direct and indirect
administrative costs is a secondary purpose and must not exceed 20
percent of the HPG funds awarded to the grantee.
(a) Administrative expenses may include:
(1) Payment of reasonable salaries or contracts for professional,
technical, and clerical staff actively assisting in the delivery of the
HPG project.
(2) Payment of necessary and reasonable office expenses such as
office rental, supplies, utilities, telephone services, and equipment.
(Any item of nonexpendable personal property having a unit value of
$1,000 or more, acquired with HPG funds, will be specifically identified
to FmHA in writing.)
(3) Payment of necessary and reasonable administrative costs such as
workers' compensation, liability insurance, and the employer's share of
Social Security and health benefits. Payments to private retirement
funds are permitted if the grantee already has such a fund established
and ongoing.
(4) Payment of reasonable fees for necessary training of grantee
personnel.
(5) Payment of necessary and reasonable costs for an audit upon
expiration of the grant agreement.
(6) Other reasonable travel and miscellaneous expenses necessary to
accomplish the objectives of the specific HPG grant which were
anticipated in the individual HPG grant proposal and which have been
approved as eligible expenses at the time of grant approval. This may
include contract or fee inspection where necessary pursuant to 1944.665
of this subpart.
(b) HPG administrative funds may not be used for:
(1) Preparing housing development plans and strategies except as
necessary to accomplish the specific objectives of the HPG project.
(2) Substitution of any financial support previously provided or
currently available from any other source.
(3) Reimbursing personnel to perform construction related to housing
preservation assistance. (Nonadministrative funds may be used if
construction is for housing preservation assistance under the provisions
of 1944.664(e) of this subpart.)
(4) Buying property of any kind from families receiving assistance
from the grantee under the terms of the HPG.
(5) Paying for or reimbursing the grantee for any expense or debts
incurred before FmHA executes the grant agreement.
(6) Paying any debts, expenses, or costs which should be the
responsibility of the individual families receiving HPG assistance
outside the costs of repair and rehabilitation.
(7) Any type of political activities prohibited by OMB Circular
A-122.
(8) Other costs including contributions and donations, entertainment,
fines and penalties, interest and other financial costs unrelated to the
HPG assistance to homeowners, legislative expenses and any excess of
cost from other grant agreements.
(c) Advice concerning ineligible costs may be obtained from the State
Office as part of the HPG application review or when a proposed cost
appears ineligible.
(d) The grantee may not charge fees or accept any compensation or
gratuities from HPG recipients for the grantee's technical or
administrative services under this program. Where the grantee performs
as a construction contractor, the grantee may be paid such compensation
directly related to construction services provided and limited to
authorized housing preservation activities.
1944.667 (Reserved)
07 CFR 1944.668 Term of grant.
HPG projects may be funded under the terms of a Grant Agreement for a
period of up to two years commencing on the date of execution of the
Agreement by the State Director. Term of the project will be based upon
HPG resources available for the proposed project and the
accomplishability of the applicant's proposal within one or two years.
Applicants requesting a two year term may be asked to develop a feasible
one year program if sufficient funds are not available for a two year
program.
1944.669 (Reserved)
07 CFR 1944.670 Project income.
(a) Project income during the grant period from loans made to
homeowners is governed by OMB Circular A-102 or A-110 (available in any
FmHA office). All income during the grant period, including amounts
recovered by the grantee due to breach of agreements between the grantee
and the HPG recipient, must be used under (and in accordance with) the
requirements of the HPG program.
(b) Grantees are encouraged to establish a program which reuses
income from loans after the grant period for continuing repair and
rehabilitation activities.
07 CFR 1944.671 Equal opportunity requirements.
The policies and regulations contained in Subpart E of Part 1901 of
this chapter apply to grantees under this subpart.
07 CFR 1944.672 Environmental and administrative requirements.
The following policies and regulations apply to grants made under
this subpart:
(a) Subpart G of Part 1940 of this chapter shall be followed
regarding environmental requirements. The following is additional
information on how to approach HPG projects under those requirements:
(1) The use of HPG funds to rehabilitate specific single family
dwellings are generally exempt from an FmHA environmental review.
However, if such units are located in a floodplain or wetland or the
proposed work is not concurred in by the Advisory Council on Historic
Preservation under the requirements of 1944.673 of this subpart, an
FmHA environmental review is required. Applicants must include in their
preapplication a process for identifying units that may receive housing
preservation assistance that will require an environmental assessment.
(2) The approval of an HPG grant for the rehabilitation of single
family dwellings shall be a Class I action. As part of their
application materials, applicants shall submit Form FmHA 1940-20,
''Request for Environmental Information,'' for the geographical area(s)
proposed to be served by the program. Guidance on completing the form
will be available from the FmHA office servicing the program.
(3) When a unit requiring an environmental assessment is proposed for
PG assistance, the grantee will immediately contact the FmHA office
designated to service the HPG grant and work with that office in
preparing an environmental assessment and otherwise complying with
Subpart G of Part 1940.
(b) The policies, guidelines and requirements of OMB Circulars (Nos.
A-102 and A-87 for public bodies and Nos. A-110 and A-122 for
nonprofits) apply to the acceptance and use of HPG funds.
(48 FR 200, Jan. 4, 1983, as amended at 53 FR 36269, Sept. 19, 1988)
07 CFR 1944.673 Historic preservation requirements and procedures.
(a) FmHA has entered into a Programmatic Memorandum of Agreement
(PMOA) with the National Conference of State Historic Preservation
Officers and the Advisory Council on Historic Preservation in order to
implement the specific requirements regarding historic preservation
contained in section 533(i) of the enabling legislation. The PMOA with
attachments can be found in FmHA Instruction 2000-FF (available in any
FmHA office).
(b) Accordingly, each applicant for an HPG grant will provide, as
part of its preapplication documentation submitted to FmHA, a
description of its proposed process for assisting very low- and
low-income families owning historic properties needing rehabilitation or
repair. ''Historic properties'' are defined as properties that are
included or eligible for inclusion on the National Register of Historic
Places. Each HPG proposal shall:
(1) Be developed in consultation with the State Historic Prevervation
Officer (SHPO) for the State in which the applicant proposes to
undertake the HPG program;
(2) Take into account the national historic preservation objectives
set forth at 16 U.S.C. 470-1(1), (4), and (5) (Attachment 1 of the PMOA)
and specifically be designed to encourage the rehabilitation of historic
properties in a manner that realistically meets the needs of very low-
and low-income homeowners while preserving the historic and
architectural character of such buildings;
(3) Establish a mechanism for determining whether buildings proposed
for rehabilitation are ''historic properties'' and whether
rehabilitation may affect historic properties. Such mechanisms must be
consistent with the guidance contained in Attachment 2 of the PMOA.
(4) Establish mechanisms, as feasible, for coordinating with other
public and private organizations and programs that provide assistance in
the rehabilitation and preservation of historic properties;
(5) Establish a system to ensure that the rehabilitation of historic
properties is reasonably consistent with the recommended approaches in
the Secretary of the Interior's Standards for Rehabilitation and
Guidelines for Rehabilitating Historic Buildings (G.P.O. 1983 0-416-688
or available from any FmHA office processing an HPG preapplication),
except as provided in 1944.673(b)(6), and that the SHPO is afforded the
opportunity to comment on each such rehabilitation; and
(6) Establish a system by which the applicant will furnish all
necessary information and initiate the consultation steps set forth in
36 CFR Part 800, Protection of Historic and Cultural Properties
(available from any FmHA office processing an HPG preapplication), to
afford the Advisory Council on Historic Preservation an opportunity to
comment on any rehabilitation that the applicant, in consultation with
the SHPO, determines cannot reasonably meet the Secretary of Interior's
Standards for Rehabilitation and Guidelines for Rehabilitating Historic
Buildings or would adversely affect historic properties (see Attachment
3 of the PMOA).
(c) For the purposes of 1944.673(b)(6), the Advisory Council on
Historic Preservation will consider grantees as though they were Federal
agencies in the process prescribed in the Council's regulations
implementing section 106 of the National Historic Preservation Act (36
CFR Part 800, Protection of Historic and Cultural Properties), except
that, should the Council be unable to concur in an applicant's proposal
or reach agreement with the grantee on measures to avoid or mitigate
effects on an historic property, the Council will notify the SHPO, the
applicant or grantee and FmHA that the entity cannot be treated as
though it were a Federal agency with respect to the specific property
under consideration.
(d) The grantee will also notify the FmHA office servicing its
program of notification from the Council immediately. Upon receipt of
such notification, FmHA will assume responsibility for completing
compliance with 36 CFR Part 800, using the procedures for an
environmental assessment contained in Subpart G of Part 1940 of this
Chapter. The grantee will assist FmHA in preparing this assessment and
may be required, if further information is needed, to prepare and submit
an FmHA Form 1940-20, ''Request for Environmental Information,'' for the
property, with the grantee being the ''applicant.'' FmHA will work with
the grantee to develop alternative actions as appropriate.
(e) Such assumption of responsibility by FmHA on a particular
property shall not preclude the grantee from carrying out the
requirements of 36 CFR Part 800 on other properties as though it were a
Federal agency, but no work may be commenced on any unit in controversy
until and unless so advised by FmHA.
(f) If FmHA is required to make an environmental assessment, the
results of the assessment will be made part of the recipient's file.
The grantee must also include in each recipient's file:
(1) Documentation on how the process for historic preservation review
under this section has been complied with, including all relevant
reviews and correspondence; and
(2) Determination whether the unit is located in a 100-year
floodplain or a wetland.
07 CFR 1944.674 Public participation and consultation with State and
local governments.
(a) In preparing its Statement of Activity, the applicant is
responsible for consulting with leaders from the county, parish and/or
township governments of the area where HPG activities will take place
for the purpose of assuring that the proposed HPG program is beneficial
and does not duplicate current activities. Indian nonprofit
organization applicants should obtain the written concurrence of the
Tribal governing body in lieu of consulting with the county governments
when the program is operated only on tribal land.
(b) The applicant must make its statement of activities available to
the public for comment. The applicant must announce the availability of
its Statement of Activities for review in a newspaper of general
circulation in the project area and allow at least 15 days for comment.
(c) The HPG program is subject to the provisions of Executive Order
12372 which requires intergovernmental consultation with State and local
officials. Under Subpart J of part 1940 of this chapter,
''Intergovernmental Review of Farmers Home Administration Programs and
Activities,'' prospective applicants for HPG grants must submit their
Statement of Activities to the State Single Point of Contact prior to
submitting their preapplication to FmHA. Comments and recommendations
made through the intergovernmental review process are for the purpose of
assuring consideration of State and local government views. The name of
the Point of Contact is available from the FmHA State Office.
07 CFR 1944.675 Allocation of HPG funds to States and unused HPG funds.
The allocation and distribution of HPG funds is found in 1940.578 of
Subpart L of Part 1940 of this chapter, ''Methodology and Formulas for
Allocation of Loan and Grant Program Funds.''
07 CFR 1944.676 Preapplication procedures.
(a) All applicants will file an original and two copies of SF 424.2,
''Application for Federal Assistance (For Construction),'' and
supporting information outlined in paragraph (b) of this section with
the appropriate FmHA office. A preapplication packet including SF 424.2
is available in all FmHA District and State Offices.
(b) All preapplications shall be accompanied by the following
information which FmHA will use to determine the applicant's eligibility
to undertake the HPG program and to evaluate the preapplication under
the project selection criteria of 1944.679 of this subpart.
(1) A statement of activities proposed by the applicant for its HPG
program, including:
(i) A complete discussion of the type of and conditions for financial
assistance for housing preservation;
(ii) The process for selecting recipients for HPG assistance,
determining housing preservation needs of the unit, identifying
potential environmental effects (per 1944.672 of this subpart),
performing the necessary work, and monitoring/inspecting work performed;
(iii) The development standard(s) the applicant will use for the
housing preservation work, and, if not the FmHA development standards
for existing housing, evidence of its acceptance by the jurisdiction
where the grant will be implemented.
(iv) The time schedule for completing the program;
(v) The staffing required to complete the program;
(vi) The estimated number of very low- and low-income minority and
nonminority families the applicant will assist with HPG funds;
(vii) The area(s) to be served by the HPG program;
(viii) Annual estimated budget for the program year based on the
financial needs to accomplish the objectives outlined in the proposal.
The budget should include proposed direct and indirect administrative
costs, such as personnel, fringe benefits, travel, equipment, supplies,
contracts, and other cost categories, detailing those costs for which
the grantee proposes to use the HPG grant separately from non-HPG
resources, if any. The applicant's budget should also include a
schedule (with amounts) of how the applicant proposes to draw HPG grant
funds, i.e., monthly, quarterly, lump sum for program activities, etc.
(ix) A brief description of the accounting system to be used;
(x) The method of evaluation to be used by the applicant to determine
the effectiveness of its program which encompasses the requirements for
quarterly reports to FmHA per 1944.683(b) of this subpart;
(xi) The sources and estimated amounts of other financial resources
to be obtained and used by the applicant for both HPG activities and
housing development and/or supporting activities;
(xii) The use of program income, if any;
(xiii) The applicant's plan for disposition of any security
instruments held by them as a result of its HPG activities in the event
of its loss of legal status; and
(xiv) Any other information necessary to explain the HPG program.
(2) Complete information about the applicant's experience and
capacity to carry out the objectives of the proposed HPG program;
(3) Evidence of the applicant's legal existence, including, in the
case of a private nonprofit organization, a copy of, or an accurate
reference to, the specific provisions of State law under which the
applicant is organized; a certified copy of the applicant's Articles of
Incorporation and Bylaws or other evidence of corporate existence;
certificate of incorporation for other than public bodies; evidence of
good standing from the State when the corporation has been in existence
one year or more; the names and addresses of the applicant's members,
directors, and officers. If other organizations are members of the
applicant-organization, or the applicant is a consortium, the names,
addresses, and principal purpose of the other organizations and, if a
consortium, documentation showing compliance with 1944.656(g)(4) of
this subpart.
(4) For a private nonprofit entity, the most recent audited statement
and a current financial statement dated and signed by an authorized
officer of the entity showing the amounts and specific nature of assets
and liabilities together with information on the repayment schedule and
status of any debt(s) owed by the applicant. If the applicant is an
organization being assisted by another private nonprofit organization,
the same type of financial statement should also be provided by the
organization.
(5) A brief narrative statement which includes information about the
area to be served and the need for improved housing (including both
percentage and actual number of both low-income and low-income minority
families and substandard housing), the need for the type of housing
preservation assistance being proposed, the anticipated use of HPG
resources for historic properties, the method of evaluation to be used
by the applicant in determining the effectiveness of its efforts (as
related to paragraph (b)(1)(x) of this section).
(6) A list of other activities the applicant is engaged in and
expects to continue, a statement as to any other funding, and whether it
will have sufficient funds to assure continued operation of the other
activities for at least the period of the HPG grant agreement.
(7) Any other information necessary to specifically address the
selection criteria in 1944.679 of this subpart.
(c) The applicant must submit a description of its program for
identifying and rehabilitating any properties that are listed on or
eligible for listing on the National Register or Historic Places as well
as evidence of concurrence by the SHPO in the program in accordance with
1944.673 of this subpart, or, in the event of nonconcurrence, the
SHPO's comments together with evidence that the applicant has sought the
advice of the Advisory Council on Historic Preservation as to how the
disagreement might be resolved and any advice provided by the Council.
(d) The applicant must submit written statements and related
correspondence reflecting compliance with 1944.674 (a) and (c) of this
subpart regarding consultation with local government leaders in the
preparation of its program and then consultation with local and state
government pursuant to the provisions of Executive Order 12372.
(e) The applicant is to make its Statement of Activity available to
the public for comment prior to submission to FmHA pursuant to
1944.674(b) of this subpart. The preapplication must contain a
description of how this was accomplished as well as a synopsis of
comments received and how the comments were addressed.
(f) The applicant must submit a description of its process for
determining whether an individual property requires an environmental
assessment as required in 1944.672 of this subpart.
(g) The applicant must submit an original and one copy of Form FmHA
400-1, ''Equal Opportunity Agreement,'' and Form FmHA 400-4, ''Assurance
Agreement.''
(48 FR 200, Jan. 4, 1983, as amended at 53 FR 36269, Sept. 19, 1988;
55 FR 13503, Apr. 11, 1990)
1944.677 (Reserved)
07 CFR 1944.678 Preapplication submission deadline.
Dates governing the invitation and review of HPG preapplications will
be published annually in the Federal Register and may be obtained from
FmHA State Offices. Preapplications received after the date specified
in the Federal Register will not be considered for funding in that
fiscal year and will be returned.
07 CFR 1944.679 Project selection criteria.
(a) Grant applicants must meet all the following criteria:
(1) Provide a financially feasible program of housing preservation
assistance as defined in 1944.656(e) of this subpart;
(2) Serve eligible rural areas with a concentration of substandard
housing for households with very low- and low-income;
(3) Be an eligible applicant entity as defined in 1944.658 of this
subpart; and
(4) Meet the requirements of consultation and public comment per
1944.674 of this subpart; and
(b) For applicants meeting the requirements listed in paragraph (a)
of this section, FmHA will use the weighted criteria in this paragraph
in the selection of grant recipients. Each preapplication and its
accompanying statement of activities will be evaluated and, based solely
on the information contained in the preapplication, the applicant's
proposal will be numerically rated on each criteria within the range
provided. The highest ranking applicant(s) will be selected, in
accordance with 1944.680 of this subpart and the resources available to
the State. For convenience, Exhibit D, ''Project Selection Criteria --
Outline Rating Form, may be used for the rating.
(1) Points are awarded based on the percentage of very low-income
homeowners or families the applicant proposes to assist, using the
following scale:
(i) More than 80%: 20 points.
(ii) 61% to 80%: 15 points.
(iii) 41% to 60%: 10 points.
(iv) 20% to 40%: 5 points.
(v) Less than 20%: 0 points.
(2) The applicant's proposal may be expected to result in the
following percentage of HPG fund use to total cost of unit preservation.
This percentage reflects maximum rehabilitation with the least possible
HPG funds due to leveraging, innovative financial assistance, or other
specified approaches. Points are awarded based on the following
percentage of HPG funds to total funds:
(i) 50% or less: 20 points.
(ii) 51% to 65%: 15 points.
(iii) 66% to 80%: 10 points.
(iv) 81% to 95%: 5 points.
(v) 96% to 100%: 0 points.
(3) The applicant has demonstrated its administrative capacity in
assisting very low- and low-income families obtain adequate housing
based on the following:
(i) The organization or a member of its staff has two or more years
experience successfully managing and operating a rehabilitation or
weatherization type program: 10 points..
(ii) The organization or a member of its staff has two or more years
experience successfuly managing and operating a program assisting very
low- and low-income families obtain housing assistance: 10 points.
(iii) If the organization has administered grant programs, there are
no outstanding or unresolved audit or investigative findings which might
impair carrying out the proposal: 10 points.
(4) The proposed program will be undertaken entirely in rural areas
outside Metropolitan Statistical Areas (MSAs) identified by FmHA as
having populations below 10,000 or in remote parts of other rural areas
(i.e., rural areas contained in MSAs with less than 5,000 population):
10 points.
(5) The program will use less than 20 percent of HPG funds for
administration: 5 points.
(6) The proposed program contains a component for alleviating
overcrowding: 5 points.
(7) The applicant is an existing grantee and meets the conditions
under 1944.686 of this subpart for additional points: 10 points.
07 CFR 1944.680 Limitation on grantee selection.
After all preapplications have been reviewed under the selection
criteria and if more than one preapplication has met the criteria of
1944.679(a) of this subpart, the State Director may not approve more
than 50 percent of the State's allocation to a single applicant.
07 CFR 1944.681 Application submission.
(a) Applicants selected by FmHA will be advised to submit a full
application in an original and two copies of SF 424.2 and to include any
condition or amendments that must be incorporated into the Statement of
Activities prior to submitting a full application. The applicant must
submit an original and one copy of Form FmHA 1940-20, ''Request for
Environmental Information.'' Instructions on submission and timing will
be provided by FmHA.
(b) Applicants not selected by FmHA will be so notified and advised
of their appeal rights under Subpart B of Part 1900 of this chapter.
(48 FR 200, Jan. 4, 1983, as amended at 53 FR 36269, Sept. 19, 1988
55 FR 13504, Apr. 11, 1990)
07 CFR 1944.682 Grant approval and requesting HPG funds.
(a) Grant approval is the process by which FmHA determines that all
applicable administrative and legal conditions for making a grant have
been met, the Grant Agreement is signed, and funds obligated for the HPG
project. The FmHA office designated for servicing and monitoring the
HPG applicant's program will review the application submission. If
acceptable and if the designated office is prepared to recommend the
application to the State Director for approval, the applicant will sign
Form FmHA 1940-1, ''Request for Obligation of Funds,'' and Exhibit A of
this subpart, Housing Preservation Grant Agreement. If the application
is approved by the State Director, the applicant will be sent a copy of
the executed Grant Agreement and Form FmHA 1940-1. Should the State
Director attach any conditions to the Agreement that must be satisfied
prior to the applicant receiving any HPG funds, the Agreement and the
conditions will be returned to the applicant for acceptance and
acknowledgement on the Agreement prior to execution by the State
Director.
(b) The application may be disapproved before execution of the grant
agreement if the applicant is no longer eligible, the proposal is no
longer feasible, or the applicant requests cancellation of its project.
Except when the applicant requests cancellation, FmHA will document its
findings and advise the applicant of its appeal rights under Subpart B
of Part 1900 of this chapter.
(c) With the executed Grant Agreement and Form FmHA 1940-1, FmHA will
send the approved applicant (now the ''grantee'') copies of Standard
Form (SF) 270, ''Request for Advance or Reimbursement.'' The grantee
must submit an original and two copies of SF-270 to the FmHA office
servicing the project. Advances or reimbursements must be in accordance
with the grantee's budget and Statement of Activity, including any
amendments, prior approved by FmHA. Requests for reimbursement or
advances must be at least 30 calendar days apart.
(d) If the grantee fails to submit required reports pursuant to
1944.683 of this subpart or is in violation of the Grant Agreement, FmHA
may suspend HPG reimbursements and advances or terminate the grant in
accordance with 1944.688 of this subpart and the Grant Agreement.
07 CFR 1944.683 Reporting requirements.
(a) SF-269, ''Financial Status Report,'' is required of all grantees
on a quarterly basis. Grantees shall submit an original and two copies
of the report to the designated FmHA servicing office. Reports will be
submitted no later than February 15, May 15, August 15 and November 15
while the grant agreement is in effect.
(b) Quarterly performance reports shall be submitted by grantees with
SF-269, in an original and two copies. (See Exhibit E of this subpart,
Guide for Quarterly Performance Reports.) The quarterly report should
relate the activities during the report period to the project's
objectives and analyze the effectiveness of the program. As part of the
grantee's preapplication submission, as required by 1944.676(b) of this
subpart, the grantee established its objectives for the HPG program,
including its method of evaluation to determine its effectiveness.
Accordingly, the report must include, but need not be limited to, the
following:
(1) Use of HPG funds for adminstration and housing preservation
activities.
(2) The following specific information for each unit assisted:
(i) Name, address, income, and size of each homeowner family
assisted;
(ii) Total cost of unit's repair/rehabilitation, major repairs made,
amount financed by HPG, and amount financed from other sources;
(iii) Type of assistance provided (interest subsidy, loan, grant,
etc.); and
(iv) Results of implementing the environmental process contained in
1944.672 of this subpart and the historic preservation process contained
in 1944.673 of this subpart.
(3) A comparison of actual accomplishments to the objectives set for
that period, including:
(i) The number of very low- and low-income, minority and nonminority
families assisted in obtaining adequate housing by the HPG program
through repair and rehabilitation; and
(ii) The average cost of assistance provided to homeowners.
(4) Reasons why, if established objectives are not met.
(5) Problems, delays, or adverse conditions which will materially
affect attainment of the HPG grant objectives, prevent the meeting of
time schedules or objectives, or preclude the attainment of program work
elements during established time periods. This disclosure shall be
accompanied by a statement of the action taken or contemplated and any
Federal or other assistance needed to relieve the situation.
(6) Objectives established for the next reporting period,
sufficiently detailed to identify the type assistance to be provided,
the number and type of families to be assisted, etc.
(c) The grantee should be prepared to meet with the FmHA office
servicing the project to discuss its quarterly report shortly after
submission.
(d) If the reports are not submitted in a timely manner or if the
reports indicate that the grantee has made unsatisfactory progress or
the grantee is not meeting its established objectives, the State
Director will recommend appropriate action to resolve the indicated
problem(s). If appropriate corrective action is not taken by the
grantee, the State Director has the discretion to not authorize further
advances by suspending the project in accordance with 1944.688 of this
subpart and the Grant Agreement.
07 CFR 1944.684 Extending grant agreements and modifying statements of
activities.
(a) All requests extending the original grant agreement or modifying
the HPG program's statement of activities must be in writing. Such
requests will be processed through the designated FmHA office servicing
the project. The State Office will respond to the applicant within 30
days of receipt of the request in the State Office.
(b) A grantee may request an extension of the Grant Agreement prior
to the end of the project term specified in the Grant Agreement if the
grantee anticipates that there will be grant funds remaining and the
grantee has demonstrated its ability to conduct its program in a manner
satisfactory to FmHA. The State Director may approve an extension when:
(1) The grantee is likely to complete or exceed the goals outlined in
the approved Statement of Activities, and
(2) The FmHA office responsible for servicing the grant recommends
continuation of the grant until the grantee has expended all of the
remaining grant funds.
(c) Modifications of the Statement of Activities, such as revising
the processes the grantee follows in operating the HPG program, may be
approved by the State Director when the modifications are for eligible
purposes per 1944.664 and 1944.666 of this subpart, meet any
applicable review and process requirements of this subpart, and the
program will continue to serve the geographic area originally approved.
The grantee will submit its proposed revisions together with the
necessary supporting information to FmHA prior to modifying its
operation from the approved Statement of Activites.
(d) Exhibit B, ''Amendment to Housing Preservation Grant Agreement,''
will be used for all extensions and modifications.
1944.685 (Reserved)
07 CFR 1944.686 Additional grants.
An additional HPG grant may be made to a grantee when it has achieved
or nearly achieved the goals established for the previous grant. The
grantee must file a new application for HPG funds that will be processed
similar to an initial application and compared under the project
selection criteria to others submitted at that time. Ten additional
points may be given to an existing grantee where there is a continuing
need for the program in the area currently being served by the existing
grant, the program has local public and community support, and the
grantee has fully complied with the HPG requirements contained herein.
1944.687 (Reserved)
07 CFR 1944.688 Grant evaluation, closeout, suspension and termination.
(a) Grant evaluation will be an ongoing activity performed by both
the grantee and FmHA. The grantee will perform self-evaluations by
preparing quarterly performance reports in accordance with 1944.683 of
this subpart. FmHA will also review all reports prepared and submitted
by the grantee in accordance with the Grant Agreement and this subpart.
(b) The grant can be suspended or terminated before the grant ending
date for the causes specified in the Grant Agreement. No further grant
funds will be advanced when grant suspension or termination procedures
have been initiated in accordance with the Grant Agreement. Grantees
may be reimbursed for eligible costs incurred prior to the effective
date of the suspension or termination. Grantees are prohibited from
incurring additional obligations of funds after notification, pending
corrective action by the grantee. FmHA may allow necessary and proper
costs that the grantee could not reasonably avoid during the period of
suspension provided they are for eligible HPG purposes. In the event of
termination, FmHA may allow necessary and reasonable costs for an audit.
(c) Grantees will have the opportunity to appeal a suspension or
termination under FmHA's appeal procedures, Subpart B of Part 1900 of
this chapter.
(d) Within ninety (90) calendar days after the grant ending date, the
grantee will complete the closeout procedures as specified in the Grant
Agreement.
(e) The grantee will complete a final SF-269 and a final performance
report upon termination or expiration of the Grant Agreement. The final
performance report will serve as the last quarterly report.
(f) The grantee will have an audit performed upon termination or
completion of the project in accordance with OMB Circulars Nos. A-102
or A-110, as applicable. As part of its final report, the grantee will
address and resolve all audit findings.
1944.689 (Reserved)
07 CFR 1944.690 Exception authority.
The Administrator of FmHA may, in individual cases, make an exception
to any requirements of this subpart not required by the authorizing
statute if the Administrator finds that application of such requirement
would adversely affect the interest of the Government, or adversely
affect the accomplishment of the purposes of the HPG program, or result
in undue hardship by applying the requirement. The Administrator may
exercise this exception authority at the request of the State Director.
The request must be supported by information demonstrating the adverse
impact, citing the particular requirement involved, recommending proper
alternative course(s) of action, and outlining how the adverse impact
could be mitigated.
1944.691 -- 1944.699 (Reserved)
07 CFR 1944.700 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0115.
07 CFR 1944.700 Pt. 1944, Subpt. N, Exh. A
07 CFR 1944.700 Exhibits to Subpart N
07 CFR 1944.700 Exhibit A -- Housing Preservation Grant Agreement
This Agreement dated ------ is between ------ (name), ------
(address), (grantee), organized and operating under ------ (authorizing
State statute), and the United States of America acting through the
Farmers Home Administration (FmHA). FmHA agrees to grant a sum not to
exceed $ ------ subject to the terms and conditions of this Agreement;
provided, however, that the grant funds actually advanced and not needed
for grant purposes shall be returned immediately to FmHA. The Housing
Preservation Grant (HPG) Statement of Activities approved by FmHA, is
attached, and shall commence within 10 days of the date of execution of
this agreement by FmHA and be completed by ------ (date). FmHA may
terminate the grant in whole, or in part, at any time before the date of
completion, whenever it is determined that the grantee has failed to
comply with the conditions of this Grant Agreement or FmHA regulation
related hereto. The grantee may appeal adverse decisions in accordance
with the FmHA Appeal Procedures contained in Subpart B of Part 1900 of
this chapter.
In consideration of said grant by FmHA to the Grantee, to be made
pursuant to section 533 of the Housing Act of 1949, Housing Preservation
Grant (HPG) program, the grantee will provide such a program in
accordance with the terms of this Agreement and applicable FmHA
regulations.
07 CFR 1944.700 Part A -- Definitions
1. ''Beginning date'' means the date this agreement is executed by
FmHA and costs can be incurred.
2. ''Ending date'' means the date when all work under this agreement
is scheduled to be completed. It is also the latest date grant funds
will be provided under this agreement, without an approved extension.
3. ''Disallowed costs'' are those charges to a grant which the FmHA
determines cannot be authorized in accordance with applicable Federal
cost principles contained in Treasury Circular 74-4, ''Cost Principles
Applicable to Grants and Contracts with State and Local Governments,''
OMB Circular A-87, ''Cost Principles for State and Local Governments,''
OMB Circular A-122, ''Cost Principles for Nonprofit Organizations,'' and
other conditions contained in this Agreement and OMB Circular A-102
''Uniform Requirements for Grants to State and Local Governments,'' and
OMB Circular A-110, ''Grants and Agreements with Institutions of Higher
Education, Hospitals and Other Nonprofit Organizations, Uniform
Administrative Requirements,'' as appropriate.
4. ''Grant closeout'' is the process by which the grant operation is
concluded at the expiration of the grant period or following a decision
to terminate the grant.
5. ''Termination'' of the grant means the cancellation of Federal
assistance, in whole or in part, at any time before the date of
completion.
07 CFR 1944.700 Part B -- Terms of agreement
FmHA and grantee agree:
1. All grant activities shall be limited to those authorized in
Subpart N of 7 CFR Part 1944.
2. This Agreement shall be effective when executed by both parties.
3. The HPG activities approved by FmHA shall commence and be
completed by the date indicated above, unless earlier terminated under
paragraph B 18 below or extended.
4. Grantee shall carry out the HPG activities and processes as
described in the approved Statement of Activities which is made a part
of this Agreement. Grantee will be bound by the activities and
processes set forth in the Statement of Activities and the further
conditions set forth in this Agreement. If the Statement of Activities
is inconsistent with the Agreement, the latter will govern. A change of
any activities and processes must be in writing and must be signed by
the FmHA State Director or his or her delegated representative.
5. Grantee shall use grant funds only for the purpose and activities
approved by FmHA in the HPG budget. Any uses not provided for in the
approved budget must be approved in writing by FmHA in advance.
6. If the Grantee is a private nonprofit corporation, expenses
charged for travel or per diem will not exceed the rates paid FmHA
employees for similar purposes. If the grantee is a public body, the
rates will be those that are allowable under the customary practice in
the government of which the grantee is a part; if none are customary,
the FmHA rates will be the maximum allowed.
7. Grant funds will not be used for any of the following:
(a) To pay obligations incurred before the effective date of this
Agreement.
(b) To pay obligations incurred after the grant termination or ending
date.
(c) Entertainment purposes.
(d) To pay for capital assets, the purchase of real estate or
vehicles, improvement or renovation of grantee's office space, or repair
or maintenance of privately owned vehicles.
(e) Any other purpose specified in 1944.664(f) and 1944.666(b) of
this subpart.
(f) Administrative expenses exceeding 20% HPG grant funds.
8. Grant funds shall not be used to substitute for any financial
support previously provided and currently available or assured from any
other source.
9. Disbursal of grants will be governed as follows:
(a) In accordance with Treasury Circular 1075 (fourth revision) Part
205, Chapter II of title 31 of the Code of Federal Regulations, grant
funds will be provided by FmHA as cash advances on an as needed basis
not to exceed one advance every 30 days. The advance will be made by
direct Treasury check to the grantee. The financial management system
of the recipient organization shall provide for effective control over
and accountability for all Federal funds as stated to OMB Circular A-102
(42 FR 45828, September 12, 1977) for State and local governments and
OMB Circular A-110 (41 FR 32016, July 30, 1976) for nonprofit
organizations.
(b) Cash advances to the grantee shall be limited to the minimum
amounts needed and shall be timed to be in accord only with the actual,
immediate cash requirements of the Grantee in carrying out the purpose
of the planned project. The timing and amount of cash advances shall be
as close as administratively feasible to the actual disbursements by the
grantee for direct program costs (as identified in the grantee's
Statement of Activity and budget and fund use plan) and proportionate
share of any allowable indirect costs.
(c) Grant funds should be promptly refunded to the FmHA and redrawn
when needed if the funds are erroneously drawn in excess of immediate
disbursement needs. The only exceptions to the requirement for prompt
refunding are when the funds involved:
(i) Will be disbursed by the recipient organization within seven
calendar days from the date of the Treasury check, or
(ii) Are less than $10,000 and will be disbursed within 30 calendar
days from the date of the Treasury check.
(d) Grantee shall provide satisfactory evidence to FmHA that all
officers of the Grantee organization authorized to receive and/or
disburse Federal funds are covered by satisfactory fidelity bonds
sufficient to protect FmHA's interests.
10. The grantee will submit performance and financial reports as
indicated below to the appropriate FmHA office.
(a) As needed, but not more frequently than once every 30 calendar
days, an original and 2 copies of SF-270, ''Request for Advance or
Reimbursement.''
(b) Quarterly (not later than February 15, May 15, August 15, and
November 15 of each year), an original and 2 copies of SF-269,
''Financial Status Report,'' and a quarterly performance report in
accordance with 1944.683 of this subpart.
(c) Within ninety (90) days after the termination or expiration of
the Grant Agreement, an original and 2 copies of SF-269, and a final
performance report which will include a summary of the project's
accomplishments, problems, and planned future activities of the grantee
for HPG. Final reports may serve as the last quarterly report.
(d) FmHA may require performance reports more frequently if deemed
necessary.
11. In accordance with FMC Circular 74-4, Attachment B, compensation
for employees will be considered reasonable to the extent that such
compensation is consistent with that paid for similar work in other
activities of the State or local government.
12. If the grant exceeds $100,000, cumulative transfers among direct
cost budget categories totaling more than 5 percent of the total budget
must have prior written approval by FmHA.
13. Results of the program assisted by grant funds may be published
by the grantee without prior review by FmHA, provided that such
publications acknowledge the support provided by funds pursuant to the
provisions of Title V of the Housing Act of 1949, as amended, and that
five copies of each such publications are furnished to FmHA.
14. Grantee certifies that no person or organization has been
employed or retained to solicit or secure this grant for a commission,
percentage, brokerage, or contingent fee.
15. No person in the United States shall, on the grounds of race,
creed, color, sex, marital status, age, national origin, or mental or
physical handicap, be excluded from participating in, be denied the
proceeds of, or be subject to discrimination in connection with the use
of grant funds. Grantee will comply with the nondiscrimination
regulations of FmHA contained in Subpart E of Part 1901 of this chapter.
16. In all hiring or employment made possible by or resulting from
this grant, the grantee: (a) Will not discriminate against any employee
or applicant for employment because of race, creed, color, sex, marital
status, national origin, age, or mental or physical handicap, and (b)
will take affirmative action to insure that employees are treated during
employment without regard to their race, creed, color, sex, marital
status, national origin, age, or mental or physical handicap. This
requirement shall apply to, but not be limited to, the following:
Employment, upgrading, demotion, or transfer; recruitment or
recruitment advertising, layoff or termination, rates of pay or other
forms of compensation; and selection for training, including
apprenticeship. In the event grantee signs a contract related to this
grant which would be covered by any Executive Order, law, or regulation
prohibiting discrimination, grantee shall include in the contract the
''Equal Employment Clause'' as specified by Form FmHA 400-1, ''Equal
Employment Agreement.''
17. The grantee accepts responsibility for accomplishing the HPG
program as submitted and included in the Statement of Activities. The
grantee shall also:
(a) Endeavor to coordinate and provide liaison with State and local
housing organizations, where they exist.
(b) Provide continuing information to FmHA on the status of grantee
HPG programs, projects, related activities, and problems.
(c) The grantee shall inform FmHA as soon as the following types of
conditions become known:
(i) Problems, delays, or adverse conditions which materially affect
the ability to attain program objectives, prevent the meeting of time
schedules or goals, or preclude the attainment of project work units by
established time periods. This disclosure shall be accompanied by a
statement of the action taken or contemplated, new time schedules
required and any FmHA assistance needed to resolve the situation.
(ii) Favorable developments or events which enable meeting time
schedules and goals sooner than anticipated or producing more work units
than originally projected.
18. Grant closeout and termination procedures will be as follows:
(a) Promptly after the date of completion or a decision to terminate
a grant, grant closeout actions are to be taken to allow the orderly
discontinuation of grantee activity.
(i) The grantee shall immediately refund to FmHA any uncommitted
balance of grant funds.
(ii) The grantee will furnish to FmHA within 90 calendar days after
the date of completion of the grant an SF-269 and all financial,
performance, and other reports required as a condition of the grant,
including an audit report.
(iii) The grantee shall account for any property acquired with HPG
grant funds, or otherwise received from FmHA.
(iv) After the grant closeout, FmHA retains the right to recover any
disallowed costs which may be discovered as a result of an audit.
(b) When there is reasonable evidence that the grantee has failed to
comply with the terms of this Agreement, the State Director can, on
reasonable notice, suspend the grant pending corrective action or
terminate the grant pursuant to paragraph (c) below. In such instances,
FmHA may reimburse the grantee for eligible costs incurred prior to the
effective date of the suspension or termination and may allow all
necessary and proper costs which the grantee could not reasonably avoid.
FmHA will withhold further advances and grantees are prohibited from
further obligating grant funds, pending corrective action.
(c) Grant termination will be based on the following:
(i) Termination for cause. This grant may be terminated in whole or
in part at any time before the date of completion, whenever FmHA
determines that the grantee has failed to comply with the terms of this
Agreement. The reasons for termination may include, but are not limited
to, such problems as:
(A) Failure to make reasonable and satisfactory progress in attaining
grant objectives.
(B) Failure of grantee to use grant funds only for authorized
purposes.
(C) Failure of grantee to submit adequate and timely reports of its
operation.
(D) Violation of any of the provisions of any laws administered by
FmHA or any regulation issued thereunder.
(E) Violation of any nondiscrimination or equal opportunity
requirement administered by FmHA in connection with any FmHA programs.
(F) Failure to maintain an accounting system acceptable to FmHA.
(ii) Termination for convenience. FmHA or the grantee may terminate
the grant in whole, or in part, when both parties agree that the
continuation of the project would not produce beneficial results
commensurate with the further expenditure of funds. The two parties
shall agree upon the termination conditions, including the effective
date and, in case of partial termination, the portion to be terminated.
(d) FmHA shall notify the grantee in writing of the determination and
the reasons for and the effective date of the suspension or termination.
Except for termination convenience, grantees have the opportunity to
appeal a suspension or termination under FmHA's appeal procedure,
Subpart B of Part 1900 of this chapter.
19. Upon any default under its representatives or agreements set
forth in this instrument, the grantee, at the option and demand of FmHA,
will, to the extent legally permissible, repay to FmHA forthwith the
grant funds received with interest at the rate of five per centum per
annum from the date of the default. The provisions of this Grant
Agreement may be enforced by FmHA, at its option and without regard to
prior waivers by it or previous defaults of the grantee, by judicial
proceedings to require specific performance of the terms of this Grant
Agreement or by such other proceedings in law or equity, in either
Federal or State Courts, as may be deemed necessary by FmHA to assure
compliance with the provisions of this Grant Agreement and the laws and
regulations under which this grant is made.
20. Extension of this Grant Agreement and/or modifications of the
Statement of Activities may be approved by FmHA provided, in its
opinion, the extension and/or modification is justified and there is a
likelihood that the grantee can accomplish the goals set out and
approved in the Statement of Activities during the period of the
extension and/or modifications as specified in 1944.684 of this
subpart.
07 CFR 1944.700 Part C -- Grantee agrees
1. To comply with property management standards for expendable and
nonexpendable personal property established by Attachment N of OMB
Circular A-102 or Attachment N of OMB Circular A-110 for State and local
governments or nonprofit organizations respectively. ''Personal
property'' means property of any kind except real property. It may be
tangible -- having physical existence -- or intangible -- having no
physical existence, such as patents, inventions, and copyrights.
''Nonexpendable personal property'' means tangible personal property
having a useful life of more than one year and an acquisition cost of
$300 or more per unit. A grantee may use its own definitions of
nonexpendable personal property provided that such definition would at
least include all tangible personal property as defined above.
''Expendable personal property'' refers to all tangible personal
property other than nonexpendable personal property. When nonexpendable
tangible personal property is acquired by a grantee with project funds,
title shall not be taken by the Federal Government but shall vest in the
grantee subject to the following conditions:
(a) Right to transfer title. For items of nonexpendable personal
property having a unit acquisition cost of $1,000 or more, FmHA may
reserve the right to transfer title to the Federal Government or to a
third party named by the Federal Government when such third party is
otherwise eligible under existing statutes. Such reservation shall be
subject to the following standards:
(i) The property shall be appropriately identified in the grant or
otherwise made known to the grantee in writing.
(ii) FmHA shall issue disposition instructions within 120 calendar
days after the end of the Federal support of the project for which it
was acquired. If FmHA fails to issue disposition instructions within
the 120 calendar day period, the grantee shall apply the standards of
paragraph 1(c) below.
(iii) When FmHA exercises its right to take title, the personal
property shall be subject to the provisions for federally owned
nonexpendable property discussed in paragraph 1(a)(iv) below.
(iv) When title is transferred either to the Federal Government or to
a third party and the grantee is instructed to ship the property
elsewhere, the grantee shall be reimbursed by the benefitting Federal
agency with an amount which is computed by applying the percentage of
the grantee participation in the cost of the original grant project or
program to the current fair market value of the property, plus any
reasonable shipping or interim storage costs incurred.
(b) Use of other tangible nonexpendable property for which the
grantee has title.
(i) The grantee shall use the property in the project or program for
which it was acquired as long as needed, whether or not the project or
program continues to be supported by Federal funds. When it is no
longer needed for the original project or program, the grantee shall use
the property in connection with its other federally sponsored
activities, in the following order of priority:
(A) Activities sponsored by FmHA.
(B) Activities sponsored by other Federal agencies.
(ii) Shared use. During the time that nonexpendable personal
property is held for use on the project or program for which it was
acquired, the grantee shall make it available for use on other projects
or programs if such other use will not interfere with the work on the
project or program for which the property was originally acquired.
First preference for such other use shall be given to other projects or
programs sponsored by FmHA; second preference shall be given to
projects or programs sponsored by other Federal agencies. If the
property is owned by the Federal Government, use on other activities not
sponsored by the Federal Government shall be permissible if authorized
by FmHA. User charges should be considered if appropriate.
(c) Disposition of other nonexpendable property. When the grantee no
longer needs the property, the property may be used for other activities
in accordance with the following standards:
(i) Nonexpendable property with a unit acquisition cost of less than
$1,000. The grantee may use the property for other activities without
reimbursement to the Federal Government or sell the property and retain
the proceeds.
(ii) Nonexpendable personal property with a unit acquisition cost of
$1,000 or more. The grantee may retain the property for other use
provided that compensation is made to FmHA or its successor. The amount
of compensation shall be computed by applying the percentage of Federal
participation in the cost of the original project or program to the
current fair market value of the property. If the grantee has no need
for the property and the property has further use value, the grantee
shall request disposition instructions from the original Grantor agency.
FmHA shall determine whether the property can be used to meet the
agency's requirements. If no requirement exists within that agency, the
availability of the property shall be reported, in accordance with the
guidelines of the Federal Property Management Regulations (FPMR) to the
General Services Administration by FmHA to determine whether a
requirement for the property exists in other Federal agencies. FmHA
shall issue instructions to the grantee no later than 120 calendar days
after the grantee request and the following procedures shall govern:
(A) If so instructed or if disposition instructions are not issued
within 120 calendar days after the grantee's request, the grantee shall
sell the property and reimburse FmHA an amount computed by applying to
the sales proceeds the percentage of Federal participation in the cost
of the original project or program. However, the grantee shall be
permitted to deduct and retain from the Federal shares $100 or ten
percent of the proceeds, whichever is greater, for the grantee's selling
and handling expenses.
(B) If the grantee is instructed to dispose of the property other
than as described in paragraph 1(a)(iv) above, the grantee shall be
reimbursed by FmHA for such costs incurred in its disposition.
(C) The grantee's property management standards for nonexpendable
personal property shall include the following procedural requirements:
(1) Property records shall be maintained accurately and shall
include:
(a) A description of the property.
(b) Manufacturer's serial number, model number, Federal stock number,
national stock number, or other identification number.
(c) Sources of the property including grant or other agreement
number.
(d) Whether title vests in the grantee or the Federal Government.
(e) Acquisition date (or date received, if the property was furnished
by the Federal Government) and cost.
(f) Percentage (at the end of the budget year) of Federal
participation in the cost of the project or program for which the
property was acquired. (Not applicable to property furnished by the
Federal Government).
(g) Location, use, and condition of the property and the date the
information was reported.
(h) Unit acquisition cost.
(i) Ultimate disposition data, including date of disposal and sales
price or the method used to determine current fair market value when a
grantee compensates the Federal agency for its share.
(2) Property owned by the Federal Government must be marked to
indicate Federal ownership.
(3) A physical inventory of property shall be taken and the results
reconciled with the property records at least once every two years. Any
differences between quantities determined by the physical inspection and
those shown in the accounting records shall be investigated to determine
the causes of the difference. The grantee shall, in connection with the
inventory, verify the existence, current utilization, and continued need
for the property.
(4) A control system shall be in effect to ensure adequate safeguards
to prevent loss, damage, or theft of the property. Any loss, damage, or
theft of nonexpendable property shall be investigated and fully
documented; if the property was owned by the Federal Government, the
grantee shall promptly notify FmHA.
(5) Adequate maintenance procedures shall be implemented to keep the
property in good condition.
(6) When the grantee is authorized or required to sell the property,
proper sales procedures shall be established which will provide for
competition to the extent practicable and result in the highest possible
return.
(7) Expendable personal property shall vest in the grantee upon
acquisition. If there is a residual inventory of such property
exceeding $1,000 in total aggregate fair market value, upon termination
or completion of the grant and if the property is not needed for any
other federally sponsored project or program, the grantee shall retain
the property for use on nonfederally sponsored activities, or sell it,
but must in either case compensate the Federal Government for its share.
The amount of compensation shall be computed in the same manner as
nonexpendable personal property.
2. To provide a financial management system which will include:
(a) Accurate, current, and complete disclosure of the financial
results of each grant. Financial reporting will be on an accrual basis.
(b) Records which identify adequately the source and application of
funds for grant-supported activities. Those records shall contain
information pertaining to grant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays, and income.
(c) Effecting control over and accountability for all funds,
property, and other assets. Grantee shall adequately safeguard all such
assets and shall assure that they are solely for authorized purposes.
(d) Accounting records supported by source documentation.
3. To retain financial records, supporting documents, statistical
records, and all other records pertinent to the grant for a period of at
least three years after the submission of the final Project Performance
report pursuant to Part B (10)(c) of this Agreement except in the
following situations:
(a) If any litigation, claim, audit, or investigation is commenced
before the expiration of the three year period, the records shall be
retained until all litigations, claims, audit or investigation findings
involving the records have been resolved.
(b) Records for nonexpendable property acquired by FmHA, the three
year retention requirement is not applicable.
(c) When records are transferred to or maintained by FmHA, the three
year retention requirement is not applicable.
Microfilm copies may be substituted in lieu of original records.
FmHA and the Comptroller General of the United States, or any of their
duly authorized representatives, shall have access to any books,
documents, papers, and records of the grantee which are pertinent to the
specific grant program for the purpose of making audits, examinations,
excerpts, and transcripts.
4. To provide information as requested by FmHA concerning the
grantee's actions in soliciting citizen participation in the application
process, including published notice of public meetings, actual public
meetings held, and content of written comments received.
5. Not to encumber, transfer, or dispose of the property or any part
thereof, furnished by FmHA or acquired wholly or in part with HPG funds
without the written consent of FmHA except as provided in Part C 1 of
this Agreement.
6. To provide FmHA with such periodic reports of grantee operations
as may be required by authorized representatives of FmHA.
7. To execute Form FmHA 400-1, and to execute any other agreements
required by FmHA to implement the civil rights requirements.
8. To include in all contracts in excess of $100,000 a provision for
compliance with all applicable standards, orders, or regulations issued
pursuant to the Clean Air Act, 42 U.S.C. 1875C-9 as amended. Violations
shall be reported to FmHA and the Regional Office of the Environmental
Protection Agency.
9. That no member of Congress shall be admitted to any share or part
of this grant or any benefit that may arise therefrom, but this
provision shall not be construed to bar as a contractor under the grant
a publicly held corporation whose ownership might include a member of
Congress.
10. That all nonconfidential information resulting from its
activities shall be made available to the general public on an equal
basis.
11. That the purpose for which this grant is made may complement, but
shall not duplicate programs for which monies have been received, are
committed, or are applied for from other sources, public and private.
12. That the grantee shall relinquish any and all copyrights and/or
privileges to the materials developed under this grant, such material
being the sole property of the Federal Government. In the event
anything developed under this grant is published in whole or in part,
the material shall contain notice and be identified by language to the
following effect: ''The material is the result of tax-supported
research and as such is not copyrightable. It may be freely reprinted
with the customary crediting of the source.''
13. That the grantee shall abide by the policies promulgated in OMB
Circular A-102, Attachment O, or OMB Circular A-110, Attachment O, as
applicable, which provides standards for use by Grantees in establishing
procedures for the procurement of supplies, equipment, and other
services with Federal grant funds.
14. That it is understood and agreed that any assistance granted
under this Agreement will be administered subject to the limitations of
Title V of the Housing Act of 1949 as amended, 42 U.S.C. 1471 et seq.,
and related regulations, and that all rights granted to FmHA herein or
elsewhere may be exercised by it in its sole discretion to carry out the
purposes of the assistance, and project FmHA's financial interest.
15. That it will adopt a Standard of Conduct that provides that, if
an employee, officer, or agent of the grantee, or such person's
immediate family members conducts business with the grantee, the grantee
must not:
(a) Participate in the selection, award, or administration of a
contract to such persons for which Federal funds are used;
(b) Knowingly permit the award or administration of the contract to
be delivered to such persons or other immediate family members or to any
entity (i.e., partnerships, corporation, etc.) in which such persons or
their immediate family members have an ownership interest; or
(c) Permit such person to solicit or accept gratuities, favors or
anything of monetary value from landlords or developers of rental or
ownership housing projects or any other person receiving HPG assistance.
07 CFR 1944.700 Part D -- FmHA agrees
1. That it may assist grantee, within available appropriations, with
such technical and management assistance as needed in coordinating the
Statement of Activities with local officials, comprehensive plans, and
any State or area plans for improving housing for very low- and
low-income households in the area in which the project is located.
2. That at its sole discretion, FmHA may at any time give any
consent, deferment, subordination, release, satisfaction, or termination
of any or all of grantee's grant obligations, with or without valuable
consideration, upon such terms and conditions as Grantor may determine
to be (a) advisable to further the purposes of the grant or to protect
FmHA's financial interests therein, and (b) consistent with the
statutory purposes of the grant and the limitations of the statutory
authority under which it is made and FmHA regulations.
This Agreement is subject to current FmHA regulations and any future
regulations not inconsistent with the express terms hereof. Grantee has
caused this Agreement to be executed by its duly authorized ------ ,
properly attested to and its corporate seal affixed by its duly
authorized ------ .
Attest:
Grantee:
By
(Title)
United States Of America Farmers Home Administration:
By
(Title)
Date of Execution of Grant Agreement by FmHA:
--
Attached Statement of Activities Is Made Part of This Agreement.
07 CFR 1944.700 Pt. 1944, Subpt. N, Exh. B
07 CFR 1944.700 Exhibit B -- Amendment to Housing Preservation Grant
Agreement
This Amendment between ------ herein called ''Grantee,'' and the
United States of America acting through the Farmers Home Administration,
Department of Agriculture, herein called ''FmHA,'' hereby amends the
Housing Preservation Grant Agreement executed by said parties on ------
, 19 -- , hereinafter called the ''Agreement.''
Said Agreement is amended by extending the Agreement to ------ ,
19 -- , and/or by making the following changes noted in the
attachments hereto: (List and identify proposal and any other documents
pertinent to the grant which are attached to the Amendment.)
Grantee has caused this Agreement to be executed by its duly
authorized ------ , properly attested to and its corporate seal affixed
by its duly authorized ------ .
Attest:
Grantee:
By
(Title)
United States Of America Farmers Home Administration.
By
(Title)
Date of Execution of Amendment to Grant Agreement by FmHA: ------ .
--
07 CFR 1944.700 Exhibit C -- (Reserved)
07 CFR 1944.700 Pt. 1944, Subpt. N, Exh. D
07 CFR 1944.700 Exhibit D -- Project Selection Criteria Outline Rating
Form
Applicant Name ------------
Applicant Address ------------
Application received on ------ .
State ------ District Office ------ .
If answer to any of the above is ''no'', application is rejected and
applicant so notified.
Selection Criteria:
Select the appropriate rating:
1. Points awarded based on the percentage of very-low income
homeowners or families the applicant proposes to assist, using the
following scale ------ :
(a) More than 80%: 20 points.
(b) 61% to 80%: 15 points.
(c) 41% to 60%: 10 points.
(d) 20% to 40%: 5 points.
(e) Less than 20%: 0 points.
2. Points awarded based on the applicant's percentage of use of HPG
funds to total cost of unit preservation. This percentage reflects
maximum rehabilitation with the least possible HPG funds due to
leveraging, innovative financial assistance, or other specified
approaches. Points are based on the following percentage of HPG funds
to total funds ------ :
(a) 50% or less: 20 points.
(b) 51% to 65%: 15 points.
(c) 66% to 80%: 10 points.
(d) 81% to 95%: 5 points.
(e) 96% to 100%: 0 points.
3. The applicant has demonstrated its administrative capacity in
assisting very low- and low-income families obtain adequate housing
based on the following:
(a) The organization or a member of its staff has two or more years
experience successfully managing and operating a rehabilitation or
weatherization type program ------ :
Yes -- 10 points.
No -- 0 points.
(b) The organization or a member of its staff has two or more years
experience successfully managing and operating a program assisting very
low- and low-income families obtain housing assistance ------ :
Yes -- 10 points.
No -- 0 points.
(c) If the organization has administered grant programs, there are no
outstanding or unresolved audit or investigative findings which might
impair carrying out the proposal ------ :
No findings: 10 points.
Outstanding findings: 0 points.
4. The proposed program will be undertaken entirely in rural areas
outside Metropolitan Statistical Areas (MSAs) identified by FmHA as
having populations below 10,000 or in remote parts of other rural areas
(i.e., rural areas contained in MSAs with less than 5,000 population)
------ :
Non-MSA area below 10,000 pop.: 10 points.
MSA area below 5,000 pop.: 10 points.
Neither: 0 points.
5. The program will use less than 20 percent of HPG funds for
administration ------ :
Less than 20%: 5 points.
20%: 0 points.
6. The proposed program contains a component for alleviating
overcrowding ------ :
Has component: 5 points.
No component: 0 points.
7. The applicant is an existing grantee and meets the conditions of
1944.686 of this subpart for additional points ------ :
Meets conditions: 10 points.
Doesn't meet conditions: 0 points.
Total Points ------ :
Ranking of This Applicant --------
07 CFR 1944.700 Pt. 1944, Subpt. N, Exh. E
07 CFR 1944.700 Exhibit E -- Guide For Quarterly Performance Report
Grantee name:
Grantee address:
Grant quarter: ------------
Report Period: From: ------ To: ------
I. General Information on Use of HPG Funds During Period:
A. Use of Administrative Funds:
Budgeted Amount $ ------
Expended Thru Last Quarter ------
Direct Cost:
Personnel $ ------
Supplies & Equip ------
Travel ------
Indirect Costs:
( ------ % Rate) ------
This Quarter Total ------
B. Use of Program Funds:
Budgeted Amount ------
Expended Thru Last Quarter ------
Loans No. ------ $ ------
Grants No. ------ ------
Other subsidies
(describe briefly) No. ------ ------ This Quarter Total ------
II. Description of recipients provided assistance during report
period: (Attach breakdown for each HPG recipient on separate page
including name, address, income, size, race, housing preservation
activities, and type of assistance received):
Number of low-income homeowners assisted ------
Number of very low-income homeowners assisted ------
Total number of homeowners assisted ------
Racial composition:
White ------ Black ------ Hispanic ------ Am. Indian ------ Other
------
III. Description of types of housing preservation provided:
IV. Objectives for next period:
Loans No. ------ $ ------
Grants No. ------ $ ------
Other subsidy No. ------ $ ------
Totals No. ------ $ ------
V. Project summary:
VI. Narrative:
A. Significant accomplishments.
B. Problem areas.
C. Proposed changes/assistance needed, etc.
D. Status of implementing environmental and historic preservation
requirements. Include number of historic properties assisted.
07 CFR 1944.700 Pt. 1945
07 CFR 1944.700 PART 1945 -- EMERGENCY
Sec.
1945.1 (Reserved)
1945.2 Purpose.
1945.3 -- 1945.4 (Reserved)
1945.5 Abbreviations.
1945.6 Definitions.
1945.7 -- 1945.17 (Reserved)
1945.18 United States Department of Agriculture (USDA) Food and
Agriculture Council (FAC).
1945.19 Reporting potential natural disasters and initial actions.
1945.20 Making EM loans available.
1945.21 Reporting and coordination requirements.
1945.22 -- 1945.24 (Reserved)
1945.25 Relationship between FmHA and FEMA.
1945.26 Relationship between FmHA and SBA.
1945.27 Relationship between FCIC and FmHA.
1945.28 Relationship between ASCS and FmHA.
1945.29 (Reserved)
1945.30 FmHA Emergency Loan Support Teams (ELST).
1945.31 FmHA Emergency Loan Assessment Teams (ELAT).
1945.32 -- 1945.34 (Reserved)
1945.35 Special EM loan training.
1945.36 -- 1945.44 (Reserved)
1945.45 Public information function.
1945.46 -- 1945.50 (Reserved)
07 CFR 1944.700 Subpart B -- (Reserved)
07 CFR 1944.700 Subpart C -- Economic Emergency Loans
1945.101 Introduction.
1945.102 Program objectives.
1945.103 (Reserved)
1945.104 Definitions and abbreviations.
1945.105 Credit elsewhere.
1945.106 -- 1945.110 (Reserved)
1945.111 Receiving and processing applications.
1945.112 Eligibility.
1945.113 County Committee review.
1945.114 Planning, development, and appraisals.
1945.115 (Reserved)
1945.116 Loan purposes.
1945.117 Loan limitations and special provisions.
1945.118 Loan rates and terms.
1945.119 Consolidation, rescheduling, reamortization, and deferral.
1945.120 Collateral requirements.
1945.121 (Reserved)
1945.122 Revision of the use of loan funds.
1945.123 General provisions -- compliance requirements.
1945.124 -- 1945.125 (Reserved)
1945.126 Cancellation of loan checks and advances.
1945.127 Increase or decrease in amount of loan.
1945.128 Docket preparation.
1945.129 Approval and closing.
1945.130 -- 1945.134 (Reserved)
1945.135 Loan servicing.
1945.136 Graduation.
1945.137 -- 1945.144 (Reserved)
1945.145 OMB control number.
1945.146 Memoranda of Understanding.
1945.147 State supplements.
1945.148 FmHA forms.
1945.149 Additional loans.
1945.150 General provisions.
07 CFR 1944.700 Subpart D -- Emergency Loan Policies, Procedures and
Authorizations
1945.151 Introduction.
1945.152 Program objectives.
1945.153 Loans for citrus grove rehabilitation or reestablishment.
1945.154 Definitions and abbreviations.
1945.155 Relationship between FmHA and other federal agencies.
1945.156 The test for credit and certification requirements for
availability of credit elsewhere.
1945.157 -- 1945.160 (Reserved)
1945.161 Receiving and processing applications.
1945.162 Eligibility requirements.
1945.163 Determining qualifying losses, eligibility for EM loan(s)
and the maximum amount of each.
1945.164 -- 1945.165 (Reserved)
1945.166 Loan purposes.
1945.167 Loan limitations and special provisions.
1945.168 Rates and terms
1945.169 Security requirements.
1945.170 -- 1945.172 (Reserved)
1945.173 General provisions -- compliance requirements.
1945.174 (Reserved)
1945.175 Options, planning, and appraisals.
1945.176 -- 1945.179 (Reserved)
1945.180 County Committee certification.
1945.181 (Reserved)
1945.182 Loan docket preparation.
1945.183 Loan approval or disapproval.
1945.184 (Reserved)
1945.185 Actions after loan approval.
1945.186 -- 1945.187 (Reserved)
1945.188 Chattel lien search.
1945.189 Loan closing.
1945.190 Revision of the use of EM loan funds.
1945.191 (Reserved)
1945.192 Loan servicing.
1945.193 -- 1945.199 (Reserved)
1945.200 OMB control number.
Exhibits A and C -- (Reserved)
Exhibit D -- Emergency Loans for Citrus Grove Rehabilitation and/or
Reestablishment
Authority: 7 U.S.C. 1989; 5 U.S.C. 301; 7 CFR 2.23; 7 CFR 2.70.
Source: 46 FR 28331, May 26, 1981, unless otherwise noted.
07 CFR 1944.700 Subpart A -- Disaster Assistance -- General
Source: 53 FR 30384, Aug. 11, 1988, unless otherwise noted.
1945.1 (Reserved)
07 CFR 1945.2 Purpose.
This subpart describes and explains the types of incidents which can
result in an area being determined a disaster area, thereby making
qualified farmers in such areas eligible for Farmers Home Administration
(FmHA) Emergency (EM) loans. With respect to natural disasters, it sets
forth the responsibility of the Secretary of Agriculture; the factors
used in making a natural disaster determination; the relationship
between FmHA and the Federal Emergency Management Agency (FEMA); the
method for establishing and using Emergency Loan Support Teams (ELST)
and Emergency Loan Assessment Teams (ELAT); the training of FmHA
personnel; and disaster related public information functions. The
natural disaster determinations/notifications made under this subpart do
not apply to any program other than the FmHA EM loan program. FmHA's
policy is to make EM loans to any otherwise qualified applicant without
regard to race, color, religion, sex, national origin, marital status,
age, or physical/mental handicap (provided the applicant can execute a
legal contract) as provided by law.
1945.3 -- 1945.4 (Reserved)
07 CFR 1945.5 Abbreviations.
The following abbreviations are used in this subpart.
(a) ASCS -- Agricultural Stabilization and Conservation Service.
(b) DAR -- Damage Assessment Report.
(c) ELAT -- Emergency Loan Assessment Team.
(d) ELST -- Emergency Loan Support Team.
(e) EM -- Emergency.
(f) EOH -- USDA Emergency Operations Handbook.
(g) FAC -- Food and Agriculture Council.
(h) FCIC -- Federal Crop Insurance Corporation.
(i) FCO -- Federal Coordinating Officer.
(j) FEMA -- Federal Emergency Management Agency.
(k) FmHA -- Farmers Home Administration.
(l) LFAC -- Local Food and Agriculture Council.
(m) NASS -- State Statistical Office of the USDA National
Agricultural Statistics Service.
(n) OMB -- Office of Management and Budget.
(o) SBA -- Small Business Administration.
(p) SFAC -- USDA State Food and Agriculture Council.
(q) USDA -- United States Department of Agriculture.
07 CFR 1945.6 Definitions.
The following definitions are applicable to this subpart:
(a) Applicant. The person or entity carrying on the farming
operation at the time of the disaster and requesting EM loan assistance
from FmHA.
(b) County. A local administrative subdivision of a State or a
similar political subdivision of the United States.
(1) Primary county. A county determined to be a disaster area.
(2) Contiguous county. A county that touches a primary county at any
point.
(c) Disaster. A natural disaster, as determined by the Secretary of
Agriculture or the FmHA Administrator, or a major disaster or emergency
declared by the President.
(1) Major disaster. Any hurricane, tornado, storm, flood, high
water, wind-driven water, tidal wave, tsunami, earthquake, volcanic
eruption, landslide, mudslide, snowstorm, drought, fire, explosion, or
other catastrophe in any part of the United States which, in the
determination of the President, causes damage of sufficient severity and
magnitude to warrant major disaster assistance under the ''Disaster
Relief Act of 1974,'' above and beyond normal emergency services
available from Federal, State and local governments.
(2) Presidential emergency. Any hurricane, tornado, storm, flood,
high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic
eruption, landslide, mudslide, snowstorm, drought, fire, explosion, or
other catastrophe in any part of the United States which is of such
magnitude that the President makes a declaration requiring Federal
emergency assistance to supplement State and local efforts to save lives
and protect property, public health and safety, or to avert or lessen
the threat of a disaster.
(3) Natural disaster. A disaster in any part of the United States in
which unusual and adverse weather conditions or other natural phenomena
have substantially affected farmers by causing severe physical property
losses and/or severe production losses within a county. Except where
otherwise specified, the use of the term county or similar political
subdivision is for administrative purposes only.
(i) Unusual and adverse weather conditions or natural phenomena
include such things as:
(A) A major single natural occurrence or event such as a blizzard,
cyclone, earthquake, hurricane or tornado.
(B) A single storm, or series of storms, accompanied by severe hail,
excessive rain, heavy snow, ice and/or high wind.
(C) An electrical storm.
(D) A severe weather pattern over a period of time which, due to
excessive rainfall, unusual lack of rainfall, or periods of high or low
temperatures, causes flooding, substantial water damage, drought or
freezing, or which results in the spreading and flourishing of insects
or pests, or in plant or animal diseases spreading into epidemic
proportions, or prevents the control of fire, however caused.
(ii) Severe physical property losses are those which the
Administrator determines prior to a natural disaster determination by
the Secretary, to be severe, and to have caused extensive damage to or
destruction of, physical farm property including farmland (except sheet
erosion); structures on the land such as buildings, fences, dams, etc.;
machinery, equipment, and tools; livestock, livestock products;
poultry; poultry products; growing crops (see 1945.163(b)(11) of
Subpart D of Part 1945 of this chapter); harvested crops, and supplies
which, if not repaired or replaced, would make it impossible for farmers
affected by the unusual and adverse weather conditions to continue
operating their farms on a sound basis.
(iii) Severe production losses within a county are those in which
either:
(A) The Secretary determines that there has been a reduction
countywide of at least 30 percent of the normal year's dollar value of
all crops, including hay and pasture, and the crops could not be
replanted or replaced with a substitute crop, or
(B) The Secretary determines that there has been a 30 percent loss
countywide in the normal year's dollar value of a single enterprise (as
defined in 1945.154(a)(13)(i) of Subpart D of Part 1945 of this
chapter); or
(C) The Secretary, after exercising discretion, determines that,
although the conditions set forth in 1945.6(c)(3)(iii)(A) and (B) of
this subpart have not been met, the unusual and adverse weather
conditions or natural phenomena have resulted in such significant
production losses, or have produced such extenuating circumstances as to
warrant a finding that a natural disaster has occurred. In making this
determination, the Secretary may request the Administrator to provide
for consideration such factors as the nature and extent of production
losses; the number of farmers who have sustained qualifying production
losses; the number of farmers in that other lenders in the county
indicate they will not be in position to finance; whether the losses
will cause undue hardship to a certain segment of farmers in the county;
whether damage to particular crops has resulted in undue hardship;
whether other Federal and/or State benefit programs, which are being
made available due to the same disaster, will consequently lessen undue
hardship and the demand for EM loans; and any other factors considered
relevant. The Secretary will consider the information set forth in
1945.6(i) of this subpart in deciding whether a natural disaster has
occurred.
(4) Potential natural disaster. Unusual and adverse weather
conditions or natural phenomena that have caused physical and/or
production losses, but which have not yet been examined by the Secretary
or the Administrator for consideration as a natural disaster.
(d) Disaster area(s). The county(ies) declared/designated as a
disaster area for EM loan assistance as a result of disaster related
losses. This included counties named as contiguous to those counties
declared/designated as disaster areas.
(e) Farmers. Individuals, cooperatives, corporations, partnerships
or joint operations who are farmers, ranchers, or aquaculture operators
actively engaged in their operation at the time a disaster occurs.
(f) Incidence period. The specific date or dates during which a
disaster occurred.
(g) National Office. The Director, Emergency Designation Staff.
(h) Normal year's dollar value. The FmHA National Office will
determine the normal year's dollar value by establishing a normal year
yield and price. Normal year yield will be the average yield of the 5
years immediately preceding the disaster year for each cash crop,
including hay and pasture, grown in the county. The price will be the
average commodity price for the 36 months immediately preceding the
disaster year for each crop. Yields and prices used to establish the
value or normal production will be obtained from the NASS. In cases
where crops produced and/or prices are not available from NASS, the
information will be obtained from other reliable sources. Yields used
to establish the disaster year's production will be obtained from DARs
which are prepared by the LFACs and SFACs. Prices used to establish the
value of disaster year production will be the same as those used to
establish normal year values.
(i) Substantially affected. A farmer applicant has been
substantially affected when there has been a disaster as defined in
paragraph (c) of this section, and the applicant has sustained
qualifying physical and/or production losses, as defined in 1945.154(a)
of Subpart D of Part 1945 of this chapter.
(j) Termination date. The date specified in a disaster
declaration/determination/notification which establishes the final date
after which EM loan applications can no longer be accepted. For both
physical and production losses, the termination date will be 8 months
from the date of the disaster declaration/determination/notification.
(k) United States or State. Each of the several States, the
Commonwealth of Puerto Rico, the Virgin Islands of the United States,
Guam, American Samoa, and the Commonwealth of the Northern Mariana
Islands.
1945.7 -- 1945.17 (Reserved)
07 CFR 1945.18 United States Department of Agriculture (USDA) Food and
Agriculture Council (FAC).
There is a USDA FAC established by the Secretary to serve every State
and every County in the United States. The FACs are responsible for
reporting the occurrence of and assessing the damage caused by potential
disasters, as required to ensure that the Department's disaster programs
are implemented when and where needed; to coordinate the Department's
EM disaster programs with those of other Federal departments and
agencies; and to provide personnel, as needed and requested by FEMA, to
help staff disaster application centers in major disaster areas.
(a) State Food and Agriculture Council (SFAC). The SFACs are
composed of representatives of the several USDA agencies having
emergency program responsibilities at the State level. The vice
chairpersons, Emergency Programs, of the SFACs are the ASCS State
Executive Directors. FmHA State Directors are members of the SFACs.
(b) Local Food and Agriculture Council (LFAC). These councils are
composed of representatives of the several USDA agencies having
available personnel at the County level. The chairpersons of the LFACs,
in most cases, are the ASCS County Executive Directors. The FmHA County
Supervisors are members of the LFACs.
(c) FAC policies and procedures. These policies and procedures are
set forth in the USDA Emergency Operations Handbook (EOH), available in
any ASCS or FmHA Office.
07 CFR 1945.19 Reporting potential natural disasters and initial
actions.
(a) Purpose. The purpose of reporting potential natural disasters is
to provide a systematic procedure for rapid reporting of the occurrence
and extent of damage and loss caused by such events which may result in
a natural disaster determination.
(b) Responsibility for assessing and reporting disasters. USDA SFACs
and LFACs representing their members agencies are best qualified at the
State and County levels to accomplish the assessment of agricultural
production losses resulting from a potential natural disaster. These
councils are charged with the responsibility of reporting the occurrence
of and assessing the damage caused by disasters and will perform this
responsibility under policies and procedures as set forth in the EOH.
(c) Actions to be taken. Immediately after the occurrence of a
potential natural disaster:
(1) When physical losses only occur, the FmHA County Supervisor will
report to the State Director who will advise the Administrator that
there has been a potential natural disaster with physical property
losses to one or more farmers. This report must be made to the
Administrator within 3 months from the last day of the disaster
incidence period. Upon receiving the report, the Administrator will
decide whether a natural disaster has occurred. If it has, the
Administrator will make EM loans available to any otherwise qualified
applicant who has suffered qualifying physical losses. Availability of
EM loans assistance under this Administrator action shall be limited to
physical losses only. Notices that EM loans are available will identify
the county in which the unusual and adverse weather condition, or
natural phenomenon has occurred and also each contiguous county.
(2) When physical and/or production losses occur, the FmHA County
Supervisor will report to the LFAC chairperson, as specified in the EOH,
all substantial physical property loss, damage or injury and severe
production losses that have occurred in the County Office area. The
County Supervisor will assist the LFAC in preparing the 24-hour report
required in paragraph (c)(3) of this section. If the LFAC has not
completed its 24 hour report within two workdays after the occurrence of
a potential natural disaster, the County Supervisor will report to the
State Director of Form FmHA 1945-27, ''Report of Natural Disaster.'' In
urgent situations, the report may be made by telephone, followed by the
LFAC report or Form FmHA 1945-27. Either of these reports will be based
on information obtained from personal knowledge and from farmers,
agricultural and community leaders, and from any other personally
contacted reliable source(s). The County Supervisor will convey to the
LFAC chairperson all information pertaining to the potential disaster
and provide the chairperson with a copy of Form FmHA 1945-27, if
prepared.
(3) The LFAC will report the potential natural disaster, in
accordance with the EOH, to:
(i) The SFAC, Vice Chairperson; and
(ii) Appropriate County Government representative(s).
(4) The SFAC will provide copies of the LFAC report to:
(i) The USDA Washington Offices of ASCS, FmHA and Office of
Intergovernmental Affairs; and
(ii) The State Governor's Emergency Coordinator and the State
Department of Agriculture.
(5) The FmHA State Director will inform the National Office of each
potential natural disaster as soon as possible and forward to the
National Office a copy of the LFAC report or Form FmHA 1945-27, with any
attachments, and supplemented with the State Director's comments and
recommendations. The State Director must include a statement as to the
number of farmers, ranchers, and aquaculture operators affected by the
potential natural disaster. In urgent situations, the State Director
will report to the National Office, Emergency Designation Staff, by
telephone, and immediately thereafter send a written report to the
National Office, Emergency Designation Staff. The State Director will
continually notify the SFAC Vice Chairperson, Emergency Programs, of any
additional information received concerning the potential natural
disaster.
(6) When inquiries are received from persons affected by a potential
natural disaster, they will be provided the following information:
(i) By the County Office:
(A) The kind of assistance that will be available if the President
declares a major disaster or emergency, or if the Secretary determines
that a natural disaster has occurred.
(B) Whether or not physical property loss EM loans are available.
(C) That applications for EM loans may be filed for future processing
if such loans are made available, or may be filed at a later date after
the necessary determinations have been made.
(D) Whether regular FmHA farm loan assistance is available.
(ii) State Office, or the National Office, will furnish the same
information as the County Office, or will refer the person to the
appropriate County Office.
(7) When inquiries are received from a Governor, a County Governing
Body or Indian Tribal Council concerning a potential natural disaster,
they will be informed of the procedure for making EM loans available.
(8) The actions required in paragraph (b) of this section will be
taken even if the Governor of a State has requested the President to
declare a county(ies) a major disaster or Presidential emergency area.
07 CFR 1945.20 Making EM loans available.
EM loans will be made available to applicants having qualifying
severe physical and/or production losses within a county named by FEMA
as eligible for Federal assistance under a major disaster or emergency
declaration by the President; or under a natural disaster determination
by the Secretary of Agriculture, pursuant to 1945.6(c)(3)(iii) of this
subpart; and to applicants having qualifying severe physical property
losses when, prior to action by the President or the Secretary, the FmHA
Administrator has determined (pursuant to 1945.6(c)(3)(ii) of this
subpart) that such losses have occurred as a result of a natural
disaster. Any determination made by the Secretary or the Administrator,
pursuant to this subpart may be revised or reversed upon the receipt of
new facts which establish that a change is warranted. FmHA's policy is
to make loans to any otherwise qualified applicant. When a county has
been designated/declared a disaster area where eligible farmers may
qualify for EM loans due to a disaster(s) occurring on or after May 31,
1983, under this section, all other counties contiguous to the eligible
county(ies) are also named as areas where EM actual loss loans may be
made to applicants whose operations have been substantially affected by
the same disaster(s).
(a) Declaration by the President. When there is a Presidential major
disaster or emergency declaration and FEMA has notified the FmHA
National Office, the following actions will be taken:
(1) The National Office will immediately:
(i) Notify the State Director and the Director, Finance Office by
telephone and confirm by electronic message. The notification will
contain:
(A) The date of the declaration;
(B) The name(s) of the county(ies) determined eligible for Federal
disaster assistance;
(C) The type of disaster;
(D) The incidence period for the disaster;
(E) The termination date for accepting applications; and
(F) The disaster declaration number (Examples: Major Disasters,
M491; or Presidential Emergency, E061).
(ii) Take the actions required by 1945.21(a)(1) of this subpart.
(2) The State Director will immediately:
(i) Notify the appropriate County Supervisor(s) to make EM loans
available in the declared counties, and confirm this notification by a
State supplement containing information listed in paragraphs (a)(1)(i)
(A) through (F) of this section.
(ii) Notify the SFAC Vice Chairperson, Emergency Programs, in
writing; and
(iii) Prepare the public announcements deemed appropriate to inform
the farm community, and coordinate the issuance of such announcements
with FEMA's Public Information Officer.
(3) The County Supervisor will immediately upon receiving
notification that the county(ies) has been declared a disaster area:
(i) Notify the Chairperson LFAC in writing;
(ii) Make such public announcements as seem appropriate to adequately
inform the local farm community;
(iii) Arrange and conduct meetings with local agricultural lenders
and agricultural leaders within 10 working days after the disaster
declaration date to explain the purpose and the assistance available
under the EM loan program; and
(iv) Be available to help staff the FEMA disaster assistance centers,
when requested to do so.
(b) Determination by the Secretary of Agriculture. When a potential
disaster has substantially affected farmers, causing qualifying severe
losses and it is requested by a Governor or Indian Tribal Council that
there be a determination that a natural disaster has occurred, the
Secretary will acknowledge the request in writing and consider whether a
determination should be made, provided the Secretary receives such
request in writing within three months of the last day of the occurrence
of such potential disaster. The Governor or Indian Tribal Council
should send a copy of the request to the FmHA State Director. When the
Secretary finds based on the material received pursuant to this subpart
that the conditions of 1945.6(c)(3)(iii) (A) or (B) have been met, it
shall be announced that a natural disaster has occurred. Also, if on
finding that the conditions of 1945.6(c)(3)(iii)(C) of this subpart so
warrant, the Secretary may determine that a natural disaster has
occurred.
(1) Upon receipt of the Governor's or Indian Tribal Council's request
through the Secretary's Office, the FmHA National Office will
immediately take the following actions:
(i) Notify the State Director by telephone of the Governor's request.
(ii) Obtain an immediate report from the State Director on whether
there have been severe physical property losses within each of the
counties requested by the Governor or Indian Tribal Council.
(iii) Obtain a report from the State Director on production losses.
(2) The State Director will immediately:
(i) Notify the SFAC Vice Chairperson, Emergency Programs, that a DAR
is needed, unless the Governor has already made such request to the SFAC
Vice Chairperson, in accordance with the EOH for the requested
county(ies); and
(ii) Advise the National Office on whether qualifying physical
property losses have occurred.
(iii) Review each DAR, as soon as it is available, and forward it to
the National Office with written comments on the extent of probable
qualifying production losses, and other factors which are recommended
for consideration by the Secretary in making determinations under
1945.6(c)h3) of this subpart. The State Director will also submit to the
National Office a list of all agricultural commodities produced in the
State, giving the average yearly prices for each commodity for the three
years immediately preceding the disaster year; the county average
yields for each commodity for the five years immediately preceding the
disaster year; and any additional supportive information. Yields and
prices data will be used to establish the normal year's production and
will be obtained from the USDA National Agricultural Statistics Service
(NASS) by the State Director. In cases where crops produced and/or
prices are not available from NASS, the information will be obtained
from other reliable sources.
(iv) Upon receipt of the Administrator's request for a survey in
connection with a request by the Secretary for information needed
concerning 1945.6(c)(3)(iii)(C), expeditiously gather and compile the
information requested and submit it to the Administrator with a
recommendation. The survey will be conducted in a manner jointly agreed
upon by the Administrator and the State Director.
(3) The National Office will:
(i) Immediately use the State Director's report and accompanying
price and yield information to analyze and verify losses reported in the
DAR(s), along with any other information and comments provided by the
State Director.
(ii) Promptly forward a written report to the Secretary, along with
supporting information, for use by the Secretary in making a decision on
the requested natural disaster determination.
(4) The Secretary will review the results of the survey and determine
whether a natural disaster has occurred.
(i) When the Secretary determines that a natural disaster has
occurred:
(A) The Administrator will be directed to make EM loans available in
the county(ies) named by the Secretary, as provided by law.
(B) The Administrator will notify the State Director, by electronic
message, of the Secretary's decision. Such notice will not be given to
the State Director until the Secretary has notified the Governor or
Indian Tribal Council, from whom the natural disaster determination
request was received.
(C) The National Office will immediately pursue the same course of
action as described in paragraph (a)(1) of this section, except the
disaster determination number will be coded S and three numbers (Example
S141).
(D) The State Director will immediately pursue the same course of
action as described in paragraph (a)(2) of this section.
(E) The County Supervisor will immediately pursue the same course of
action as described in paragraph (a)(3) of this section.
(ii) When the Secretary determines that the conditions in
1945.6(c)(3)(iii) (A) or (B) of this subpart have not been met, and
decides to consider other factors in accordance with
1945.6(c)(3)(iii)(C) of this subpart, the Secretary will:
(A) Request the Administrator to provide additional information for
consideration through an actual survey of farmers and lending
institutions in the county(ies) requested to be determined a natural
disaster area.
(B) The Administrator will instruct the State Director to conduct the
survey focusing on such factors as:
(1) The nature and extent of production losses;
(2) The number of farmers who have sustained qualifying production
losses;
(3) The number of farmers in paragraph (b)(4)(ii)(B)(2) of this
section that other lenders in the County Office area indicate they will
not be in a position to finance;
(4) Whether the losses will cause undue hardship to a certain segment
of farmers in the county;
(5) Whether damage to particular crops has resulted in undue
hardship;
(6) Whether other Federal and/or State benefit programs, which are
being made available due to the same disaster, will consequently lessen
undue hardship and the demand for EM loans; and
(7) Any other factors considered relevant.
(iii) If the Secretary finds that the conditions of
1945.6(c)(3)(iii) (A) or (B) of this subpart have not been met, and
decides that the conditions do not warrant a natural disaster finding
under 1945.6(c)(3)(iii)(C) of this subpart, the Governor or Indian
Tribal Council and other concerned officials will be notified of this
and the reason(s) for the Secretary's conclusions.
(c) Notification by the FmHA Administrator. When the Administrator
determines that an unusual and adverse weather condition or natural
phenomenon has substantially affected farmers, causing qualifying severe
physical losses, the Administrator will make EM physical loss loans
available in the county(ies) identified and notify the State Director by
electronic message.
(1) The Administrator, upon notifying the State Director that EM
physical loss loans are to be made available, will issue the following:
(i) The Administrator's notification number (Example: N181);
(ii) The incidence period for the natural disaster; and
(iii) The termination date for accepting applications.
(2) The State Director upon receiving written notification by
electronic message from the Administrator will notify:
(i) Appropriate County Supervisor(s) to commence processing EM loan
applications in appropriate county(ies).
(ii) The SFAC Vice Chairperson, Emergency Programs; and
(iii) The news media with appropriate announcements.
(3) The Administrator will notify the Office of the Secretary of
Agriculture of any action taken concerning physical property losses.
The National Office will also provide the same information to the
appropriate Governor or Indian Tribal Council, FEMA, ASCS, SBA and other
concerned officials at their request.
(4) Upon notification from the State Director that EM loans are
available in a county, the County Supervisor will pursue the course of
action described in 1945.20(a)(3) of this subpart.
(d) Relationship between Administrator's notification and Secretary's
determination. Both the Administrator and the Secretary can make
natural disaster determinations affecting the same county:
(1) When the Administrator has made physical loss loans available
pursuant to 1945.6(c)(3)(ii), and the Secretary later makes production
loss loans available pursuant to 1945.6(c)(3)(iii) on the basis of the
same unusual and adverse weather condition or natural phenomenon, such
physical and production losses will be considered to be caused by a
single natural disaster. Any physical loss loans made pursuant to the
Administrator's earlier notification will be included in the maximum
amount available to an applicant as prescribed in 1945.163(e) of
Subpart D of Part 1945 of this chapter.
(2) When a series of unusual and adverse weather conditions or
natural phenomena occur in a county within the same crop year, and it is
not possible for the Secretary to assess the damages in order to
determine whether the conditions in 1945.6(c)(3)(iii) have been met
until the end of such series or the crop year, a determination that a
natural disaster has occurred shall be considered for both physical
property and production losses to be due to a single natural disaster.
Any physical loss loans made pursuant to the Administrator's earlier
notification will be included in the maximum amount available to an
applicant as prescribed in 1945.163(e) of Subpart D of Part 1945 of
this chapter.
(e) Extension of termination dates for continuing disaster
conditions. When a natural disaster continues beyond the date on which
an Administrator's notification or Secretary's determination is made,
and when there are continuing losses or damages caused by that disaster,
the Administrator will extend the incidence period and the termination
date for such specified period as the Administrator finds appropriate,
but not in excess of 60 days. The following actions will be taken to
obtain an extension:
(1) The County Supervisor will advise the State Director of the
conditions for which an extension is requested.
(2) The State Director will make a recommendation to the
Administrator on whether an extension should be granted; and
(3) The Administrator will, if the request is granted:
(i) Amend the initial notification/determination (using the same
number) by establishing a new incidence period and termination date;
and
(ii) Notify the State Director by electronic message.
(f) Limitations. When actions are authorized by the Secretary or the
Administrator under paragraphs (b) or (c) of this section, such actions
will ordinarily be completed within six months after the beginning date
of the incidence period of a reported disaster, except when the actions
required in paragraph (b)(2) of this section cause a delay beyond the
six months period, in which event the actions must be completed within
nine months of the beginning date of the incidence period. The
Secretary may extend this limitation up to 12 months from the beginning
date of the incidence period if there were other exceptional causes for
the delay.
07 CFR 1945.21 Reporting and coordination requirements.
After EM loans are made available under 1945.20 of this subpart, the
following actions will be taken immediately:
(a) By the National Office. The Administrator or a designee will:
(1) Submit weekly reports to the following, informing them of the
past week's disaster actions taken by FmHA. If no actions are taken in
any particular week, negative reports will be made:
(i) The Secretary of Agriculture or the Secretary's designee;
(ii) The Director of the FmHA Finance Office;
(iii) The FEMA;
(iv) The SBA Central Office;
(v) The ASCS National Office;
(vi) The FCIC National Office;
(vii) The OMB;
(viii) The National Oceanic and Atmospheric Administration; and
(ix) The Office of Governmental and Public Affairs.
(2) The weekly reports will contain the following information:
(i) The date of the declaration/determination/notification;
(ii) The name(s) of any county(ies) in which EM loans are available;
(iii) The nature of the damages and losses; and
(iv) The termination data for accepting EM loan applications.
(b) By the State Director. (1) Notify the appropriate County
Supervisor(s) of the:
(i) Name(s) of any county(ies) in which EM loans are available;
(ii) Date of the declaration/determination/notification;
(iii) Disaster number;
(iv) Type of disaster;
(v) Incidence period; and
(vi) Termination date for accepting applications.
(2) Notify the State ASCS Executive Director of the authority to make
EM loans. Promptly have a meeting to review and implement the
provisions of the Memorandum of Understanding between ASCS and FmHA on
Disaster Assistance, Exhibit A of FmHA Instruction 2000-JJ (available in
any FmHA office). Arrive at a mutual understanding as to how ASCS
disaster program benefits are to be handled in conjunction with the
processing of FmHA EM actual loss loans, so that duplication of benefits
for the same losses are not received by disaster victims;
(3) Contact the FCIC Field Operations Office Director to review the
Memorandum of Understanding between FCIC and FmHA, Exhibit A of FmHA
Instruction 2000-N (available in any FmHA office), and arrive at a
mutual understanding as to how FCIC indemnity payments are to be handled
in conjunction with the processing of EM actual loss loans so that
duplication of benefits for the same losses are not received by disaster
victims;
(4) Make appropriate public announcements, including notices in
Indian Tribal Council(s) news media. However, if the declaration was by
the President, under 1945.20(a) of this subpart, news releases should
be cleared with the FEMA; and
(5) If the FEMA notifies the State Director that an agreement between
the State and Federal Government (FEMA) has been made to provide 408
grants in a major disaster area to those suffering damages and losses to
housing and personal property, who are ineligible for disaster loan
assistance through the FmHA and/or SBA, the following actions will be
taken:
(i) The State Director will notify the appropriate County
Supervisor(s) of the address and phone number of the nearest FEMA office
in the Supervisor's area; and
(ii) At the close of business each week, the County Supervisor(s)
will forward to the State Director a list of applicants claiming
physical losses who do not qualify for EM loan assistance, with the
reason(s) they do not qualify; and
(iii) The State Director will immediately summarize the information
received from the County Supervisors and forward a report to FEMA.
(c) By the County Supervisor. (1) Notify the County ASCS Executive
Director of the declaration/determination/notification and have a
meeting to review and implement the provisions of the Memorandum of
Understanding between ASCS and FmHA on Disaster Assistance, Exhibit A of
FmHA Instruction 2000-JJ (available in any FmHA office), to arrive at a
mutual understanding as to how ASCS disaster program benefits and other
information in ASCS's records will be made available and used in
processing EM actual loss loans. Also, the County Supervisor will
request that information regarding the availability of EM loans be
placed in the ASCS's newsletter;
(2) Notify the County Governing Body, Indian Tribal Council(s), and
make appropriate public announcements including notices in Indian Tribal
Council(s') news media; and
(3) Explain the assistance available under the EM program to
agricultural lenders and leaders in the area including Indian
agricultural lenders and leaders.
1945.22 -- 1945.24 (Reserved)
07 CFR 1945.25 Relationship between FmHA and FEMA.
(a) General. When a major disaster or emergency declaration is made
by the President, the FEMA is charged with the responsibility for seeing
that disaster assistance is made available to disaster victims. Also,
FEMA is responsible for coordinating the actions of other Federal
agencies who have programs to provide disaster assistance. A Federal
Coordinating Officer (FCO) is appointed for each major disaster or
emergency to coordinate Federal assistance in the disaster area.
(b) Before the declaration. (1) When a request for a major disaster
or emergency declaration is made by the Governor of a State, the FEMA
through its Regional Director is responsible for obtaining an assessment
of the losses and damages to respond to the request.
(2) If the FEMA makes a request for information from FmHA on losses
and damages caused by an unusual and adverse weather condition or
natural phenomenon, the FEMA representative will be advised to contact
the SFAC Vice Chairperson. The EOH provides that the SFAC will request
the LFAC to prepare the DAR. State Directors and County Supervisors
should cooperate with the SFAC Vice Chairpersons and LFAC Chairpersons
in preparing the DARs.
(c) After the declaration. When a major disaster has been declared
by the President and the FEMA establishes a disaster application
center(s) in the local disaster area(s):
(1) The SFAC will be responsible for:
(i) Selecting qualified USDA employees to represent USDA at each
center, after consulting with other council members in making the
selection. FmHA State Directors will cooperate with the SFAC in seeing
that centers are properly staffed.
(ii) Orienting the selected employees on all current USDA disaster
programs. FmHA State Directors will cooperate in this orientation to
ensure that the USDA representatives at the center(s) are familiarized
with the FmHA EM loan program and other FmHA loan programs that could be
of assistance to the disaster victims; and
(iii) Informing the FEMA that USDA representatives are available to
help at each of the disaster application centers.
(2) The FmHA State Director will be responsible for pursuing the
following policy in working with the FEMA and the FCO by:
(i) Authorizing receipt of EM loan applications in the counties named
by the FEMA. However, no EM loans can be approved until the National
Office has given such notification as prescribed in 1945.20(a)(1) of
this subpart;
(ii) Attending or delegating a representative to attend any
meeting(s) called by the FCO to discuss Federal assistance under the
disaster declaration; and
(iii) Advising the FCO to contact the SFAC Vice Chairperson, if a
request is made by the FCO for FmHA employees to help staff the FEMA's
Disaster Application Centers; and
(iv) Advising the FCO that FmHA's ''Report of Emergency Loans Made
Pertaining to Disasters'' will be provided quarterly to FEMA's National
Office by the FmHA National Office.
07 CFR 1945.26 Relationship between FmHA and SBA.
(a) General. Public Law 99-272 made agricultural enterprises
ineligible for SBA physical disaster and economic injury loan programs.
However, in disaster areas declared by the President or the SBA
Administrator, the SBA will continue to accept physical disaster loan
applications for losses to dwellings and/or personal household contents,
regardless of whether the dwelling is located on a farm or nonfarm
tract. It is the policy of USDA and FmHA to cooperate with SBA in the
use of each agency's respective loan making authorities, to complement
the activities of each other; and to the extent possible, improve the
delivery of disaster assistance to the agricultural segment of the
country and minimize the potential for duplication of benefits for the
same losses from the disaster loan programs administered by the two
agencies.
(b) Preventing duplication of disaster program benefits. Preventing
borrowers from receiving duplicate disaster program benefits will be
assured by taking the following precautions:
(1) For all counties named by FEMA under a major disaster or
Presidential emergency declaration, the FmHA County Offices will notify
the appropriate SBA Disaster Area Office of all EM loan applications
received each week, for damage or loss of farm dwellings and/or loss of
household contents. Notice will be given by forwarding to SBA a
photocopy of the applicant's completed Form FmHA 410-1, ''Application
for FmHA Services.'' Block 22 of the form should indicate the purpose
for which the loan was requested.
(2) For each application referred to in paragraph (b)(1) of this
section, FmHA County Offices will send a copy of each final action taken
with EM loan applications to the appropriate SBA Disaster Area Office.
(3) A farm applicant may elect to obtain SBA financing for physical
damage or loss to the dwelling and household contents, and separate
financing from FmHA to cover damages or losses to the farming operation.
Accordingly, applicants who elect to receive SBA physical disaster
loans for dwelling and/or household content losses may also file for
FmHA EM loan assistance in disaster areas declared by the President or
the Secretary of Agriculture or FmHA Administrator. An EM loan will not
be approved until it is determined the requirements of 1945.163(d) of
Subpart D of this part will be met. When an EM loan is approved, the
FmHA County Office will notify the SBA Disaster Area Office, pursuant to
paragraph (a)(4)(ii) of 1945.183 of Subpart D of this part.
(c) How SBA disaster loans are made available. SBA disaster loans
are available in counties:
(1) Named by the FEMA under a major disaster or emergency declaration
by the President; for physical loss and/or economic injury disaster
loans.
(2) Declared by the SBA Administrator for physical loss and economic
injury disaster loans.
(3) Designated by the Secretary of Agriculture for Agri-dependent
businesses.
(d) Notification of SBA disaster areas. The SBA Central (National)
Office will notify the FmHA National Office when its disaster loan
program is made available. The FmHA National Office will notify State
Directors, by memorandum, of the SBA disaster areas; and State
Directors will notify the appropriate County Supervisor(s) in writing.
07 CFR 1945.27 Relationship between FCIC and FmHA.
(a) General. Exhibit A of FmHA Instruction 2000-N (available in any
FmHA office) is a Memorandum of Understanding between FCIC and FmHA.
This Memorandum of Understanding is intended to assist in maintaining
and improving the working relationship between the FCIC and the FmHA by
providing encouragement to regular and FmHA EM loan borrowers to use
Federal All-Risk Crop Insurance, where available; assist FmHA borrowers
to obtain All-Risk Crop Insurance or other agricultural commodity
insurance coverage; and exchange information essential to the
elimination of duplicating compensatory disaster benefits from the FCIC
and FmHA for the same disaster losses.
(b) Annual meeting with FCIC. FmHA State Directors will meet with
FCIC Field Operations Office Directors at least once each year to review
the Memorandum of Understanding and rededicate their efforts and those
of their respective agency employees to comply with the agreements
contained in the Memorandum of Understanding.
(c) Contact after EM actual loss loans are made available. After
each disaster, when EM loans are made available, State Directors are
required to promptly contact the FCIC Field Operations Office Director
to review the Memorandum of Understanding and agree on how each agency
will fulfill its responsibilities in dealing with the disaster
situation.
(d) Notification to County Offices. State Directors will provide
instructions for actions to be taken by County Supervisors in
maintaining a good relationship with FCIC Insurance Representatives.
07 CFR 1945.28 Relationship between ASCS and FmHA.
Exhibit A of FmHA Instruction 2000-JJ (a copy of which is available
in any FmHA office) is a Memorandum of Understanding between ASCS and
FmHA. This Memorandum of Understanding is intended to assist in
maintaining and improving the working relationship between the ASCS and
the FmHA by coordinating certain ASCS disaster programs with the FmHA EM
loan program. It specifically identifies the administrative
responsibilities of FmHA County Supervisors and ASCS County Executive
Directors concerning disaster benefits.
1945.29 (Reserved)
07 CFR 1945.30 FmHA Emergency Loan Support Teams (ELST).
(a) Use of ELSTs. ELSTs are to be used when a disaster warrants
immediate attention by FmHA in implementing the EM loan program. Also,
ELSTs are used when unusually large numbers of EM loan applications are
received and personnel from other areas are required to be temporarily
assigned to assist in rendering prompt service to the affected area(s).
(b) State Office ELST. Each State Director shall form an ELST to be
deployed, when needed, in areas affected by a major disaster,
Presidential emergency, or a natural disaster. ELSTs shall assist the
State Directors in expediting the making of EM loans to disaster
victims.
(1) State Directors shall use the ELSTs formed in their State(s) and
all other FmHA personnel within their State(s), as the need arises, in
making EM loans. If additional help is needed beyond that available in
the State, including the use of overtime, temporary personnel, and/or
private contractors, the State Director shall advise the National Office
of these needs and request outside assistance.
(2) Upon request from a State Director, the Assistant Administrator,
Farmer Programs, will consider detailing ELSTs from other States to
assist in the making of EM loans.
(3) State ELSTs will consist of a team leader and team members,
selected by the State Director.
(i) The State ELST can include Farmer Programs Specialists, County
and Assistant County Supervisors, Program Review Assistants, County
Office Assistants, and County Office Clerks.
(ii) So that no one person or County Office unit bears an unfair
burden, State team members will be changed from time to time.
(iii) Team members will provide training in EM loan making and EM
loan servicing to all County Office employees.
(iv) District Directors are responsible for notifying the State
Director of any need to change a team member within their district.
(4) State ELSTs will be trained as follows:
(i) The National Office will hold training meetings or workshops for
ELST leaders as needed; and
(ii) State ELST leaders will be responsible for training and keeping
the State team and all other State personnel currently informed on all
phases of EM loans.
(5) State Directors will issue a State supplement establishing an
ELST for the State(s) under their jurisdiction. This supplement will
name the team leader and all members. A copy of this supplement will be
sent to the National Office, Attention: Director, Emergency Designation
Staff.
(c) National Office ELST leaders. The National Office has
established a cadre of ELST team leaders.
(1) National Office team leaders will be used as follows:
(i) Training of FmHA field personnel, other USDA personnel, and
temporary personnel in the making of EM loans:
(ii) Assisting State Directors in the organization and expediting of
assistance to eligible disaster victims; and
(iii) Leading ELSTs in areas with an unusually large volume of EM
loan applications.
(2) Upon request from a State Director, the Assistant Administrator,
Farmer Programs, will consider detailing one or more National Office
team leaders to assist in the training of personnel and organizing of EM
loan processing activities.
07 CFR 1945.31 EmHA Emergency Loan Assessment Teams (ELAT).
The State Director will deploy ELATs on a continuing basis to the
designated areas to monitor EM loan processing activities in order to
minimize loan errors, especially in loss calculations and eligibility
determinations. Such teams will be composed of State Office Farmer
Programs staff members, District Directors or Assistant District
Directors, Office Management Assistants/Program Review Assistants, and
auditors from the Office of Inspector General, if they desire to
participate. The team leader will keep the State Director informed by
telephone and by submission of weekly written reports, setting forth the
problems discovered and the corrective actions taken or to be taken.
The State Director will keep all County and District Offices in the
designated area of the State informed of the common problems found by
the team and require appropriate corrective action to be taken by the
County Office. Such actions will be monitored by the District Director
and reported to the State Director when corrective measures have been
completed. State Directors will monitor the handling of this quality
control measure and will forward a copy of the ELAT team leader's report
to the Administrator, Attention: Emergency Designation Staff.
1945.32 -- 1945.34 (Reserved)
07 CFR 1945.35 Special EM loan training.
(a) General. When it is evident that a large number of farmers were
affected by a widespread disaster in a State, the National Office will
send a qualified representative(s) from the Emergency Designation Staff
to the State to assist the State Director in conducting a training
meeting(s) with State, District and County employees, provided there has
not been a recent training meeting in that State.
(b) Purpose. A good training program is a must in disaster areas.
This program should adequately instruct State and County Office
personnel so that when the training is completed they will be well
qualified to process EM loans without undue delay. The training meeting
will last two days (16 hours) and include a workshop and a test.
(c) Objective. The basic objective of this training program is to
keep State and County personnel properly trained in the current methods
of processing EM loan applications and EM loan making. This will result
in more expeditious service to disaster victims during critical times
and minimize erroneous interpretations of regulations by FmHA employees
in administering the EM loan program.
(d) Comprehensive EM loan training package. A comprehensive EM loan
training package has been developed for use by National Office and Staff
Office personnel in training all EM loan writers (both regular and
temporary employees). This package, including an application kit, will
be used for the EM loan training meetings, and any subsequent EM loan
training meetings conducted by State or District personnel.
(e) Funding. Travel for the two-day session required in paragraph
(b) of this section may be funded from a special purpose account with
advance approval from the Budget Division. The following information
must be provided to the Budget Division when a request is made for these
additional travel funds:
(1) Number of sessions.
(2) Categories, by number, of personnel attending each session.
(3) Estimated cost per session.
1945.36 -- 1945.44 (Reserved)
07 CFR 1945.45 Public information function.
A good public information program is a must in disaster areas. This
program should inform farmers and the general public when and where EM
loans are available. Also, the information will state the EM loan
objectives, eligibility requirements, and type of assistance available.
Public information functions will be performed according to Exhibit A of
FmHA instruction 2015-A (available in any FmHA office).
1945.46 -- 1945.50 (Reserved)
07 CFR 1945.45 Subpart B -- (Reserved)
07 CFR 1945.45 Subpart C -- Economic Emergency Loans
Source: 44 FR 75105, Dec. 19, 1979, unless otherwise noted.
07 CFR 1945.101 Introduction.
(a) Policy. This subpart contains regulations for making and
servicing Economic Emergency (EE) loans made after August 11, 1978, and
applies to borrowers, Farmers Home Administration (FmHA) personnel, and
other parties involved in making, servicing, or liquidating such loans.
It is the policy of FmHA to make loans to any otherwise qualified
applicant without regard to race, color, religion, sex, national origin,
marital status, age or physical/mental handicap providing the applicant
can execute a legal contract.
(b) Program administration. The County Supervisor is the local
contact person for processing and servicing activities.
07 CFR 1945.102 Program objectives.
The insured EE loan program objective is to make financial assistance
available during the period authorized by Title II of Pub. L. 95-334,
as amended, and as directed by the Final Order and Judgment in Kjeldahl
v. Block, Civil No. 82-2745 (D. D.C., October 5, 1983), (the authority
to make loans under this subpart begins December 22, 1983, and expires
September 30, 1984), in the form of loans insured or guaranteed by FmHA,
provided they are bona fide farmers and ranchers who are primarily and
directly engaged in agricultural production. This allows these farmers
and ranchers to continue their operations during the economic emergency
which has been caused by a lack of agricultural credit due to economic
stress such as a general tightening of agricultural credit or an
unfavorable relationship between production costs and prices received
for agricultural commodities. Supervisory assistance will be given
according to the provisions of Subpart B of Part 1924 of this chapter.
It is the policy of FmHA to make insured EE loans only when guaranteed
EE loans are not available through private and cooperative agricultural
lenders.
(48 FR 55105, Dec. 9, 1983)
1945.103 (Reserved)
07 CFR 1945.104 Definitions and abbreviations.
(a) Definitions.
(1) Act. Emergency Agricultural Credit Adjustment Act of 1978 (Title
II of Pub. L. 95-334, as amended by Pub. L. 96-220 and Pub. L. 97-98).
(2) Applicant. The person or entity carrying on the farming
operation and desiring EE loan assistance from FmHA.
(3) Approval official. A FmHA field offical who has been delegated
loan and grant approval authorities within applicable loan programs,
subject to the dollar limitations contained in tables available in any
FmHA Office (see Subpart A of Part 1901 of this chapter, Exhibit C).
(4) Aquaculture. The husbandry of aquatic organisms by an applicant
or borrower under a controlled or selected environment. Aquaculture
operations are considered to be farming operations. Aquatic organisms
may consist of any species of finfish, mollusk, crustacean (or other
invertebrate), amphibian, reptile, or aquatic plant. An aquaculture
operation is considered to be a farm only if it is conducted on grounds
which the applicant owns, leases, or has an exclusive right to use. An
exclusive right to use must be evidenced by a permit issued to the
applicant and the permit must specifically identify the waters available
to be used by the applicant only.
(5) Borrower. All parties liable for the loan or any part thereof.
(6) Consolidate. To combine and reschedule the rates and terms of
two or more EE loans made for operating purposes. This also may include
a new EE loan made for operating purposes.
(7) Cooperative. An entity which has farming as its purpose and
whose members have agreed to share the profits of the farming
enterprise. The entity must be recognized as a farm cooperative by the
laws of the State(s) where the entity will operate a farm(s).
(8) Corporation. A private domestic corporation recognized as a
corporation by the laws of the State(s) where the corporation will
operate a farm(s).
(9) Deferment. To postpone the payment of interest in part and/or
principal in whole or in part.
(10) Economic emergency. A condition resulting from: (i) A general
tightening of agricultural credit, or (ii) an unfavorable relationship
between production costs and prices received for agricultural
commodities, which has resulted in widespread need among farmers for
temporary credit.
(11) Family farm. A farm which: (i) Produces agricultural
commodities for sale in sufficient quantities so that it is recognized
in the community as a farm rather than a rural residence.
(ii) Provides enough agricultural income by itself, including rented
land, or together with any other dependable income to enable the
borrower to:
(A) Pay necessary family and operating expenses.
(B) Maintain essential chattel and real property.
(C) Pay debts.
(iii) Is managed by:
(A) The borrower when a loan is made to an individual.
(B) The member(s), stockholder(s) or partner(s) responsible for
operating the farm when a loan is made to a cooperative, corporation or
partnership.
(iv) Has a substantial amount of the labor requirements for the farm
and nonfarm enterprise provided by:
(A) The borrower and any family of the borrower for a loan made to an
individual.
(B) The member(s), stockholder(s) or partner(s) who are responsible
for operating a farm and the families of the member(s), stockholder(s)
or partner(s), for a loan made to a cooperative, corporation or
partnership.
(v) May require a reasonable amount of full-time hired labor and
seasonal labor during peakload periods.
(12) Farm. A tract or tracts of land, improvement, and other
appurtenances considered to be farm property which is used or will be
used in the production of crops or livestock. This includes aquaculture
operations which meet the requirements set forth in paragraph (a)(4) of
this section. It will also include a residence which, although
physically separate from the farm acreage, is ordinarily considered as
part of the farm in the local community.
(13) Farmer. An individual, cooperative, corporation or partnership
that is a farmer, rancher, or aquaculture operator.
(14) Farmers Home Administration. The United States of America,
acting through the Farmers Home Administration, an agency of the United
States Department of Agriculture. References to the National Office,
Finance Office, State Office, County Office, State Director, District
Director, County Supervisor, or other FmHA office or official should be
read as prefaced by ''FmHA.''
(15) Farming or farm enterprises. The business of producing crops,
livestock products, and aquatic organisms through the utilization and
management of land, water, labor, capital, and basic raw materials
including seed, feed, fertilizer, and fuel. Farming and farm
enterprises consist of a total farming or aquaculture operation, or a
portion thereof, which produces different types of products, including
crops, livestock, livestock products, and aquatic organisms.
(16) Hazard insurance. Includes coverage against losses due to fire,
windstorm, lightning, hail, explosion, business interruption, riot,
civil commotion, aircraft, vehicles, marine, smoke, builder's risk,
public liability, property damage, flood or mudslide, workmen's
compensation, or any similar insurance that is available and needed to
protect the security, or that is required by law.
(17) Majority interest. Any individual or a combination of
individuals owning more than a 50 percent interest in a cooperative,
corporation or partnership.
(18) Market value. The amount which a willing buyer would pay a
willing but not forced seller in a completely voluntary sale.
(19) Mortgage. Any form of security interest or lien upon any rights
or interest in real property of any kind. In Louisiana and Puerto Rico
the term ''mortgage'' also refers to any security interest in chattel
property.
(20) Partnership. An entity consisting of members who have agreed to
operate a farm. The entity must be recognized as a partnership by the
laws of the State(s) in which the entity will operate a farm and must be
authorized to own both real and personal property and to incur debts in
its own name.
(21) Principal member, stockholder or partner. Any member,
stockholder or partner owning or controlling a 10 percent interest in a
cooperative, corporation or partnership. If no member, stockholder or
partner owns or controls at least a 10 percent interest, all members,
stockholders or partners will be considered principal members, principal
stockholders, or principal partners.
(22) Reamortize. To rearrange the installments of an EE loan made
for real estate purposes within the remaining years of the original
repayment period, or, when the repayment period has been extended to the
maximum statutory repayment limit, within those years.
(23) Reschedule. To rewrite the rates and/or terms of EE loans made
for operating purposes.
(24) Security. Property of any kind subject to a real or personal
property lien. Any reference to collateral shall be considered a
reference to the term ''security.''
(i) Basic security. All real estate and fixtures and personal
property such as foundation herds, flocks, aquatic animal and plant
organisms, machinery, and equipment serving as security and crops when
crops are the only security.
(ii) Normal income security. All security planned to be marketed in
the regular course of business unless liquidation is approved. If
liquidation is approved, such security becomes basic security.
(iii) Additional security. All security not covered by paragraph
(a)(24) (i) or (ii) of this section.
(25) State or United States. The United States itself, each of the
several States, the Commonwealth of Puerto Rico, the Virgin Islands of
the United States, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
(b) Abbreviations. The following abbreviations are applicable:
(1) EL -- Emergency Livestock Loans
(2) EM -- Emergency Loans
(3) FMI -- Forms Manual Insert
(4) FO -- Farm Ownership Loans
(5) OGC -- Office of the General Counsel
(6) OL -- Operating Loans
(7) RH -- Rural Housing Loans
(8) RL -- Recreation Loans
(9) SW -- Soil and Water Loans
(10) USDA -- United States Department of Agriculture.
(44 FR 75105, Dec. 19, 1979, as amended at 45 FR 35783, May 27, 1980;
48 FR 55105, Dec. 9, 1983)
07 CFR 1945.105 Credit elsewhere.
(a) Test for credit for individuals and entities. The applicant must
be unable to obtain sufficient credit elsewhere to finance actual needs
at reasonable rates and terms, taking into consideration prevailing
private and cooperative rates and terms in the community in or near
which the applicant resides for loans for similar purposes and periods
of time. If the applicant has been getting credit away from the local
community where the farming operation is located, that source of credit
must also be considered. The applicant's equity in all assets,
including but not limited to real estate, chattels, stocks, bonds, and
Certificates of Deposit will be considered in determining ability to
obtain such credit from other sources. Also, the applicant must offer
to pledge all assets as security when requesting credit from other
lenders. Cooperatives, corporations, and partnerships and the principal
members, principal stockholders, and principal partners, both
individually and collectively, must be unable to obtain the required
funds with their own resources or with credit obtained from other
sources. Form FmHA 1940-38, ''Request for Lender's Verification of Loan
Application,'' when appropriate, must be filed in the County Office case
folders and any additional facts concerning the findings in all cases
must be documented and recorded in the running record.
(b) Test for credit certification requirements. The applicant shall
certify in writing on the application form and the County Supervisor
shall determine that adequate credit elsewhere is not available to
finance the applicant's actual needs.
(1) If the EE loan(s) requested is less than $300,000, the following
actions will be taken:
(i) When it appears from a review of the application that it would be
unduly burdensome to require the applicant to obtain written
declinations of credit from other lenders, the County Supervisor may
make an exception to this requirement, provided the County Supervisor
knows the other lenders' programs well enough to determine that no
possibility exists for the applicant to obtain the credit needed from
these lenders. This conclusion and the basis for it will be recorded in
the running record and further checks will not be necessary. However,
the applicant's normal lender(s) must be contacted in all cases and the
findings will be recorded in the running record.
(ii) If the County Supervisor questions whether the applicant is
unable to obtain the credit needed from other agricultural lenders in
the area, such lenders will be contacted. Form FmHA 1940-38 must be
completed by all lenders contacted and returned to the county office.
In lieu of using Form FmHA 1940-38, the lenders may submit a letter
stating whether they will extend the credit needed by the applicant. If
one or more of the lending sources contacted will provide the applicant
with sufficient credit to finance actual needs at reasonable rates and
terms taking into consideration prevailing private and cooperative rates
and terms in the community, the applicant will be advised that it is not
eligible for an EE loan. If the applicant cannot qualify for the needed
credit from the lenders contacted, but one or more of them have
indicated they would provide credit with an FmHA guarantee, the
applicant will be advised to file an application with that lender(s) so
that a guaranteed EE loan request can be processed by the lender for
consideration by FmHA. If the County Supervisor believes it necessary,
the action required in paragraph (b)(2) of this section can be taken.
(iii) When the County Supervisor receives letters or other written
evidence including Form FmHA 1940-38 from a lender(s) indicating that
the applicant is unable to obtain satisfactory credit, this will be
included in the loan docket. Such evidence will not preclude the County
Supervisor from contacting other farm lenders in the area and making an
independent determination of the applicant's ability to obtain credit
elsewhere.
(2) If the EE loan(s) request is $300,000 or more, the following
actions will be taken:
(i) The applicant will be required to apply at not less than three
conventional lending sources, including the Production Credit
Association or Federal Land Bank, as appropriate, in the local
community. However, when an applicant has a net worth of $1 million or
more but cannot obtain credit in the local community, the applicant will
be required to contact at least two other lending sources out of the
local area. One or more of the lenders contacted must be the
applicant's normal lender(s) even though the lender is not located in
the local community.
(ii) Form FmHA 1940-38 must be completed by all lending sources
contacted and returned to the County Office. If one or more of the
lending sources contacted will provide the applicant with sufficient
credit to finance actual needs at reasonable rates and terms taking into
consideration prevailing private and cooperative rates and terms in the
community, the applicant will be advised that it is not eligible for an
EE loan. If the applicant cannot qualify for the needed credit from the
lenders contacted, but one or more of them have indicated they would
provide the credit with an FmHA guarantee, the applicant will be advised
to file an application with that lender(s) so that a guaranteed EE loan
request can be processed by the lender for consideration by FmHA. Only
if the applicant is not able to obtain a loan -- either with or without
an FmHA guarantee -- from one or more of the lending sources contacted,
will the applicant be considered for an insured EE loan.
(iii) When the County Supervisor receives Forms FmHA 1940-38
indicating that the applicant is unable to obtain satisfactory credit,
the forms will be placed in the loan docket. However, such evidence
will not preclude the County Supervisor from contacting other farm
lenders in the area and making an independent determination of the
applicant's ability to obtain credit elsewhere.
(c) Use of nonfarm assets. The basic objective of EE loans is,
through financial assistance, to enable eligible farmers to maintain a
viable farming operation after they have sustained substantial economic
losses. Therefore, since the goal of EE loans is maintaining a sound
farm economy, applicants with large holdings in nonfarm assets not
essential to the successful operation of their farm will offer those
assets as security for loans requested from other lenders.
(1) If other lenders will not provide the needed credit even with
these assets offered as security for the loans, an EE loan may be
considered provided it is determined that:
(i) The applicant by selling all or a part of the nonfarm assets
could not meet the total financial needs of the farm without other
credit; or
(ii) The applicant by selling all or a part of the nonfarm assets
could not meet the total financial needs of the farm with credit from
other sources.
(2) When an EE loan will be made, after other lenders have declined
to provide credit, the County Supervisor may still require the applicant
to sell all or a part of such assets to meet a portion of the
applicant's needs in connection with processing an EE loan for the
difference between the applicant's actual needs and the amount realized
by the sale of the assets. If the applicant cannot sell the assets
before the loan is closed, the applicant will mortgage such assets to
FmHA and agree in writing, in a manner approved by OGC, to sell them
within a one year period and apply the proceeds to reduce the EE debt.
(45 FR 35783, May 27, 1980)
1945.106 -- 1945.110 (Reserved)
07 CFR 1945.111 Receiving and processing applications.
Applications will be received and processed in accordance with
Subpart A of Part 1910 of this chapter. Form FmHA 410-1, ''Application
for FmHA Services,'' will be used for this purpose. The application may
be processed for other loans when appropriate. An applicant conducting
farming operations as an individual, or as a cooperative, corporation,
or partnership in different counties or locations will be considered for
only one application and will file the application in the county in
which the farming operation is conducted unless determined otherwise by
the State Director. In cases where the operation is located in more
than one State, the State Directors involved will determine which State
will process the application and service the loan(s).
(a) Information required from entities. If the applicant is a
cooperative, corporation, or partnership the following information will
be obtained and included in the loan docket:
(1) A complete list of members, stockholders, or partners showing the
address, citizenship, principal occupation, and the number of shares and
percentage of ownership or of stock held in the cooperative or
corporation by each or the percentage of interest held in the
partnership by each.
(2) A current personal financial statement (not over 60 days old at
the time of filing the application) from each of the principal members
of a cooperative, principal partners of a partnership, or principal
stockholders of a corporation. Any other member, partner or stockholder
whose financial statement, in the judgment of the loan approval
official, would be pertinent to a consideration of the financial
strength of the cooperative, corporation or partnership will also be
required to provide a personal financial statement.
(3) A current financial statement (not over 90 days old at the time
of filing the application) from the cooperative, corporation, or
partnership itself.
(4) A copy of the cooperative's or corporation's charter, or the
partnership agreement, any articles of incorporation and bylaws, any
certificate or evidence of current registration (good standing) and a
resolution(s) adopted by the Board of Directors or members or
stockholders authorizing specified officers of the cooperative or
corporation to apply for and obtain the desired loan and execute
required debt, security, and other instruments and agreements.
(5) A copy of any written lease, contract, or agreement entered into
by the applicant which may be pertinent to a consideration of its
application. When a written lease is not obtainable, a statement
setting forth the terms and conditions of the agreement will be included
in the loan docket.
(b) Federal Land Bank Association stock. Federal Land Bank (FLB)
Association stock is required to be purchased by FLB Association
borrowers and has value. It must be assigned to FmHA when it is relied
upon as security for the loan. The loan approval official will record
the determination of the market value of the security in such a case in
the comments section of Form FmHA 422-1, ''Appraisal Report -- Farm
Tract.''
07 CFR 1945.112 Eligibility.
To be eligible for an EE loan, an applicant must:
(a) Citizen. If an individual, be a citizen of the United States
(see 1945.104(a)(25) of this subpart for the definition of ''United
States''). If a cooperative, corporation, or partnership, those
members, stockholders, or partners who have a majority interest in the
entity applying for the loan must be citizens.
(b) Bona fide farmer. Be a bona fide farmer (owner-operator or
tenant-operator), doing business in the United States either as an
individual, cooperative, corporation, or partnership, that is recognized
in the community as one primarily and directly engaged in agricultural
production. In the case of an individual loan applicant, the term
''primarily and directly engaged in agricultural production'' means that
the applicant(s) derives more than 50 percent of the gross income from
the applicant's own agricultural production or either the applicant or
family members of the applicant devote more than 50 percent of their
time to such agricultural production. In the case of a cooperative,
corporation, or partnership loan applicant, the term ''primarily and
directly engaged in agricultural production'' means that the
cooperative, corporation, or partnership derives more than 50 percent of
its gross income from agricultural production and the member(s),
shareholder(s), or partner(s) owning or controlling a majority interest
in such cooperative, corporation or partnership either derive more than
50 percent of their gross income from their own or the cooperative's,
corporation's, or partnership's agricultural production, or devote more
than 50 percent of their time to such agricultural production.
(1) A bona fide farmer must be actually engaged in farming operations
to be financed by an EE loan, and must have been engaged in farming
during the 12-month period, or one full production and marketing cycle,
whichever is the lesser, immediately preceding the date of the
application. If the applicant is an individual, the applicant must
manage such farming operation. If the applicant is a cooperative,
corporation, or partnership, it must be managed by one or more of the
members, stockholders, or partners. One who does not devote full time
to the farming enterprise may be considered the manager provided the
person visits the farm at sufficiently frequent intervals to exercise
control over the farming enterprise, gives directions as to how it
should be run, and sees that the enterprise is being carried on
properly. Any enterprise that involves an outside full-time manager or
management service does not qualify regardless of the number of visits
made. In addition, as between two applications on file at the same
time, FmHA will give preference to an applicant who owns and operates
not larger than a family farm as defined in 1945.104(a)(11). However,
for purposes of an EE loan, this does not exclude an applicant who does
not own or operate a family farm.
(2) An estate or trust; a corporation owned primarily (more than
50%) by an estate, trust, other corporations, or other partnerships; an
individual partnership composed primarily (more than 50%) of an estate,
trust, corporation or other partnership is not considered to be a bona
fide farmer for EE loan purposes.
(3) An individual engaged in a joint farming operation and/or owning
an undivided interest in the property of such an operation is not
considered to be an eligible farmer for EE loan purposes. However, if
the individuals engaged in the joint farming operation decide on their
own to reorganize their operation to form a cooperative, corporation or
partnership, an application from the entity for an EE loan may then be
accepted and considered by FmHA in accordance with this subpart.
(4) For the purpose of determining EE loan eligibility, farmers,
ranchers, or aquaculture operators who operate through contract or
business arrangements with an integrated processor(s) are considered
''bona fide'' farm, ranch, or aquaculture operators provided they meet
established eligibility criteria and the unit being operated is
recognized in the community as a farm, ranch, or aquaculture operation.
(5) Integrated livestock, poultry, and fish processors who operate
primarily and directly as commercial businesses through contracts or
business arrangements with farmers, ranchers, and aquaculture operators
are not considered to be bona fide farmers, ranchers, or aquaculture
operators and, therefore, are not eligible for EE loans.
(c) Change in the form of an applicant. A change in the form of an
applicant from an individual, partnership, cooperative, or corporation
to another form of legal entity will not disqualify the new entity if it
is conducting the same operation as was conducted during the 12-month
period, or during one full production and marketing cycle, whichever is
the lesser, immediately preceding the date of the application, and is
primarily owned by substantially the same people that owned the
operation during the 12-month period, or during one full production and
marketing cycle, whichever is the lesser, immediately preceding the date
of the application.
(1) When one or more individuals who were engaged in a farming
operation during the 12-month period, or during one full production and
marketing cycle, whichever is the lesser, immediately preceding the
application later forms a partnership, cooperative, or corporation, the
operation's application may still receive consideration provided such
individual(s) owns at least 50 percent of the new partnership assets or
cooperative or corporation's voting stock and continues to manage or
control the farming operation.
(2) When a partnership that was engaged in a farming operation during
the 12-month period, or during one full production and marketing cycle,
whichever is the lesser, immediately preceding the application later
dissolves and the operation is continued by an individual or a newly
formed partnership, cooperative, or corporation, an application from the
individual or the new entity will receive consideration provided one or
more of the partners who managed the farming operation for the prior
partnership will now manage the operation for the applicant, and
provided:
(i) The assets of the prior partnership are now owned by an
individual applicant who, as a partner in the prior partnership, had
owned at least 50 percent of the partnership assets; or
(ii) The assets of the prior partnership are now owned by a new
partnership applicant and the partners who had owned at least 50 percent
of the assets of the prior partnership are now partners owning at least
50 percent of the assets of the new partnership applicant; or
(iii) The assets of the prior partnership are now owned by a new
cooperative or corporation applicant, and the partners of the prior
partnership who owned at least 50 percent of those assets now own at
least 50 percent of the voting stock of the new cooperative or
corporation applicant.
(3) When a cooperative that was engaged in a farming operation during
the 12-month period, or during one full production and marketing cycle,
whichever is the lesser, immediately preceding the application dissolves
but the farming operation is continued by an individual or a newly
formed cooperative, corporation, or partnership, the application from
the individual or new entity will receive consideration provided one or
more of the members who managed the farming operation for the prior
cooperative must now manage the operation for the new applicant, and
provided:
(i) The assets of the dissolved cooperative are now owned by an
individual who had owned at least 50 percent of the voting stock of the
former cooperative, or
(ii) The assets of the former cooperative are now owned by a new
partnership applicant and the members who had owned at least 50 percent
of that cooperative are now partners owning at least 50 percent of the
assets of the new partnership applicant, or
(iii) The assets of the former cooperative are now owned by a new
cooperative or corporation applicant and the members or stockholders who
had owned at least 50 percent of the voting stock of the former
cooperative are now members or stockholders owning at least 50 percent
of the voting stock of the new cooperative or corporation applicant.
(4) When a corporation that was engaged in a farming operation during
the 12-month period, or during one full production and marketing cycle,
whichever is the lesser, immediately preceding the application dissolves
but the farming operation is continued by an individual or newly formed
cooperative, corporation, or partnership, the application from the
individual or new entity will receive consideration provided one or more
of the stockholders who managed the farming operation for the prior
corporation must now manage the operation for the new applicant, and
provided:
(i) The assets of the dissolved corporation are now owned by an
individual who had owned at least 50 percent of the voting stock of the
former corporation, or
(ii) The assets of the former corporation are now owned by a new
partnership applicant and the stockholders who had owned at least 50
percent of that corporation are now partners owning at least 50 percent
of the assets of the new partnership applicant, or
(iii) The assets of the former corporation are now owned by a new
cooperative or corporation applicant and the members or stockholders who
had owned at least 50 percent of the voting stock of the former
corporation are now members or stockholders owning at least 50 percent
of the voting stock of the new cooperative or corporation applicant.
(d) Legal capacity. Possess the legal capacity to incur the
obligations of the loan.
(e) Character, industry, training, or experience and ability.
Possess the character (emphasizing repayment ability and reliability),
industry, training and/or experience and ability necessary to carry out
the proposed operations and honestly endeavor to carry out the
undertakings and obligations in connection with the loan.
(f) Credit elsewhere. Be unable to obtain credit elsewhere as
outlined in 1945.105 of this subpart.
(g) Need. Need such credit in order to maintain a viable
agricultural production enterprise.
(h) Registration or authorization. If a cooperative, corporation, or
partnership, be authorized to carry on a farming, ranching, or
aquaculture operation in the State(s) in which the farm is located.
(44 FR 75105, Dec. 19, 1979, as amended at 45 FR 35784, May 27, 1980)
07 CFR 1945.113 County Committee review.
The County Committee will review the initial application and any
subsequent applications to determine whether the applicant meets EE loan
eligibility requirements contained in 1945.112 of this subpart.
(a) Favorable action. If the County Committee finds the applicant
eligible, under 1945.112 of this subpart, the members will sign Form
FmHA 440-2, ''County Committee Certification or Recommendation.'' This
form will be retained in the County Office file. A new Form FmHA 440-2
will be prepared for any loans(s) resulting from a subsequent
application.
(b) Unfavorable action. If the County Committee finds that the
applicant does not meet all of the requirements set forth in 1945.12 of
this subpart, the members will complete Form FmHA 440-2 and the County
Supervisor will inform the applicant in writing of the reasons for the
Committee's unfavorable action as set forth in Subpart A of Part 1910 of
this chapter.
07 CFR 1945.114 Planning, development, and appraisals.
See Subpart A of Part 1809 of this chapter (FmHA Instruction 422.1)
for the appropriate procedures dealing with appraisals. (See
1945.120(b)(5) of this subpart for use of abbreviated appraisals.) See
Subpart A of Part 1924 of this chapter for the appropriate procedures
dealing with planning and development.
(48 FR 55105, Dec. 9, 1983)
1945.115 (Reserved)
07 CFR 1945.116 Loan purposes.
EE loans may be made for purposes which are essential to carrying on
farming operations. These purposes are:
(a) Operating purposes. (1) Purchase of essential livestock,
poultry, fur bearing and other farm animals, aquatic organisms, bees,
farm equipment, and paying costs incident to reorganizing the farming
system for a viable operation.
(2) Payment of secured or unsecured annual family living and farm
production debts (not including FmHA insured and guranteed loans) when
it is determined that the lender(s) is demanding payment in full and
will not continue with the applicant or carry a portion of the
applicant's debt(s).
(i) Preference will be given to paying those debts that will be most
helpful to the applicant in carrying on essential farm and home
operations.
(ii) Ordinarily, in the case of old unsecured debts or inadequately
secured debts, the applicant will be requested to contact the
applicant's creditor(s) and attempt to obtain a substantial reduction of
such debts before the payment of such debts with EE loan funds.
(iii) When annual credit advances were made for family living and/or
farm production expenses, but also included funds for capital
expenditures such as equipment, foundation livestock, and real estate
purchases or improvements, only that portion advanced for annual family
living and farm production expenses may be fully paid with EE loan
funds. However, one year's interest and an amount not to exceed 20
percent of the appraised market value for the essential farm and home
equipment and livestock under prior lien to the creditor(s), or 20
percent of the balance owed to the creditor(s) (whichever is the lesser)
may be paid with EE loan funds.
(3) Payment of existing delinquent installment(s) plus the next
installment owed on farm and home operating debts which were amortized
over a period of more than one year (not including FmHA insured and
guaranteed loans) when it is determined that the lender(s) is demanding
payment of the delinquent installment(s) and will not continue with the
applicant without receiving payment of such installment(s). When a
nondelinquent installment is involved, payment of a nondelinquent
installment may be made only if the applicant has insufficient cash flow
to meet the existing payment terms and the indebtedness will not be paid
in full with such payment. When the ''nondelinquent'' installment is a
balloon payment, such installment will not be paid in full. In such
cases, only an amount equal to a regular installment will be paid and
the lender will be required to extend the remaining portion of the
balloon payment for a reasonable period of time.
(4) Purchase of a milk base either with or without cows when such
action is necessary to assure the borrower a satisfactory market for the
dairy products.
(5) Purchase of grazing license or permit rights of private parties
which can be validly sold and transferred.
(6) Augmenting and improving existing water supplies.
(7) Payment of fuel, seed, fertilizer, insecticide, farm supplies,
labor, and other annual operating expenses that are essential to
continuation of the farming operations, including the operation of any
additional acreage which does not substantially expand the farming
operation(s).
(8) Payment of customary cash rent or cash charges for the use of
essential buildings, pasture, crops, hay, land, and grazing permits or
bills for such purposes for the operating or crop year being financed,
subject to the following:
(i) The applicant is obligated under a written lease or other
agreement to pay such rent or charges in advance of the time income will
be available from the operations to make such payment. For grazing fees
an invoice showing the number of livestock to be grazed, the grazing
period, the cost per head and the total cost may be used in lieu of a
written lease. However, when a relatively small amount of funds are
involved, an invoice will not be required if the applicant's explanation
of a satisfactory grazing agreement is recorded in the loan docket.
(ii) Arrangements cannot be made for the rent or charges to become
due when income will be available from the operation to make such
payment.
(iii) The terms of the rental agreement provide the applicant with
satisfactory tenure for the crop year being financed.
(iv) Not more than one year's cash rent or cash charges will be paid
with loan funds in any one lease year, except that if a loan is approved
near the end of the current lease year, funds for payment of such rent
or charges for the succeeding lease year may be included in the loan.
(9) Payment of delinquent real and personal property taxes and other
taxes such as income and social security taxes due or about to become
due, and water or drainage charges or assessments.
(10) Payment of reasonable expenses incidental to obtaining,
planning, making and closing the loan such as fees for legal,
architectural, and technical services which are required to be paid by
the borrower and which cannot be paid from other funds. Loan funds also
may be used to pay a reasonable fee(s) for recordkeeping and related
farm management service(s), if necessary, to meet the objectives of the
loan plus the borrower's share of Social Security taxes for labor hired
by the borrower in connection with making the planned building or land
improvements. However, loan funds are not to be used to pay fees
charged applicants by agricultural management consultants and other
professionals for preparation of EE loan dockets, including farm and
home plans and other FmHA forms used in processing such loans.
(11) Payment of premiums for insurance on real and personal property
including premiums for public liability and property damage insurance on
farm and other essential equipment, including farm trucks. When a loan
is secured by chattels and the loss of such chattels would jeopardize
the interest of the Government, FmHA may require the borrower to insure
the chattels against hazards customarily covered by insurance in the
area.
(12) Meeting family subsistence needs, including premiums on
reasonable amount of health and life insurance, and expenses for medical
care or for paying bills incurred for any of these purposes during the
crop year being financed.
(13) Purchase stock in a cooperative lending or marketing
organization that is necessary to maintain a viable farming operation.
(14) Up to $25,000 in a fiscal year for real estate improvements or
repairs. The following determinations must first be made:
(i) A loan will not be needed year after year for this purpose.
(ii) The applicant owns the land or has a lease including a
compensating agreement adequate to reimburse the tenant for any
unexhausted value of the improvement upon termination of the lease.
(iii) It is clearly necessary for the success of the operation.
(15) When it is a customary practice among farmers in the locality,
payment of ''hedging'' costs including brokerage fees, margin
requirements and margin calls in connection with a futures contract for
nonspeculative purposes for a specific commodity being produced.
(b) Real estate purposes. (1) Changing or reorganizing the farming
operation so it will be an economically viable operating unit. Such
purpose includes the contruction, improvement, alteration, repair,
relocation, purchase or moving of essential either service buildings,
facilities, and structures on the applicant's real estate necessary for
reorganization of the operation, including the purchase and/or
installation or augmentation and improvement of essential farmstead
water and sewage systems, and other equipment or facilities necessary to
the operation (including alcohol fuel and methane gas facilities, and
equipment which utilizes wind or solar energy).
(2) Providing land and water development, acquiring water supplies,
rights, and use, and providing conservation essential to the operation.
This includes but is not limited to fencing, land clearing, forestry
practices, establishment and improvement of permanent hay or pasture,
drainage and irrigation facilities, basic application of lime and
fertilizer, and development of fish ponds and lakes.
(3) Payment of existing delinquent installment(s) plus the next
installment owed on farm real estate or other farm and home debts (not
including FmHA insured and guaranteed loans) when it is determined that
the lender(s) is demanding payment of the delinquent installment(s) and
will not continue with the applicant without receiving payment of such
installment(s). When a nondelinquent installment is involved, the
following conditions must be met:
(i) Payment of a nondelinquent installment may be made only if the
applicant has insufficient cash flow to meet the existing payment terms
and the indebtedness will not be paid in full with such payment. When
the ''non-delinquent'' installment is a balloon payment, such
installment will not be paid in full. In such cases, only an amount
equal to a regular installment will be paid and the lender will be
required to extend the remaining portion of the balloon payment for a
reasonable period of time.
(ii) The limitation found in 1945.117(a)(5) must be complied with.
(iii) Preference will be given to paying those installments that will
be most helpful to the applicant in carrying on essential farm and home
operations.
(iv) Ordinarily, in the case of old unsecured debts or inadequately
secured debts, the applicant will be requested to contact the
applicant's creditor(s) and attempt to obtain a substantial reduction of
such debts before payment of installments.
(4) Payment of reasonable expenses incidental to obtaining, planning,
making and closing the loan such as fees for legal, architectural, and
technical services which are required to be paid by the borrower and
which cannot be paid from other funds. Loan funds also may be used to
pay the borrower's share of Social Security taxes for labor hired by the
borrower's share of Social Security taxes for labor hired by the
borrower in connection with making the planned building or land
improvements. However, loan funds are not to be used to pay fees
charged applicants by agricultural management consultants and other
professionals for preparation of EE loan dockets including farm and home
plans and other FmHA forms used in processing such loans.
(5) Payment of the first-year premium for required insurance on
buildings on the property which are to serve as security for the loan.
Buildings will be insured in accordance with Subpart A of Part 1806 of
this chapter (FmHA Instruction 426.1), except when the appraisal report
shows that the land alone will adequately secure the loan. However, the
applicant will be encouraged to take property insurance on essential
buildings to protect the applicant's interest. Borrowers eligible for
insurance under the National Flood Insurance Act of 1968 will be advised
of its availability in accordance with Subpart B of Part 1806 of this
chapter (FmHA Instruction 426.2).
(44 FR 75105, Dec. 19, 1979, as amended at 45 FR 35785, May 27, 1980;
46 FR 2590, Jan. 12, 1981)
07 CFR 1945.117 Loan limitations and special provisions.
(a) Limitations on use of loan funds. (1) Loan funds will not be
used to purchase land.
(2) Loan funds will not be used to lease additional land which would
increase the number of acres of the operation above the highest level
being farmed during the year of application or the year preceding
application, whichever is greater.
(3) Individual members of a cooperative, partnership, or stockholders
of a corporation, will not receive individual loans to finance their
interest in the cooperative, corporation, or partnership farming
operation.
(4) Loan funds will not be used to buy, build or repair a borrower's
personal dwelling(s).
(5) Installments owed on farm or home real estate debts will not be
paid unless such real estate was purchased by the applicant at least one
year before the date of the EE loan application. When a farm real
estate Purchase Contract(s) is involved, the following conditions must
be met and documented in the case file by the County Supervisor or loan
approval official:
(i) The farm real estate Purchase Contract(s) must have been in
effect for at least 12 months before the date of the EE loan
application.
(ii) The terms of the farm real estate Purchase Contract(s) must be
reasonable and in keeping with terms normally provided by sellers in the
area. EE loan funds will not be used to pay an installment(s) owed on
such a Purchase Contract(s) which contains terms too tight for the
applicant/borrower to meet under normal conditions.
(iii) Such contract(s) must meet the real estate security
requirements prescribed in 1945.120 (b)(7) of this subpart. In
addition, it must be determined that such Purchase Contract(s) provides
the applicant/borrower with comparable rights and benefits afforded by
regular deeds and real estate security instruments.
(b) Total loans to applicants. The total principal balance
outstanding at any time on an EE loan(s) shall not exceed $400,000.
(c) Applicants involved in more than one operation. Loans to
applicants involved in more than one operation will be considered as
follows:
(1) If an applicant who, in addition to the applicant's own farm
operation, owns or controls 50 percent or more of another farm
operations(s), and the applicant is actively engaged in both operations,
both the applicant and the other farm operation(s) may be considered for
separate loans provided the combined total does not exceed the $400,000
limitation.
(2) If an applicant who, in addition to the applicant's own farm
operation, owns or controls less than 50 percent of another farm
operations(s), is actively engaged in separate farm operation(s), the
applicant and the other farm operation(s) will be considered as separate
entities for application of the $400,000 limitation.
(3) If the first applicant described in paragraphs (c) (1) and (2) of
this section is deemed to be ineligible, such determination shall not
preclude the other operation(s) in which the applicant holds an interest
from being considered for an EE loan(s).
(d) Relationship with other FmHA insured or guaranteed loans. (1) If
an applicant qualifies for an EM loan in an authorized area, the
applicants credit needs will first be considered under EM loan
authorities.
(2) Applicants applying for FmHA assistance or borrowers already
indebted to FmHA and/or FmHA guaranteed lender(s) for FO, OL, RL, or SW,
loan(s) may be considered for EE loan(s) provided the total outstanding
principal indebtedness to FmHA and/or the lender(s) does not exceed
$650,000. Applicants applying for assistance, who are eligible for FO,
OL, RL, or SW loans will have their credit needs considered as follows:
(i) If at all possible their total credit needs should be met with an
FO, OL, RL, or SW loan;
(ii) If their total credit needs cannot be met with an FO, OL, RL, or
SW loan, they may be made an EE loan to meet their total needs;
(iii) If their total credit needs are greater than can be met with an
EE loan, an EE loan can be made simultaneously with an FO, OL, RL, or SW
loan to meet the applicant's needs; and
(iv) If FO, OL, RL, or SW loan funds are not available in hardship
cases, an EE loan can be made to meet the applicant's immediate credit
needs.
(3) The combined total of EM and EL indebtedness will not be
considered in determining the $400,000 EE loan limitation.
(e) Prohibition on guaranteeing repayment of advances from other
credit sources. FmHA employees will not guarantee repayment of advances
from other credit sources, either personally or on behalf of applicants,
borrowers, or FmHA.
(44 FR 75105, Dec. 19, 1979, as amended at 46 FR 2590, Jan. 12, 1981;
48 FR 55105, Dec. 9, 1983)
07 CFR 1945.118 Loan rates and terms.
(a) Interest rates. See Part 1810 of this chapter (FmHA Instruction
440.1, Exhibit B, a copy of which is available at any FmHA office), for
the applicable interest rate.
(b) Terms of loan repayment. Loans will be scheduled for repayment
at such time and periods as the FmHA approval official may determine,
consistent with the purpose of and need for the loan, and in accordance
with the useful life of the security and the reasonable repayment
ability of the applicant as reflected in the completed Form FmHA 431-2,
''Farm and Home Plan.'' However, there must be at least an annual
installment unless a deferment of principal and/or interest is
authorized in accordance with 1945.119 (c) and (e) of this subpart.
(1) Loan terms for items financed under 1945.116(a) (Operating
purposes) of this subpart will be as follows:
(i) Loans will be for a period not to exceed 7 years. Loans may be
scheduled for a longer repayment period if the FmHA approval official
determines that the needs of the applicant justify a longer repayment
period. Such period may be approved as warranted but cannot exceed 20
years. Generally, real estate will be needed as security when the
longer repayment period is authorized. This longer repayment period
will only be used when the applicant would be unable to repay the loan
in a shorter period taking into consideration rescheduling
possibilities. The reasons the longer period is given must be
documented in the county office case file.
(ii) When conditions warrant, installments may vary in amounts.
However, the final installment will not be larger than the amount which
can then be financed with other agricultural lenders or be repaid within
a rescheduled period of not to exceed 7 years. The applicant must be
advised before the loan is closed that FmHA will review each case at the
end of the loan term to determine if such rescheduling is warranted.
(iii) Advances for annual recurring operating expenses or for paying
bills incurred for such purposes for the crop year being financed will
be scheduled for payment when the principal income from the year's
operations normally would be received. However, the initial loan for
annual recurring operating purposes may be scheduled for repayment for a
period up to 7 years, if additional security other than crops can be
obtained.
(2) Loans for real estate and items financed under 1945.116(b) (real
estate purposes) will normally be scheduled for repayment in not more
than 30 years. Loans may be scheduled for a longer repayment period if
the FmHA approval official determines that the needs of the applicant
justify a longer repayment period. Such period may be approved as
warranted but cannot exceed 40 years. The longer repayment period will
only be used when the applicant would be unable to repay the loan in a
shorter period. The reasons the longer period is given must be
documented in the county office case file.
(44 FR 75105, Dec. 19, 1979, as amended at 45 FR 35786, May 27, 1980)
07 CFR 1945.119 Consolidation, rescheduling, reamortization and
deferral.
(a) General requirements. When the loan approval official determines
that consolidation, rescheduling, reamortization, or deferral will
assist in the orderly collection of the EE loan and any existing EE
loans, the loan approval official may take such action in accordance
with Subpart S of Part 1951 of this chapter.
(b) Approval authority. Loan approval officials are hereby
authorized to consolidate, reschedule, reamortize, or defer loans
subject to their approval authority in Subpart A of Part 1901 of this
chapter.
(44 FR 75105, Dec. 19, 1979, as amended at 48 FR 55105, Dec. 9, 1983;
49 FR 16985, Apr. 23, 1984; 50 FR 11499, Mar. 22, 1985; 53 FR 35716,
Sept. 14, 1988)
07 CFR 1945.120 Collateral requirements.
(a) Collateral. (1) The County Supervisor is responsible for seeing
that proper collateral is pledged, maintained, and is in existence and
of record to protect the interest of the Government. The applicant, or
any other individual or entity pledging real estate collateral for the
loans must have a mortgageable interest or marketable title to the
collateral pledged as security for the loan, and FmHA must ascertain
that no suits are pending or threatened that would adversely affect the
collateral of the borrower when the security instruments are filed.
(2) Except for the modifications contained in paragraph (c) of this
section, collateral must be of such a nature that repayment of the loan
is reasonably assured considering the integrity and ability of the
applicant's management, soundness of the operation, and the applicant's
prospective earnings. Collateral may include, but is not limited to the
following: Livestock, livestock products, crops, land, buildings,
machinery, equipment, furniture, fixtures, inventory, accounts
receivable, cash or special cash collateral accounts, personal and
corporate guarantees, marketable securities, and cash surrender value of
life insurance. Collateral may also include assignments of leases of
leasehold interest, revenues, patents, and copyrights. In unusual
cases, the loan approval official may require a co-signer or a pledge of
security. Generally, a pledge of security in lieu of a co-signer is
preferable.
(3) A lien will not be taken on property that cannot be taken subject
to a valid lien, nor will a lien be taken on subsistence livestock,
household goods, and small tools and small equipment such as handtools,
power lawnmowers and the items of like type not needed for security
purposes. A lien on feed crops does not have to be taken if the crops
produced by the borrower are used to feed livestock except when such
livestock is being fed for market and the loan is otherwise well
secured.
(4) When FmHA and a guaranteed lender are involved in separate EE
loans to the same borrower, separate collateral must be clearly
identified for both the FmHA and the lender's loans.
(b) Additional requirements. (1) If the present market value of the
collateral is not at least equal to the amount of the loan, the
applicant's repayment ability may be considered by the loan approval
official in determining whether the loan should still be made. When the
applicant's repayment ability is so considered, the following conditions
must also be met:
(i) The applicant's typical year operating plans indicate ability to
pay the loan in full within the proposed repayment period (which may
provide for a deferral if necessary).
(ii) The applicant will give a lien on all available collateral.
(iii) Life insurance may be required for the individual borrower or
for the principals and key employees of an entity borrower and will be
assigned or pledged to FmHA. This life insurance may be decreasing term
insurance. A schedule of life insurance available as security for the
loan will be included as part of the application.
(2) Operating loans for annual recurring expenses made under
1945.116(a)(7) of this subpart will be secured by a first lien on the
crop or livestock, or both, being financed with EE loan funds plus
enough other collateral including personal property, real estate, and
crop insurance, to assure that the Government's financial interest will
be protected. When the applicant can provide no collateral other than a
first lien on crop and/or livestock production, or both, the amount that
may be loaned for actual recurring expenses will be limited to 75
percent of the planned gross farm income as shown on Form FmHA 431-2, or
another acceptable plan of operation based on normal production and
prices authorized by the State Director for developing annual farm plans
within the State. When a borrower needs a supplemental EE loan for
annual recurring expenses to complete the year's farming operation and
the loan is made to protect the Government's financial interest, an
exception to the 75 percent gross income requirement may be made by the
State Director.
(3) Loans made under 1945.116 (a) (Operating purposes) of this
subpart will be secured by a lien on sufficient equity in livestock,
crop, equipment and machinery, (including essential truck and
automobiles) and, if necessary, other personal property to protect the
Government's interest. A lien on part or all of the real estate owned
by the applicant may be taken as additional security if the lien is
needed to protect the interest of the Government. When the applicant
can provide no collateral other than a first lien on crops and/or
livestock production, or both, the policy outlined in paragraph (b)(2)
of this section will apply. If the applicant has enough equity in real
estate to secure the entire amount of the loan, no additional security
need be taken. However, a second crop lien may be taken when deemed
necessary to assure repayment of the loan.
(4) Loans under 1945.116(b) (Real estate purposes) of this subpart
will be secured by a lien on real estate. However, if the applicant
does not have sufficient equity in the real estate, a lien also will be
taken on personal property, plus, if necessary, a second lien on the
crops. An EE loan made to a tenant with a long-term lease may be
secured by a lien on a transferable leasehold.
(5) Loans may be approved with abbreviated appraisals (also see
1945.114 of this subpart) of the property being taken as security for
the loan provided:
(i) The loan approval official determines that the applicant's equity
in the security will adequately secure the EE loan(s).
(ii) When abbreviated appraisals are prepared:
(A) For real estate, the following portions of Form FmHA 422-1 will
be completed: The heading of the report; Item A of Part 1; Part 2;
Part 3; Part 6; Part 7; and Part 8. The report will be signed and
dated by an FmHA authorized appraiser.
(B) For chattel property, Form FmHA 440-21, ''Appraisal of Chattel
Property,'' will list and identify and show the value of each chattel
item, and items A through E will be completed.
(6) When an EE loan is to be secured by a lien on real estate or a
combination of real estate and chattels, the total security will be
considered ''basic security.'' However, notwithstanding the definition
in 1945.104(a)(24)(i) of this subpart, when chattels are primarily
relied upon as security and real estate is taken only as additional
security to better protect the Government's interest and when the amount
of the loan does not exceed the value of the primary chattel security by
more than $10,000, the additional real estate security will not be
considered as basic security. For all loans over $25,000 when real
estate is taken as basic security, title clearance is required. For
loans of $25,000 or less, and for loans for which real estate is taken
as additional security, only a certification of ownership and
verification of equity in real estate is required. Certificiation of
ownership may be accepted in the form of a notarized affidavit from the
applicant stating who is the owner of record of the real estate in
question and acknowledging all known debts, with balances owed, against
the real estate. Whenever the County Supervisor is uncertain of the
ownership of or debts against the real estate security, and in all cases
where loans are made to cooperatives, corporations or partnerships,
title search will be required.
(7) If the real estate offered as security is held under a purchase
contract, the following conditions will prevail:
(i) The applicant must be able to provide mortgageable interest in
the real estate concerned.
(ii) The applicant and the purchase contract holder must agree in
writing that all insurance claim settlements received for real estate
losses will be used in their entirety to replace or repair any damaged
real estate improvements which are essential to the farming operation,
used for other essential real estate improvements or paid on the EE loan
or any prior real estate indebtedness including the purchase contract.
The applicant will renegotiate with the purchase contract holder to
arrive at a new contract if there are any provisions objectionable to
FmHA in the existing contract.
(iii) If a satisfactory contract of sale cannot be renegotiated or
the purchase contract holder refuses to enter into the agreement
described in paragraph (b)(7)(ii) of this section, the applicant will
make every effort to refinance the existing purchase contract.
(iv) If the conditions provided for in paragraphs (b)(7) (i), (ii)
and (iii) of this section can be met and an EE loan is approved, it can
be closed provided the FmHA escrow agent or designated attorney
determines that:
(A) The purchase contract is not subject to summary concellation on
default and does not contain other provisions which might jeopardize the
Government's security position or the borrower's ability to repay the
loan.
(B) The contract holder must agree in writing to give the FmHA notice
of any breach by the purchaser, and must further agree to give FmHA the
option to rectify the conditions which amount to a breach within 30
days. The 30 days begin to run on the day FmHA receives written notice
of the breach.
(8) If any of the prior liens against real estate offered as security
contain future advance provisions, or other provisions which might
jeopardize the security position of the Government or the applicant's
ability to meet the obligations under these prior liens and to pay the
EE loan, the prior lienholders involved must agree in writing, before
the loan is closed, to modify, waive, or subordinate such objectionable
provisions to the interest of the Government.
(9) When a junior lien on real estate is to be taken as security for
the loan in States where a prior lienholder may foreclose the security
instrument under power of sale or otherwise and extinguish junior liens
or private parties without giving junior lienholders actual notice, the
prior lienholder must agree in writing to give FmHA advance notice of
foreclosure or assignment of the mortgage.
(10) If essential insurable buildings are located on the property, or
if new buildings are to be erected or major improvements are to be made
to existing buildings, the applicant will provide adequate property
insurance coverage at the time of the loan closing or as of the date
materials are delivered to the property, whichever is appropriate.
However, when the real estate appraisal report shows that the present
market value of the land, after deducting the value of buildings shown
on the report, exceeds the amount of the debt (including the EE loan)
and the owner has equity equal to or exceeding the amount of the debt
(including the EE loan), real property insurance will not be required.
However, the applicant will be encouraged to obtain such insurance if
the applicant does not already have it to protect the applicant's
interest. If insurance claims for loss or damage to buildings to be
replaced or repaired with loan funds are outstanding at the time the
loan is approved, the applicant will be required to agree in writing
that when settlement is made the proceeds of such claims will be used
for replacement or repair of buildings, application on debts secured by
prior liens, or application on the EE loan.
(11) Loan amounts borrowed for repair or replacement of personal
possessions and home equipment or furnishings will be secured by a
lien(s) on crops, aquatic organisms, livestock, farm machinery,
essential trucks or automobiles, and/or farm real estate.
(12) Crop insurance is not a loan requirement. However, loan
approval officials should encourage borrowers to obtain and maintain
Federal Crop Insurance Corporation (FCIC) sponsored crop insurance, if
it is available, when it appears to be advantageous for the borrower.
When crop insurance is obtained by the borrower, an ''Assignment of
Indemnity'' will be executed by the borrower; provided no prior
''Assignment of Indemnity'' has been given to another lienholder for the
crop(s) in question. Only one assignment on a crop for any one year
will be accepted by FCIC. An ''Assignment of Indemnity'' need not be
required when the crop insurance policy contains a standard mortgage
clause naming FmHA as mortgagee or secured party.
(13) EE loans to Indians which are secured by trust or restricted
land will be handled as follows: The United States Department of
Agriculture (USDA) and the Department of the Interior have mutually
agreed that FmHA loans which are to be secured by real estate liens may
be made to Indians holding land in severalty under trust patents or
deeds containing restriction against alienation subject to statutes
under which they may, with the approval of the Secretary of the
Interior, give mortgages on their land which are valid and enforceable.
These statutes include, but may not be limited to, the Act of March 29,
1956 (70 Stat. 62).
(i) When a lien is to be taken on trust or restricted property in
connection with a loan to be made or insured by FmHA, the local
representatives of the Bureau of Indian Affairs (BIA) will furnish
requested advice and information with respect to the property and each
applicant.
(ii) The FmHA State Director should arrange with the Area Director or
other appropriate local official of the BIA as to the manner in which
the information will be requested and furnished. A State supplement
will be issued to prescribe the actions to be taken by FmHA personnel to
implement the making of loans under such conditions.
(14) The taking and filing of security instruments will be in
accordance with Subpart B of Part 1941 of this chapter (chattels and
crops) and with paragraph (b)(7) of this section and 1945.129(b) (real
estate) of this subpart.
(15) Insurance may be required on personal property when the loan
approval official determines it is necessary to protect the interest of
the Government.
(c) Signatures of principal partners, shareholders, and members of
partnerships, corporations, and cooperatives required to obtain full
personal liability. When the applicant is a cooperative, partnership or
a corporation, the promissory note(s) will be executed so as to evidence
liability of the entity as well as each principal member, partner of
stockholder (as defined in 1945.104(a)(21) of this subpart) as an
individual. To evidence the principal members', partners' or
stockholders' liability as individuals, the words ''As Individuals''
will be typed at the top of the blank space to the left of the lines for
signatures on the promissory note(s), and each principal member, partner
of stockholder will sign under that heading.
(d) Personal and corporate guarantees. (1) If a review of all credit
factors indicates the need for additional security, FmHA may require
additional personal and corporate guarantees. FmHA also may require
that such guarantees be secured. Any collateral referred to in
paragraph (a)(2) of this section may be used to secure the guarantees.
(2) Guarantors of applicants will:
(i) In the case of personal guarantees, provide current financial
statements (not over 60 days old at time of filing), signed by the
guarantors and disclosing community or homestead property.
(ii) In the case of corporate guarantees, provide current financial
statements (not over 90 days old at time of filing), certified by an
officer of the corporation.
(44 FR 75105, Dec. 19, 1979, as amended at 45 FR 35786, May 27, 1980;
48 FR 55105, Dec. 9, 1983)
1945.121 (Reserved)
07 CFR 1945.122 Revision of the use of loan funds.
(a) Requirements. Loan approval officials or their delegates are
authorized to approve changes in the purposes for which loan funds are
to be used provided:
(1) The loan was within the respective official's loan approval
authority.
(2) Such a change will not adversely affect the feasibility of the
operation for the Government's interest.
(3) Such a change is consistent with authorities, policies, and
limitations for the loan involved and is for an authorized purpose.
(b) Additional authority. The State Director may delegate additional
authority to approval officials to approve certain kinds of changes in
the use of loan funds by issuing a State supplement describing such
changes, provided prior approval is obtained from the National Office.
(c) Revisions. When changes are made in the use of loan funds, no
revision will be made in the repayment schedule on the promissory note.
Appropriate changes with respect to funds for the ''debt repayment''
will be made in Table K of Form FmHA 431-2 and they will be initialed by
the borrower. The County Supervisor will also make appropriate
notations in the ''Supervisory and Servicing Actions'' section of Form
FmHA 1905-1, ''Management System Card-Individual,'' for followup.
(44 FR 75105, Dec. 19, 1979, as amended at 48 FR 55106, Dec. 9, 1983)
07 CFR 1945.123 General provisions -- compliance requirements.
(a) Environmental impact and evaluation statements. If EE loans are
made in populated areas to finance an operation which has relatively
large feedlots or holding facilities for livestock of aquatic organisms
or smaller feedlots or holding facilities which are likely to have an
effect on the environment, the applicant will be requested to complete
Form FmHA 449-10, ''Applicant's Environmental Impact Evaluation.''
(1) The County Supervisor will complete Form FmHA 440-46,
''Environmental Impact Assessment,'' from information provided by the
applicant in Form FmHA 449-10.
(2) The County Supervisor will forward a copy of the loan
application, completed Forms FmHA 449-10 and 440-46, and any other
information and docket material relevant to environmental considerations
to the State Director. The State Director will determine whether an
environmental impact statement should be prepared based on this
submittal and any other available information.
(3) The provisions of Subpart G of Part 1901 of this chapter will be
followed to the extent applicable for EE loans in making decisions on
farm operations that may have significant impact on the environment.
(b) Equal opportunity and nondiscrimination requirements. In
accordance with Title V of Pub. L. 93-495, the Equal Credit Opportunity
Act, FmHA will not discriminate against any applicant on the basis of
race, color, religion, marital status, sex, national origin,
physical/mental handicap with respect to any aspect of credit
transactions. See Subpart E of Part 1901 of this chapter for applicable
compliance requirements.
(c) Flood or mudslide hazard area precautions. (1) Projects located
in special flood or mudslide hazard areas, as designated by the Federal
Insurance Administration (FIA) of the Department of Housing and Urban
Development, may be financed under this subpart only:
(i) If the community, as a result of such designation by FIA as a
special flood or mudslide prone area, has an approved flood plain area
management plan.
(ii) If the project location and construction plans and
specifications for new buildings or improvements to existing buildings
comply with the approved flood plain area management plan required by
paragraph (c)(1)(i) of this section.
(2) If the project is located in a special flood or mudslide hazard
area and if flood insurance is available, it will be purchased by the
borrower prior to loan closing. (See Subpart B of Part 1806 of this
chapter.) (FmHA Instruction 426.2.)
(d) Protection of historical and archaeological properties. If there
is any evidence to indicate the property to be financed has historical
or archaeological value, the provisions of Subpart F of Part 1901 of
this chapter apply.
(e) Compliance with special laws and regulations. (1) Applicants
will be required to comply with Federal, State and local laws and
regulations governing building construction; diverting, appropriating,
and using water including use for domestic or nonfarm enterprise
purposes; installing facilities for draining land; and making changes
in the use of land affected by zoning regulations.
(2) State Directors and Farmer Programs Staff members will consult
with the Soil Conservation Service, U.S. Geological Survey, State
Geologist or Engineer, or any board having official functions relating
to water use or farm drainage requirements and restrictions for water
and drainage development. State supplements will be issued to provide
guidelines which:
(i) State all requirements to be met, including the acquisitions of
water rights.
(ii) Define areas where development of ground water for acquisition
is not recommended.
(iii) Define areas where land drainage is restricted.
(3) Applicants will comply with all local laws and regulations, and
obtain any special licenses or permits needed for nonfarm, recreation,
specialized or aquaculture farming enterprises.
1945.124 -- 1945.125 (Reserved)
07 CFR 1945.126 Cancellation of loan checks and advances.
(a) If a loan check is to be canceled, the County Supervisor should
follow FmHA Instruction 102.1, paragraph IV C (a copy of which is
available in any FmHA office).
(b) When an advance is to be canceled, the County Supervisor must
take the following actions:
(1) Complete Form FmHA 1940-10, ''Cancellation of U.S. Treasury Check
and/or Obligation,'' in accordance with the Forms Manual Insert (FMI).
(2) When necessary, obtain a substitute promissory note reflecting
the revised total of the loan and the revised schedule. When it is not
possible to obtain a substitute promissory note, the County Supervisor
will show on Form FmHA 440-57, ''Acknowledgement of Obligated
Funds/Check Request,'' the revised amount of the loan and the revised
repayment schedule.
(3) Transmit to the Finance Office an original of Form FmHA 1940-10
and Form FmHA 440-57 reflecting the revised repayment schedule. The
advance will be cancelled as prescribed in FmHA Instruction 102.1
(available in any FmHA office).
(47 FR 36415, Aug. 20, 1982, as amended at 53 FR 26591, July 14,
1988; 54 FR 39728, Sept. 28, 1989)
07 CFR 1945.127 Increase or decrease in amount of loan.
If it becomes necessary that the amount of the loan be increased or
decreased prior to loan closing, the County Supervisor will request that
all distributed docket forms be returned to the County Office for
reprocessing, unless the change is minor and replacement forms can
readily be completed and submitted. In the latter case, a memorandum to
that effect will be attached to the revised forms for referral to the
State Office.
(46 FR 28331, May 26, 1981, as amended at 53 FR 26591, July 14, 1988)
07 CFR 1945.128 Docket preparation.
(a) Processing guide. See Exhibit A of this subpart for Insured EE
Loan Processing Guide.
(b) Form FmHA 1940-1, ''Request for Obligation of Funds.'' A separate
Form FmHA 1940-1 will be prepared for each amount of the total loan
which has a different purpose (operating or real estate). When the
County Supervisor is reasonably certain that the EE loan can be closed
within 20 working days from the date of the check, loan funds may be
requested at the time of loan approval through field office terminal
system. Loan funds may be scheduled for multiple advances, if
appropriate. The amount of the initial advance will be requested
through field office terminal system. Subsequent advances may be
scheduled by using the field office terminal system. Each advance will
be limited to an amount which can be used promptly, usually within sixty
days from the date of the check.
(c) Promissory note. A separate Form FmHA 1940-17 will be prepared
for each Form FmHA 1940-1 used in obligating the total amount of the EE
loan. Each scheduled installment will include interest in addition to
principal unless deferral of principal is authorized in accordance with
1945.119 of this subpart.
(44 FR 75105, Dec. 19, 1979, as amended at 48 FR 55106, Dec. 9, 1983;
53 FR 26591, July 14, 1988; 54 FR 39728, Sept. 28, 1989; 54 FR 47959,
Nov. 20, 1989)
07 CFR 1945.129 Approval and closing.
(a) Loan approval. Loans will be approved in accordance with the
authorities and provisions contained in this subpart and the loan
approval conditions and authorities contained in Subpart A of Part 1901
of this chapter. See Subpart B of Part 1941 of this chapter for closing
loans secured by chattels.
(1) When the County Committee certification has been made, the loan
approval official will determine administratively whether:
(i) The applicant is eligible, likely to be successful in the
proposed operations, and likely to achieve the objectives of the loan.
(ii) The applicant has satisfactory tenure arrangements on the farm
to be operated.
(iii) The proposed farm and home operations of the applicant are
reasonably sound.
(iv) The loan is proper and can be repaid from farm or other income
as scheduled.
(v) The security requirements can be met.
(vi) The certification required of the applicant and County Committee
have been made and are a part of the loan docket.
(vii) The loan meets all other FmHA requirements.
(b) Loan closing. Closing loans secured by real estate will be
handled as follows:
(1) Loans secured by real estate are considered closed on the date
the mortgage is filed for record. Such loans will be closed in
accordance with the applicable provisions of subpart B of part 1927 of
this chapter.
(2) Security instruments referred to in this section are real estate
mortgages or deeds of trust.
(i) Security instrument forms. (A) FmHA real estate mortgage or deed
of trust Form FmHA 1927-1 (state), ''Real Estate Mortgage for XXX,''
will be used in all cases.
(B) For assignment of income, Form FmHA 443-16, ''Assignment of
Income from Real Estate Security,'' will be used, except that if the
form is legally inadequate in a particular State it may be adapted with
the approval of OGC.
(C) When water stock certificates or similar collateral are a part of
the security, they will be retained in the County Office. A notation
will be made on Form FmHA 1905-1, ''Management System Card-Individual,''
showing that such security has been retained.
(D) Form FmHA 1940-17 will be prepared and completed at the time of
loan closing in accordance with the FMI. If insured RH funds are
advanced simultaneously, the RH loan will be evidenced by a separate
note on the proper form as provided in Subpart A of Part 1944. However,
both notes will be described in the same security instruments. When a
loan is closed between December 1 and January 1, the first installment
will be collected at the time of loan closing unless a deferral is
approved.
(E) When subsequent loans are made, a new security instrument will be
required only when such existing instruments do not cover all required
security or will not secure the subsequent loan.
(F) A subsequent loan for any authorized purpose may be made without
taking new security instruments in any case in which the existing
security instruments cover all of the property required to serve as
security for the subsequent loan, the State law and the language of the
existing security instruments will permit the future loan advance to be
secured by the existing security instruments, and the existing security
instruments will provide the same lien priority for the subsequent loan
as for the initial loan. A new security instrument will be taken if one
of these requirements is not met.
(ii) Leaseholds. Security instruments for loans received by
leaseholders will describe the security in accordance with subpart B of
part 1927 of this chapter, and the following provisions will also apply:
(A) The following language, or similar language which in the opinion
of the OGC is legally adequate, will be inserted just before the legal
description of the real estate:
All Borrower's right, title, and interest in and to the leasehold
estate for a term of ---- years beginning on ------ ,19 -- , created and
established by a certain lease dated ------ , 19 -- executed by ------ ,
as lessor(s), recorded on ------ , 19 -- , in Book ------ , page -- of
the ------ Records of said County and State, and any renewals and
extensions thereof, and all Borrower's right, title, and interest in and
to said Lease, covering the following real estate:
(B) An additional covenant will be inserted in the mortgage to read
as follows:
Borrower will pay when due all rents and any and all other charges
required by said Lease, will comply with all other requirements of said
Lease, and will not surrender or relinquish, without the Government's
written consent, any of the Borrower's right, title, or interest in or
to said leasehold estate or under said Lease while this instrument
remains in effect.
(C) A copy of the lease will be obtained for the case file.
(iii) Filing or recording security instruments. The following
appropriate actions will be taken after loan closing:
(A) If the original security instrument is returned by the recording
official, it will be retained in the borrower's case folder. If the
original is retained by the recording official, a conformed copy,
including the recording date showing the date and place of recordation
and the book and page number, will be prepared and filed in the
borrower's case folder. A conformed copy of the security instrument
will be sent to a prior lienholder if a substantial interest is held by
that lienholder or if it is required by a working agreement provision
with that lender.
(B) The original deed of conveyance, if any, and a copy of the
security instrument will be delivered to the borrower.
(iv) Abstracts of Title. Any abstract of title will be delivered to
the borrower for safekeeping, and Form FmHA 140-4, ''Transmittal of
Documents,'' will be prepared and a receipt obtained in accordance with
the FMI. However, when an abstract is obtained from a third party with
the understanding it will be returned, such abstract will be sent
directly to the third party and a memorandum receipt will be obtained.
(v) Requesting title service. When the loan is approved, the County
Supervisor will see that the title service is requested in accordance
with subpart B of part 1927 of the chapter, if this has not already been
done. Agreements will be in writing and cover subjects such as
disposition of growing crops, rentals, payment of maintenance cost, and
other pertinent points.
(vi) Fees. The borrower will pay all filing, recording, notary and
lien search fees incident to loan transactions from personal or loan
funds. When FmHA employees accept cash for these purposes Form FmHA
440-12, ''Acknowledgment of Payment for Recording, Lien Search, and
Releasing Fees,'' will be executed. FmHA employees will make it clear
to the borrower that any fee so accepted is only for paying fees on
behalf of the borrower.
(vii) Supervised bank accounts. If a supervised bank account is
required, loan funds usually will be deposited following loan closing.
Supervised bank accounts will be established in accordance with Subpart
A of Part 1902 of this chapter.
(44 FR 75105, Dec. 19, 1979, as amended at 46 FR 61991, Dec. 21,
1981; 48 FR 55106, Dec. 9, 1983; 56 FR 67483, Dec. 31, 1991)
Effective Date Note: At 56 FR 67483, Dec. 31, 1991, 1945.129 was
amended by revising paragraphs (b)(1), (b)(2)(i)(A), the introductory
text of paragraphs (b)(2)(ii), and the first sentence of paragraph
(b)(2)(v), effective January 30, 1992. For the convenience of the user,
the superseded text follows:
1945.129 Approval and closing.
(b) * * *
(1) Loans secured by real estate are considered closed on the date
the mortgage is filed for record. Such loans will be closed in
accordance with the applicable provisions of Part 1807 of this chapter
(FmHA Instruction 427.1).
(2) * * *
(i) * * *
(A) FmHA real estate mortgage or deed of trust Form FmHA 427-1
(State), ''Real Estate Mortgage for ------ ,'' will be used in all
cases.
(ii) Leaseholds. Security instruments for loans secured by
leaseholds will describe the security in accordance with Part 1807 of
this chapter (FmHA Instruction 427.1), and the following provisions will
also apply:
(v) Requesting title service. When the loan is approved, the County
Supervisor will see that title service is requested in accordance with
Part 1807 of this chapter (FmHA Instruction 427.1), if this has not
already been done. * * *
1945.130 -- 1945.134 (Reserved)
07 CFR 1945.135 Loan servicing.
Loans will be serviced in accordance with Parts 1806 and 1863 (FmHA
Instructions 426.1, and 425.1, respectively) and Subpart A of Parts 1962
and 1965 of this chapter.
(51 FR 4137, Feb.3, 1986; 51 FR 9174, Mar. 18, 1986)
07 CFR 1945.136 Graduation.
Borrowers will be required to graduate when FmHA determines they are
able to obtain their needed credit from conventional sources. All
borrowers will be advised that their loans will be reviewed for
graduation by FmHA. Applicants will also be advised during loan
processing and again at loan closing that they will be required to
refinance at any time if other satisfactory credit is available to them
even though their loans have not fully matured. This will be in
accordance with the graduation procedure set forth in Subpart F of Part
1951 of this chapter. EE loans will be reviewed three years after they
are made and every other year thereafter.
(45 FR 35786, May 27, 1980, as amended at 48 FR 40203, Sept. 6, 1983)
1945.137 -- 1945.144 (Reserved)
07 CFR 1945.145 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and have been
assigned OMB control number 0575-0096.
(48 FR 55106, Dec. 9, 1983)
07 CFR 1945.146 Memoranda of Understanding.
See the appropriate section of this chapter for memoranda pertaining
to all Farmer Program loans. The following memoranda items also apply
to this subpart:
(a) Memorandum of Understanding Between Commodity Credit Corporation
and FmHA (Exhibit A to Subpart A of Part 1962 of this chapter).
(b) Memorandum of Understanding and Blanket Commodity Lien Waiver
(Exhibit B to Subpart A of Part 1962 of this chapter).
(c) Memorandum of Understanding with the Farm Credit Administration
(Exhibit A to Subpart R of Part 2000 of this chapter).
07 CFR 1945.147 State supplements.
State supplements will be issued as necessary to implement this
subpart.
07 CFR 1945.148 FmHA forms.
See Exhibit A of this subpart.
07 CFR 1945.149 Additional loans.
Additional EE loans may be made for the same purposes and under the
same conditions as an initial EE loan provided:
(a) The additional loan will not cause either the unpaid principal
balance of the EE indebtedness to exceed $400,000 or the limitation
found in 1945.117(d)(3) of this subpart to be circumvented.
(b) All outstanding notes may be consolidated for EE loans for
operating purposes in accordance with Subpart S of Part 1951 of this
chapter.
(46 FR 28331, May 26, 1981, as amended at 53 FR 35716, Sept. 14,
1988)
07 CFR 1945.150 General provisions.
(a) In performing the FmHA functions with respect to EE loans, the
advice and assistance of OGC may be sought and followed on any legal
matter.
(b) The State Director may delegate to staff members those
administrative duties and responsibilities stipulated in this subpart.
07 CFR 1945.150 Subpart D -- Emergency Loan Policies, Procedures and
Authorizations
Source: 53 FR 30392, Aug. 11, 1988, unless otherwise noted.
07 CFR 1945.151 Introduction.
(a) Policy. This subpart prescribes the policies, procedures, and
authorizations of the Farmers Home Administration (FmHA) for making
insured emergency (EM) loans to farmers, ranchers, and aquaculture
operators (hereinafter referred to as farmers), as provided by law.
FmHA's policy is to make loans to any otherwise qualified applicant
without regard to race, color, religion, sex, national origin, marital
status, age, or physical/mental handicap (provided the applicant can
execute a legal contract). These regulations apply to
applicants/borrowers and FmHA personnel involved in making EM loans.
(b) Program administration. The County Supervisor is the local
contact person for applicant processing, loan making, and loan servicing
activities.
07 CFR 1945.152 Program objectives.
The objective of EM loans is to provide financial assistance to cover
actual losses sustained by eligible farmers, so that they can return to
normal farming operations after sustaining substantial losses as a
result of a declared/designated disaster. EM loans are made to assist
eligible disaster farm victims rehabilitate and resume their normal
operations. This objective will be accomplished through the extension
of credit and such supervisory assistance as is determined necessary to
achieve the objectives of the loan and protect the Government's
interest. Supervisory assistance will be given in accordance with the
provisions of Subpart B of Part 1924 of this chapter. The borrower has
the responsibility of achieving the objectives of the loan. The
borrower accomplishes this by repaying the loan according to the planned
repayment schedule, maintaining FmHA security, using loan funds for
planned purposes only and following a plan of operation agreed upon with
FmHA.
07 CFR 1945.153 Loans for citrus grove rehabilitation or
reestablishment.
Exhibit D of this subpart, which deals with loans made to operators
of citrus groves, modifies some of the provisions contained in this
subpart.
07 CFR 1945.154 Definitions and abbreviations.
(a) Definitions -- (1) Applicant. The person or entity conducting
the farming operation at the time of the disaster and making a request
for EM loan assistance from FmHA.
(2) Approval official. An FmHA official who has been delegated loan
approval authorities within applicable loan programs, subject to the
dollar limitations contained in tables available in any FmHA office (see
FmHA Instruction 1901-A, Exhibit C).
(3) Aquaculture. The husbandry of aquatic organisms in a controlled
or selected environment. Aquatic organisms are fish (the term ''fish''
includes any aquatic gilled animal commonly known as ''fish,'' as well
as mollusks, crustaceans, or other invertebrates produced under
controlled conditions -- that is, feeding, tending, harvesting, and such
other activities as are necessary to properly raise and market the
products -- in ponds, lakes, streams, or similar holding areas),
amphibians, reptiles, or aquatic plants. An aquaculture operation is
considered to be a farm only if it is conducted on grounds which the
applicant owns, leases, or has an exclusive right to use. An exclusive
right to use must be evidenced by a written permit or lease issued to
the applicant and the permit or lease must specifically identify the
waters to be used solely by the applicant.
(4) Borrower. When a loan is made to an individual, the individual
is the borrower. When a loan is made to an entity, the corporation,
cooperative, partnership, or joint operation is the borrower.
(5) Calendar year. The 12-month period beginning January 1 and
ending December 31 of any given year.
(6) Cooperative. An entity which has farming as its purpose and
whose members have agreed to share the profits of the farming
enterprise. The entity must be recognized as a farm cooperative by the
laws of the State(s) in which the entity will operate a farm(s).
(7) Corporation. For the purpose of this subpart, a private domestic
corporation recognized as a corporation and authorized to carry on
farming, ranching, or aquaculture operations under the laws of the
State(s) in which the entity will operate a farm(s).
(8) Eligible area. A county or similar political subdivision in
which EM loans are made available.
(9) Established farmer. A tenant-operator or owner-operator of a
family farm who was actively participating in the operation and
management of a farming operation at the time of the disaster, spends a
substantial portion of time in carrying out the farming operation, and
had planted a crop or had purchased livestock which were on the farm at
the time of the disaster. If the applicant is a cooperative, a
corporation, a partnership or a joint operation, it must be primarily
engaged in farming, i.e., the applicant entity must derive over fifty
percent (50%) of its gross income from all sources from its farming
operation. The gross farm income figures will be taken from the
proposed annual plan or farm budget that will cover the next projected
12-month period (or crop year).
(10) Family farm. A farm or ranch as defined in 1941.4 of Subpart A
of Part 1941 of this chapter.
(11) Farm. A tract or tracts of land, improvements, and other
appurtenances considered to be farm property which are used or will be
used in the production of crops or livestock and meet the requirements
of paragraph (a)(10) of this section. This includes aquaculture
operations which meet the requirements set forth in paragraph (a)(3) of
this section and includes nonfarm operations which meet the requirements
set forth in paragraph (a)(23) of this section. It also includes a
residence which, although physically separate from the farm aceage, is
ordinarily treated as a part of the farm in the local community.
(12) Farm and home plan. For the purpose of this regulation, any
reference to farm and home plan(s) means any farm planning and/or
recordkeeping system(s) acceptable to the loan approval official. This
includes but is not limited to: Form FmHA 431-2, ''Farm and Home
Plan;'' farm budgets; State University Computerized Farm Planning
Systems; etc.
(13) Farming enterprise. The business of producing and marketing
crops, livestock, livestock products, and aquatic organisms through the
utilization and management of land, water, labor, capital, and basic raw
materials.
(i) Single enterprise. Any single crop or livestock enterprise which
constitutes a basic part of an applicant's total farming operation.
Some crops such as corn may be produced as a cash or feed crop. In such
cases, the actual acres produced for each purpose for the best 4 of the
past 5 years will be used in determining losses for each single
enterprise. The following are examples of single enterprises:
(A) Individual cash crops, i.e., wheat is an individual crop, corn is
an individual crop, and soybeans is an individual crop.
(B) Individual vegetable crops, i.e., carrots is an individual crop,
tomatoes is an individual crop, and radishes is an individual crop.
(C) Individual fruit crops, i.e., apples is an individual crop,
oranges is an individual crop, and grapefruit is an individual crop.
(D) Individual nut crops, i.e., walnuts is an individual crop,
almonds is an individual crop, and pecans is an individual crop.
(E) Individual feed crops, i.e., alfalfa is an individual feed crop,
and corn is an individual feed crop when fed to an applicant's own
livestock. A livestock enterprise must be a basic part of the farming
operation in order for the feed crops to be considered as a basic
enterprise in determining eligibility based on production losses to feed
crops.
(F) Beef operations;
(G) Dairy operations;
(H) Hog operations;
(I) Poultry operations;
(J) Any aquaculture operation; and
(K) Any other operations (i.e., trees grown for timber).
(ii) Basic part of a farming operation. Any single enterprise which
normally generates sufficient income to be considered essential to the
success of the total family farming operation.
(14) Fixture. Generally, an item attached to a building or other
structure or to land in such a way that it cannot be removed without
defacing or dismantling the structure, or substantially damaging the
item itself.
(15) Hazard insurance. Includes coverage against losses due to fire,
windstorm, lightning, hail, explosion, business interruption, riot,
civil commotion, aircraft, land vehicles, marine vehicles, smoke,
builder's risk, public liability, property damage, flood or mudslide,
workmen's compensation, or any similar insurance that is available and
needed to protect the security, or that which is required by law.
(16) Household contents. The essential household items necessary to
maintain viable living quarters such as: stove, refrigerator, furnace,
couch, chairs, tables, beds, lamps, etc. Excludes all luxury items
including jewelry, furs, antiques, paintings, etc.
(17) Incidence period. The specific date(s) during which a disaster
occurred.
(18) Insured loan. A loan made directly by FmHA as lender from the
Agricultural Credit Insurance Fund, and serviced by FmHA personnel.
(19) Irregular payment schedule. To schedule the payment of interest
in part and/or principal in whole or in part.
(20) Joint operation. A farming entity in which two or more farmers
work together sharing equally or unequally land, labor, equipment,
expenses and/or income. The joint ownership of land and/or equipment or
the exchange of labor and equipment in separate farming operations does
not constitute a joint operation. They are two separate individual
operations.
(21) Majority or controlling interest. Any individual or a
combination of individuals owning more than a 50 percent interest in a
cooperative, corporation, partnership, or joint farming operation.
(22) Market value. The amount which a willing buyer would pay a
willing, but not forced, seller in a completely voluntary sale.
(23) Nonfarm enterprise. Any nonfarm business enterprise including
recreation which is closely associated with the farming operation and
located on or adjacent to the farm and provides income to supplement
farm income. The business must provide goods or services for which
there is a need and a reasonably reliable market. This may include, but
is not limited to, such enterprises as custom farm work on other farms,
raising earthworms, exotic birds, tropical fish, dogs and horses for
nonfarm purposes, welding shops, roadside stands, boarding horses and
riding stables.
(24) Normal year's production. The normal year's production is the
average per acre yield or production per animal unit of the 4 better
years out of the 5 years immediately preceding the disaster year.
(25) Partnership. An entity consisting of individuals who have
agreed to operate a farm. The entity must:
(i) Be recognized as a partnership by the laws of the State(s) in
which the entity will operate a family farm;
(iii) Be authorized to own real and/or personal property;
(iii) Be able to incur debts in its own name.
(26) Physical loss. Damages to or destruction of physical property
including farmland (except sheet erosion); structures on the land such
as buildings, fences, dams, etc.; machinery, equipment, and tools;
livestock; livestock products; harvested crops; supplies; and
growing crops and pasture which will be replanted/reestablished. Loss
of income from custom work, due to a short crop caused by the disaster,
cannot be counted as a disaster loss because custom farm work is a
nonfarm business and not an agricultural enterprise.
(27) Feasible Plan. A feasible plan is one which meets the
requirements of 1924.57(c)(5) of Subpart B of Part 1924 of this
chapter.
(28) Production loss. The reduction in normal production, directly
attributable to the natural disaster, of yield per acre and/or quality
of crops produced, of quantity and/or quality of livestock products
produced per animal unit, and of weight gain and/or natural increase in
numbers of livestock units. Loss of income from custom work, due to a
short crop caused by the disaster, cannot be counted as a disaster loss
because custom farm work is a nonfarm business and not an agricultural
enterprise.
(29) Qualifying disaster. A major disaster, Presidential Emergency,
or natural Disaster as defined in Subpart A of this part.
(30) Qualifying physical loss. A loss caused by damage to or
destruction of physical property that is essential to the successful
operation of the farm; and if it is not repaired or replaced, the
farmer would be unable to continue operations on a reasonably sound
basis.
(31) Qualifying production loss. The production loss an applicant
sustained from the disaster that is equivalent to at least a 30 percent
loss of normal per acre or per animal production in any single
enterprise, which is a basic part of the total farming operation.
Losses of livestock increases e.g., calves, pigs, etc., are considered
production losses, except when live animals are destroyed. When an
animal is killed, lost or sold because of injury or reduced production
potential caused by the disaster, it is considered a physical loss.
Reductions in the production of feeder livestock and livestock products,
or reductions in weight gain of such animals due to homegrown feed crop
and/or pasture losses, will not be considered production losses when
replacement feed is available to purchase, regardless of the cost of
that feed. When the disaster has severely disrupted the usual feeding
schedule of a livestock enterprise because of extended utility failure
or inaccessibility to the livestock, losses in production of milk, eggs,
weight losses, etc., may be considered as production losses. Such
production losses will be calculated based on the reduction from the
normal year's (full year's) production which was caused during the
disruption period and the period needed to bring production back up to
the normal level.
(32) Related by blood or marriage. As used in this subpart,
individuals who are related to one another as husband, wife, parent,
child, brother or sister.
(33) Security. Property of any kind subject to a real or personal
property lien. Any reference to collateral or security property shall
be considered a reference to the term ''security.''
(34) State or United States. The United States itself, each of the
several States, the Commonwealth of Puerto Rico, the Virgin Islands of
the United States, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
(35) Subsequent loans. Any EM loans processed by the Finance Office
after it processed the first EM loan to a borrower. The disaster
designation number is not considered in determining whether an EM loan
is a subsequent loan.
(36) Termination date. The date specified in a disaster
declaration/determination/notification which establishes the final date
after which EM loan applications can no longer be accepted.
For both physical and production losses, the termination date is 8
months from the date of the disaster
declaration/determination/notification.
(b) Abbreviations. The following abbreviations are used in this
subpart:
(1) ASCS -- Agricultural Stabilization and Conservation Service.
(2) ECP -- Emergency Conservation Program.
(3) EFAP -- Emergency Feed Assistance Program.
(4) EM -- Emergency Loans.
(5) FCIC -- Federal Crop Insurance Corporation.
(6) FEMA -- Federal Emergency Management Agency.
(7) FIA -- Federal Insurance Administration.
(8) FmHA -- Farmers Home Administration.
(9) FMI -- Forms Manual Insert.
(10) INS -- Immigration and Naturalization Service.
(11) OGC -- Office of the General Counsel.
(12) SBA -- Small Business Administration.
(13) UCC -- Uniform Commercial Code.
(14) USDA -- United States Department of Agriculture.
(53 FR 30392, Aug. 11, 1988, as amended at 55 FR 21530, May 25, 1990;
56 FR 24682, May 31, 1991)
07 CFR 1945.155 Relationship between FmHA and other federal agencies.
(a) ASCS and FmHA. A Memorandum of Understanding between the ASCS
and FmHA on disaster assistance pertaining to the exchange of
information essential to the elimination of duplication of compensatory
disaster benefits from the two participating agencies for the same
disaster losses is Exhibit A of FmHA Instruction 2000-JJ (available in
any FmHA Office).
(b) FCIC and FmHA. A Memorandum of Understanding between the FCIC
and FmHA pertaining to crop insurance and exchange of information
essential to the elimination of duplication of compensatory disaster
benefits from the two participating Agencies for the same disaster
losses is Exhibit A of FmHA Instruction 2000-N (available in any FmHA
office).
(55 FR 21530, May 25, 1990)
07 CFR 1945.156 The test for credit and certification requirements for
availability of credit elsewhere.
(a) Applicants who certify that other credit is available.
Applicants applying for EM loan assistance who certify they are able to
obtain sufficient and suitable credit elsewhere to meet their actual
farming and family living needs are not eligible for such assistance.
(b) Applicants who certify that other credit is NOT available.
Applicants who certify they are not able to obtain sufficient credit
elsewhere to meet their actual farming and family living needs must meet
the requirements set out in this paragraph (b).
(1) Test for credit for individuals and entities. Applicants must be
unable to obtain sufficient and suitable credit elsewhere to finance
their actual needs at reasonable rates and terms, taken into
consideration prevailing private and cooperative rates and terms in the
community in or near which the applicant resides for loans for similar
purposes and periods of time. If the applicant has been getting credit
away from the local community where the farming operation is located,
such source(s) of credit must also be contacted and considered. The
applicant's equity in all assets, including, but not limited to, real
estate, chattels, stocks, bonds, and Certificates of Deposit will be
considered in determining the applicant's ability to obtain such credit
from other sources. Also, the applicant must offer to pledge all assets
as security when requesting credit from other lenders. Cooperatives,
corporations, partnerships and joint farming operations and the members,
stockholders, partners and joint operators, both individually and
collectively, must be unable to provide the required financing from
their own resources or with credit obtained from pledging those
resources to other lenders. Form FmHA 1940-38, ''Request for Lender's
Verification of Loan Application,'' must be completed (with particular
attention that Item 2A is completed) and filed in the applicant's County
Office case folder; and any additional facts concerning the findings,
in all cases, must be documented and recorded in the running case
record.
(2) Test for credit certification requirements. Applicants will
certify in writing on the application form, and the County Supervisor
shall make the determination whether or not adequate and suitable credit
is available elsewhere to finance the applicant's actual needs at
reasonable rates and terms, taking into consideration prevailing private
and cooperative rates and terms in the community in or near which the
applicant resides for loans for similar purposes and periods of time.
The County Supervisor will consider all such information obtained from
other lenders in making the determination, but is required to make an
independent decision concerning the applicant's ability to obtain the
needed credit elsewhere. Should the County Supervisor determine that
the applicant can obtain the necessary credit elsewhere to meet actual
needs, the applicant will be notified, in writing, that the applicant is
not eligible for an EM loan(s).
(i) For applicants whose total EM loan(s) request is for $300,000 or
less, the following actions will be taken:
(A) Applicants will be required to apply for the credit needed from
their normal lender(s) and, if their normal lender(s) is located outside
the local community, from at least one agricultural lender in the local
community, to determine whether such lender(s) will provide the credit.
Form(s) FmHA 1940-38 must be completed by all lending sources contacted,
unless an exception is made under the provisions of paragraph
(b)(2)(i)(C) of this section. Only when the applicant is not able to
obtain a loan, from one or more of the lending sources contacted, will
the applicant be considered for an EM loan. If the County Supervisor
believes it necessary, the action required in paragraph (b)(2)(ii) of
this section will be taken.
(B) When the County Supervisor receives letters or other written
evidence, including Form FmHA 1940-38, from a lender(s) indicating that
the applicant is unable to obtain satisfactory credit from that
source(s), such correspondence will be included in the loan docket.
(C) If it appears from a review of the application that it would be
unduly burdensome for the applicant to obtain written declinations of
credit from other lenders, the County Supervisor may make an exception
to this requirement, provided the County Supervisor is familiar enough
with other lenders' farm loan programs to determine that no possibility
exists for the applicant to obtain the credit needed from those lenders.
When this conclusion is reached, the basis for it will be recorded in
the running case record, and further checks will not be necessary.
However, when this exception is used, the applicant's normal lender(s)
must be contacted in all cases and the results of that contact(s) must
be well documented in the running case record.
(ii) For applicants whose total EM loan(s) request is for more than
$300,000, the following actions will be taken:
(A) Applicants will be required to apply at not fewer than three
conventional lending sources, including the Production Credit
Association or Federal Land Bank, as appropriate, in the local
community. In addition, when an applicant has a net worth of $1 million
or more and produces evidence that the necessary credit cannot be
obtained in the local community, the applicant will be required to
contact at least two other lending sources outside the local area. One
or more of those lenders contacted must be the applicant's normal
lender(s).
(B) Form FmHA 1940-38 must be completed by all lending sources
contacted, returned to the County Office and handled in accordance with
paragraph (b)(2)(i)(B) of this section.
(C) When the County Supervisor receives Form FmHA 1940-38 indicating
that the applicant is unable to obtain satisfactory credit, the forms
will be placed in the loan docket. However, such evidence will not
preclude the County Supervisor from contacting other farm lenders in the
area and making an independent determination of the applicant's ability
to obtain credit elsewhere.
(3) Use of nonessential assets (both farm and nonfarm) when seeking
other credit. When an EM loan(s) will be made, after other lenders have
declined to provide needed credit to the applicant, the County
Supervisor will, as a condition of loan approval, require the applicant,
and the owner(s) of the entity to list all assets (both essential and
nonessential) and to pledge the nonessential assets to FmHA as security
for the proposed loan. This security will be in addition to the
security required pursuant to 1945.169 of this subpart.
53 FR 30392, Aug. 11, 1988, as amended at 56 FR 24682, May 31, 1991)
1945.157 -- 1945.160 (Reserved)
07 CFR 1945.161 Receiving and processing applications.
(a) Applications. Applications will be received and processed as
provided in Subpart A of Part 1910 of this chapter, with consideration
given to the requirements in Exhibit M of Subpart G of Part 1940 of this
chapter.
(1) Applications for initial EM loans for each disaster will be
received only in areas where EM loans are made available in accordance
with Subpart A of Part 1945 of this chapter, and must be postmarked or
received in the County Office before the specified 8-month termination
date has passed. These applications must be processed within twelve
months after they are filed.
(2) An applicant conducting a family farming operation in different
counties or locations will be considered for only one application, and
will file that application in the county in which the farm headquarters
is located, unless determined otherwise by the State Director. When the
operation is located in more than one State, the State Directors
involved will consult and determine which State will process the
application and service the loan(s).
(3) Applications may be received and processed from FmHA EM loan
borrowers or SBA disaster housing loan borrowers for that portion of the
maximum EM loan originally authorized, but not requested initially from
FmHA or SBA, provided the application is received within 8 months of the
disaster declaration/determination/notification date.
(4) Applicants who are determined to be ineligible for an EM loan may
be considered for other types of FmHA farm loans, when appropriate.
(b) Statement of losses. Applicant's statements of loss or damage
will be obtained in support of their applications by having them
complete Form FmHA 1945-22, ''Certification of Disaster Losses.''
(c) ASCS verification of farm acreages, production and benefits.
From information obtained on Form FmHA 1945-22, the County Supervisor
will send a separate Form FmHA 1945-29, ''ASCS Verification of Farm
Acreages, Production and Benefits,'' to the appropriate ASCS County
Office for verification of ASCS registered farm(s) that the applicant
has certified constituted part of the disaster year's operation. ASCS
records of acres of crops planted/grown in the disaster year, actual
(proven) yields in the disaster year, ASCS established yields for the
disaster year, ASCS emergency payments and the other information
requested on that form must be obtained. The use of Form FmHA 1945-29
is optional for EM loans made for physical losses. It is required for
EM loans made for production losses on crops covered by ASCS programs.
(d) Evidence of operation. If the applicant is a cooperative,
corporation, partnership, or joint operation, it will provide evidence
that it was operating as a cooperative, corporation, joint operation or
partnership at the time the disaster loss occurred, or has changed its
form in accordance with 1945.162(1) of this subpart, after the loss
occurred.
07 CFR 1945.162 Eligibility requirements.
In accordance with the Food Security Act of 1985 (Pub. L. 99-198)
after December 23, 1985, if an individual or any member, stockholder,
partner, or joint operator of an entity is convicted under Federal or
State law of planting, cultivating, growing, producing, harvesting or
storing a controlled substance (see 21 CFR part 1308, which is Exhibit C
to subpart A of part 1941 of this chapter and is available in any FmHA
office, for the definition of ''controlled substance'') prior to loan
approval in any crop year, the individual or entity shall be ineligible
for a loan for the crop year in which the individual or member,
stockholder, partner, or joint operator of the entity was convicted and
additionally will be ineligible for the four succeeding crop years.
Applicants will attest on Form FmHA 410-1, ''Application for FmHA
Services,'' that as individuals or that its members, if an entity, have
not been convicted of such crime after December 23, 1985. A decision to
reject an application for this reason is not appealable. In addition,
the following requirements must be met:
(a) Test for credit. Applicants must be unable to obtain sufficient
credit elsewhere to finance actual needs at reasonable rates and terms,
taking into consideration prevailing private and cooperative rates and
terms in the community in or near which the applicant resides for loans
for similar purposes and periods of time.
(b) Citizenship. (1) An individual applicant must be a citizen of
the United States (see 1945.154(a) of this subpart for the definition
of ''United States'') or an alien lawfully admitted to the United States
for permanent residence under the Immigration and Nationality Act.
Aliens must provide Forms I-151 or I-551, ''Alien Registration Receipt
Card.'' Indefinite parolees are not eligible. If the authenticity of
the information shown on the alien's identification document is
questioned, the County Supervisor may request the Immigration and
Naturalization Service (INS) to verify the information appearing on the
alien's identification card by completing INS Form G-641, ''Application
for Verification of Information from Immigration and Naturalization
Records,'' obtainable from the nearest INS District Office. (See
Exhibit B of Subpart A of Part 1944 of this chapter.) The completed form
will be mailed to INS. The payment of a service fee by FmHA to INS is
waived by inserting in the upper right hand corner of INS Form G-641,
the following: ''INTERAGENCY LAW ENFORCEMENT REQUEST''.
(2) More than a 50 percent interest in the cooperative, corporation,
partnership or joint operation must be owned by United States citizens
(see 1945.154(a) of this subpart for the definition of ''United
States'') or aliens lawfully admitted to the United States for permanent
residence under the Immigration and Nationality Act.
(c) Established farmer. An applicant must be an established farmer
(as defined in 1945.154(a) of this subpart). An applicant who conducts
the farming operation as an individual must manage the farming
operation. At least one stockholder, member, partner or joint operator
of an entity applicant must manage the farming operation. One who does
not devote full time to the farming operation may be considered the
manager provided that person visits the farm at sufficiently frequent
intervals to exercise control over the farming operation, makes
decisions and gives directions on how the operation(s) should be run,
and sees that the operation is being carried on properly. Any applicant
that employs an outside full-time hired manager or management service
does not qualify as an established farmer, regardless of the number of
visits made by the individual applicant or the members, stockholders,
partners or joint operators. The following are not considered to be
established farmers for EM loan purposes:
(1) An estate or trust; a corporation with over 50 percent of the
ownership held by an estate, trust, another corporation, a partnership
or a joint operation; a partnership or joint operation with over 50
percent of the ownership held by an estate, trust, corporation, another
partnership or another joint operation.
(2) Integrated livestock, poultry, and fish processors who operate
primarily and directly as commercial businesses through contracts or
business arrangements with farmers. However, a grower under contract
with an integrator or processor is considered an established farmer even
though the applicant operates through a contract arrangement with an
integrated processor, provided the operation is not managed by an
outside full-time hired manager or management service. Farmers
operating through contract may be considered for EM loans for physical
losses and production losses. However, eligibility for and the amount
of their production losses will be determined from the applicant's share
of the agricultural production as set forth the contract.
(d) Operate in a disaster area. An applicant for an EM loan must
have sustained qualifying losses in an area in which the availability of
EM loans for actual losses has been determined in accordance with
Subpart A of Part 1945 of this chapter; and must have filed an
application before the expiration date. When an applicant's farming
operation is located both in a designated county(ies) and a
non-designated county(ies) refer to 1945.163(a)(2)(xx) of this subpart.
(e) Losses. An applicant must have suffered qualifying production
and/or physical losses to be eligible for an EM loan. Production losses
must be to property in which the applicant has an ownership interest or
interest in which a security interest can be obtained. Physical losses
must be to property in which the applicant has an ownership interest.
See 1945.163 of this subpart for the methods of determining qualifying
losses.
(f) Legal capacity. An applicant must possess the legal capacity to
contract for the loan.
(g) Training and experience. An applicant must have sufficient
applicable training or farming experience in managing and operating a
farm or ranch (1 year's production and marketing cycle within the last 5
years immediately preceding the application) which indicates the
managerial ability necessary to assure reasonable prospects of success
in the proposed plan of operation and have the character (emphasizing
credit history, past record of debt repayment and reliability), and
industry necessary to carry out the proposed operation.
(h) Honestly endeavor. The applicant will honestly endeavor to carry
out the applicant's/borrower's undertakings and obligations. This would
include, but is not limited to, providing current, complete and truthful
information when applying for assistance and making every reasonable
effort to meet the conditions and terms of the proposed loan. When the
applicant is an entity, this requirement also must be met by the
individual members, stockholders, partners or joint operators.
(i) Family farm. The applicant's farm must be a family farm as
defined in 1945.4 of Subpart A of Part 1941 of this chapter. If the
applicant was conducting larger than a family farm at the time of the
disaster but will be conducting a family farm at the time an EM loan is
closed, the applicant meets this eligibility requirement.
(j) Intent to continue farming. An applicant must show an intent to
continue the operation after the disaster. Those applicants who were
required to stop temporarily because of the disaster loss or damage to
their operations but intend to continue farming with EM loan assistance
meet this requirement.
(k) EM loan(s) to cooperatives, corporations, joint operations or
partnerships. When an EM loan is made to a cooperative, corporation,
partnership or joint operation, only one initial EM loan can be made to
the entity constituting the farming operation to cover the losses per
disaster. However, an individual member, stockholder, partner, or joint
operator may qualify for a separate EM loan to cover losses to a
separate farming operation which the applicant conducts as an individual
on a different farm tract.
(1) If the members, stockholders, partners or joint operators holding
a majority interest are related by blood or marriage, at least one
member, stockholder, partner or joint operator must operate the family
farm.
(2) If the members, stockholders, partners or joint operators holding
a majority interest are not related by blood or marriage, the majority
interest holders must operate the family farm.
(3) If an entity applicant has an operator interest in any other
farming operation, that farming operation must be no larger than a
family farm.
(l) Change in the form of an applicant. A change in the form of an
applicant between the time of a qualifying loss and the time an EM loan
is closed does not make the applicant ineligible for EM loan assistance.
(Examples of changes in form are as follows: An entity may split into
its individual members or into more than one entity; one or more
individuals may leave an entity; an individual may incorporate; a
partnership may become a joint operation, a corporation, a cooperative,
or another partnership; a corporation may become a partnership, a joint
operation, a cooperative, or another corporation; a cooperative may
become a joint operation, a partnership, a corporation, or another
cooperative; a joint operation may become a partnership, a corporation,
a cooperative or another joint operation.) Such an applicant is eligible
for EM loan assistance subject to all of the following limitations and
qualifications:
(1) The applicant must meet all FmHA eligibility requirements at the
time of loan closing.
(2) The applicant must not conduct an operation larger than the
operation that was being conducted at the time of the disaster.
(3) In the case of an entity applicant, all of the individuals who
have an interest in the entity must have had an ownership interest (or
an interest in which a security interest could be obtained) in the
farming operation at the time of the disaster and/or must be heirs of
those who had an ownership interest (or an interest in which a security
interest could be obtained) in the farming operation at the time of the
disaster. Heirs must have been participating in the operation at the
time the disaster occurred and must be engaged in the farming operation
at the time of loan approval.
(4) In the case of an individual applicant, that person must have had
an ownership interest (or an interest in which a security interest could
be obtained) in the operation at the time of the disaster and/or must be
an heir of those who had an ownership interest (or an interest in which
a security interest could be obtained) in the operation at the time of
the disaster. An heir has to have been participating in the operation
at the time the disaster occurred and has to be engaged in the farming
operation at the time of loan approval.
(5) To determine the amount of an actual loss loan an applicant may
receive, first calculate the actual loss suffered by the operation(s) as
it existed at the time of the disaster, in accordance with 1945.163 of
this subpart. Then look at the individual applicant or the individual
members, stockholders, partners or joint operators of an entity
applicant and determine each person's percentage of ownership interest
(or interest in which a security interest could be obtained) in the
operation as it existed at the time of the disaster. For an entity
applicant, add the percentages of all owners who had an interest in the
entity that suffered the disaster losses. Multiply the actual loss
suffered by the operation as it existed at the time of the disaster by
this percentage figure; the result is the amount of actual loss loan
the applicant may receive. For example, if one partner withdraws from a
four-partner partnership (each person owning a 25% interest), the
remaining three partners are eligible for 75 percent of the actual loss
suffered by the operation as it existed at the time of the disaster.
(53 FR 30392, Aug. 11, 1988, as amended at 55 FR 21530, May 25, 1990;
56 FR 3972, Feb. 1, 1991)
07 CFR 1945.163 Determining qualifying losses, eligibility for EM
loan(s) and the maximum amount of each.
Disaster losses will be reported by applicants on Form FmHA
1945-22,''Certification of Disaster Losses,'' which states the physical
and production losses suffered as a result of the declared/designated
disaster. The applicant will report, on Form FmHA 1945-22, total acres
and actual yields for all crops planted and/or grown in the disaster
year, and the number of all animal units and production per animal unit
being maintained at the time of the disaster. This information will
come from the applicant's own records or from ASCS records of acres
grown and proven actual yields in the disaster year. Applicants will
also report their previous 5-year production levels as set forth in
paragraph (a) of this section. This form will be completed and
submitted to the County Office with the application, as soon as the
losses and/or damages can be accurately assessed. The information
provided by applicants on Form FmHA 1945-22 will be the primary basis
for FmHA's calculation of qualifying losses, eligibility for EM loan(s)
based on production losses, and an applicant's maximum amount of EM loan
eligibility. Therefore, applicants are required to certify, subject to
penalties of law, that the accuracy and completeness of the information
provided on Form FmHA 1945-22 can be supported by written records.
Applicants will be asked to identify on that form any single farming
enterprise they consider basic to the success of their total farming
operation, and in which they have suffered a disaster loss. When an
applicant's certified production loss claims seem unreasonable, they
will be verified and the findings documented. Physical loss claims will
be verified by requiring the applicant to furnish evidence of ownership
and proof of the property loss or damage. Proof of ownership could be
by deeds, mortgages, financial statements, insurance policies, and the
like. Proof of the loss or damage could be by the applicant's own
pictures, written certification by other persons or, when practical, by
visual inspections by FmHA employees.
(a) Production losses. (1) The normal year's production will be
established by eliminating the poorest year of the 5-year production
history immediately preceding the disaster year and averaging the
remaining 4 year's production. The applicant must select the year to be
eliminated. The year selected to be eliminated must be the same year
for all farm enterprises (i.e., all crops, livestock, and livestock
products), which constituted a part of the applicant's farming operation
during that year. A State supplement will be issued which will be used
in connection with paragraph (a)(1)(iii) of this section. The State
supplement will contain average production figures provided by the USDA
State Crop and Livestock Reporting Service, when available. If those
records are not available, the State supplement will contain statistical
data on production from similar State or Federal bodies. When this
information is available by county, county averages will be used. If
available only by State, the State averages will be used throughout the
State. In those States where neither a Country nor State average is
available for an agricultural commodity(ies), the State Director, with
the advice of representatives of other Federal and State agricultural
agencies, will establish County or State averages and advise County
Offices of these averages in the State supplement. State Directors and
Farmer Programs Chiefs in adjoining States will consult with each other
before releasing these figures. Applicants will identify, on Form FmHA
1945-22, the production record source(s) to be used in determining the
normal year's production for each commodity that was produced on all
farms operated by the applicant in the disaster year. Applicants must
use the production record source(s) for each crop in the order of
priority as follows:
(i) The applicant's actual reliable farm records or ASCS ''actual
yields,'' for those years for which they are available. When the ASCS
''actual yields'' are used, they will be documented on Form FmHA
1945-29. If actual yields are not available for all of the 5 crop
year(s), the applicant will first use a combination of actual records
which are available and the ASCS established yield(s) for the disaster
year, as specified in subparagraph (ii). If ASCS established yields are
not available for the disaster year, then the applicant will use a
combination of actual records which are available and County or State
averages, as specified in paragraph (a)(1)(iii).
(ii) The ASCS ''established yields.'' When this production record
source is used, the applicant must obtain the information from ASCS and
submit it with the application to FmHA. The disaster year established
yield, as provided by ASCS for any given crop, will be used as the yield
for those years for which actual yields are not available and combined
with actual yields to determine the normal year's yields. When there
are no actual yields available for any of the 5 years, and there is an
ASCS established yield available for the disaster year, the established
yield will be considered as the normal year's yield, without any
calculations. This production record source will be used only for those
years and those commodities for which the applicant's or ASCS actual
yields are not available.
(iii) The County or State average yields. These average yields will
be found in the State supplement mentioned in paragraph (a)(1) of this
section. This production record source will be used only for those
commodities and those years for which neither the applicant's reliable
farm records nor ASCS actual or established yields are available. Only
when there are no ''actual yields'' or ''established yields'' available
will County or State average yields be used. However, County or State
average yields may be combined with the actual yields when ASCS
established yields are not available, but County or State average yields
will not be combined with established yields when established yields are
available for the disaster year.
(iv) When an applicant's production loss is on new land being
developed, or to young perennial crops such as fruits and nuts, and
mature production potential has not been reached, the State Director
will establish normal year yields on a case-by-case basis.
(2) FmHA loan official(s) will complete Form FmHA 1945-26,
''Calculation of Actual Losses.''
(i) In calculating production losses, the same established unit
prices will be used for the disaster year and the normal year in
computing the dollar value of each enterprise. Unit prices will be
established in accordance with paragraph (a)(2)(iv) of this section. In
the production loss calculation, those crop production yields and
production per animal unit records authorized in paragraphs (a)(1)(i),
(ii) and (iii) of this section will be used.
(ii) Information certified on Form FmHA 1945-22 for the disaster year
for all single enterprises (as defined in 1945.154(a)(13)(i) of this
subpart), which suffered a loss due to the disaster, will be transposted
from Form FmHA 1945-22 to the appropriate places on Form FmHA 1945-26.
The FmHA official completing Form FmHA 1945-26 is responsible for
verifying loss information provided by the applicant. Information
obtained from ASCS on Form FmHA 1945-29 will be cross checked with
information provided by the applicant on Form FmHA 1945-22. Whenever
there is a discrepancy between an applicant's acreage and/or yield
information provided on Form FmHA 1945-22, by the applicant, and the
information provided by ASCS on Form FmHA 1945-29, the applicant will be
told about the discrepancy and the applicant and the County Supervisor
will complete Form FmHA 1945-22 so that it accurately reflects the
applicant's acreage and yield.
(iii) When the applicant's disaster loss is due to a reduction in
quality with or without a quantity loss, rather than a reduction in
quanity only, the applicant will be given credit for quality loss by
adjusting the actual production yield downward. This will be
accomplished by converting the dollar value of the quality loss to a
yield reduction equal in value to the quality loss. When a quality
adjustment is necessary, the basis used in making the adjustment will be
the applicant's accurate records of production and sales receipts
showing the actual price received and the grade of the commodity for the
five years immediately preceding the disaster year. The normal year's
quality will be established by eliminating the poorest of the five-year
record. The applicant must select the year to be eliminated. The
burden of providing this information rests with the applicant.
Example I: A farmer has accurate records indicating that the
farmer's normal year's production of corn is 100 bushels per acre of No.
2 corn. Due to flooding after the ears were set and mature, the corn
was coated with a filmy residue. This resulted in the quality grade
being reduced from No. 2 to No. 3. The commodity price established for
No. 2 yellow corn was $3.00 per bushel. The farmer, due entirely to a
reduction in quality, received $1.50 per bushel. Therefore, when
computing the disaster loss, the quantity produced would be reduced by
50% to reflect the quality loss.
Price per Unit Disaster Year ($1.50) Divided by Price per Unit Normal
Year ($3.00) equals Quality Reduction (.5 or 50%)
Quality Reduction Disaster Year Actual Production = Quality (for
loss calculation)
.5 100 bushels per acre = 50 bushels per acre
50 bushels per acre will be entered on Form FmHA 1945-26 as the
disaster year yield to reflect the quality reduction.
Example II: A cotton farmer usually produces No. 2 cotton. In the
disaster year, the farmer produced No. 3 cotton and this quality loss
resulted in a grade reduction amounting to a dockage of $100.00 per bale
(550 lbs.). The farmer's ASCS established yield is 550 lbs. per acre.
The farmer produced 600 lbs. per acre in the disaster year. The
established price for cotton for the disaster year is $330.00 per bale
(.60 cents per pound).
.70 600 = 420 lbs. per acre
420 lbs. per acre would be entered on FmHA Form 1945-26 as the
disaster year yield to reflect the quality reduction.
In this example the farmer would not be eligible for an EM loss loan
since the farmer suffered only a 24 percent loss.
The calculations used for a quanity reduction due to quality losses
must be documented on Form FmHA 1945-26 or on an attachment to that
form.
(iv) The gross dollar value of production losses will be computed for
all crops and all livestock enterprises that suffered losses due to the
disaster, by calculating the value of the disaster year's production and
subtracting that amount from the calculated value of the normal
production. Unit prices for all agricultural commodities produced
commercially in each State will be established on a Statewide basis by
all FmHA State Directors each year, and published in a State supplement
to be issued not later than February 15 of each year. These commodity
prices will be established by averaging the monthly market prices of
each commodity for the 12-month period preceding the calendar year in
which the disaster occurs. The monthly average market prices report,
''Agricultural Prices,'' prepared by the National Agricultural
Statistics Service (NASS), formerly the Statistical Reporting Service
(SRS), will be mailed to each State Office from the FmHA National Office
the first week of each month for the previous month. This report
provides the average monthly prices for all major agricultural
commodities produced in each State. For major commodities not reported
monthly by NASS, State Offices will also be sent the NASS publication,
''Crop Values Summary.'' This publication provides a 3-year history of
seasonal average prices, by State and United States average, for all
crops of any significance produced in the 48 contiguous States and
Hawaii. Prices found in this annual publication, available by February
1 of the year succeeding the year being reported, are to be used as a
guide only in establishing the annual price list of commodity prices
only for those commodities for which the monthly average prices are not
reported. State Directors will consult with other agricultural agency
representatives and other agricultural lenders in the local area; and
State Directors and Farmer Program Chiefs in adjoining States will
consult each other for additional guidance before releasing their
commodity price lists. Once established, these prices will not be
changed for any EM loan processed under any disaster occurring on or
after February 1 of that calendar year through January 31 of the next
calendar year. These monthly and annual reports will be retained and
used for reference each year when preparing the annual price lists of
average commodity prices to be used Statewide for calculating actual
production loss values, for all disasters that occur during the ensuing
12-month period.
(v) The amount of actual production loss will be calculated for the
single enterprise which is a basic part of the farming operation (see
1945.154(a)(13) of this subpart) by subtracting all financial
assistance, verified as having been received or to be received, through
any disaster relief program, and all compensation for disaster losses
provided by any source (i.e., crop insurance indemnity payments, ASCS
disaster program payments) for that enterprise, from the gross dollar
amount of production losses for that enterprise as determined in
paragraph (a)(2)(iv) of this section.
(vi) Actual losses for tobacco, peanuts and other crops grown under
acreage and/or poundage control will not be calculated differently than
any other crop; i.e., the calculations must not include the dollar
value of carry over surplus poundage from previous year's(s') production
or underproduced pounds to be sold or produced in future years. The
value of underproduced poundage allotments and quotas must not be
subtracted from the loss. Production from all ''controlled'' crop acres
planted in the disaster year, including acreage above the producer's
allotments and quotas, will be considered even though the carry-over
crop is not eligible for price supports until the next marketing year.
(vii) Actual losses for spring and fall annual crops of the same
species will be treated as two separate crop losses and listed
separately on Forms FmHA 1945-22 and 1945-26. The crop(s) not affected
by the disaster will be considered as having produced a normal year's
yield.
(viii) The dollar value of the actual production loss for the single
enterprise which is a basic part of the farming operation as designated
by the applicant in Item F, Form FmHA 1945-22, will be divided by the
previously calculated normal year's gross income for that enterprise.
The result should be rounded to the nearest whole number. To
illustrate, if the calculation shows a 29.49 percent production loss,
round it down to 29 percent. If the calculation shows a 29.50 percent
loss round it up to 30 percent. This establishes the percentage
reduction in production from normal for that enterprise. If the
percentage loss in any single enterprise (see 1945.154(a)(13) of this
subpart) which is a basic part of the farming operation equals or
exceeds 30 percent, and the applicant is otherwise eligible, EM loan
assistance will be considered.
(ix) Once eligibility is established, based on production losses, the
total production loss sustained by the applicant, directly attributable
to the disaster, is computed by adding the gross dollar amount of
production losses of all single enterprises, whether or not they
constitute a basic part of the farming operation, and subtracting from
this total all financial assistance verified as having been received or
to be received through any disaster relief program, and all compensation
for disaster losses provided by any source for those enterprises.
(x) The maximum EM loan for production losses is limited to 80
percent of the total calculated actual production loss sustained by the
applicant.
(xi) Production losses to hayland, pasture and rangeland used for
grazing livestock owned by the applicant must be based on the production
from only those acres which are utilized in the disaster year. Losses
may be calculated by one of three methods when approved by the State
Director. The State Director will decide which one of the following
three methods will be used throughout the State to calculate losses to
pasture and rangeland; and issue a State supplement to this subpart,
setting forth the method(s) to be used Statewide.
(A) The price per acre method. The price per acre method is used to
calculate pasture losses in the following manner:
(1) Determine the normal year's gross dollar value. To calculate
this, multiply the number of acres available to be grazed for the
disaster year by the established rental charge per acre per mongh (this
figure is established by the State Director in accordance with paragraph
(a)(2)(iv) of this section); by the average number of months grazed per
year during the highest 4 out of the 5 preceding years.
(2) Determine the disaster year gross dollar value. To calculate
this multiply the number of acres grazed during the disaster year by the
established rental charge per acre per month (as determined in
accordance with paragraph (a)(2)(xi)(A)(1) of this section); by the
number of months the livestock were able to be grazed during the
disaster year.
(3) Subtract the disaster year gross dollar value (see paragraph
(a)(2)(xi)(A)(2) of this section) from the normal year gross dollar
value (see paragraph (a)(2)(xi)(A)(1) of this section) to determine the
value of pasture loss suffered during the disaster year.
(B) The charge per head or animal unit method. The charge per head
or per animal unit method is used to calculate pasture losses in the
following manner:
(1) Determine the normal year gross dollar value. To calculate this,
multiply the number of animals or animal units grazed per month during
the disaster year by the established rental charge per animal or per
animal unit per month (this figure is established by the State Director
in accordance with paragraph (a)(2)(iv) of this section); by the
average number of months grazed per year during the highest 4 out of the
preceding 5 years.
(2) Determine the disaster year gross dollar value. To calculate
this, multiply the number of animals or animal units grazed per month
during the disaster year by the established normal rental charge per
animal or per animal unit per month (as determined in accordance with
paragraph (a)(2)(xi)(B)(1) of this section); by the number of months
grazed during the disaster year.
(3) Subtract the disaster year gross dollar value (see paragraph
(a)(2)(xi)(B)(2) of this section) from the normal year gross dollar
value (see paragraph (a)(2)(xi)(B)(1) of this section) to determine the
value of pasture loss suffered during the disaster year.
(C) The forage equivalent method. The forage equivalent method is
used to calculate pasture losses in the following manner:
(1) Determine the normal year gross dollar value. To calculate this,
multiply the number of acres grazed during the disaster year by the
established price per pound or ton (this figure is established by the
State Director in accordance with paragraph (a)(2)(iv) of this section);
by the average number of pounds or tons of forage equivalent produced
per acre per year during the average of the highest 4 out of the
preceding 5 years for forage of the type being used in this calculation.
(The State Office will set forth the forage equivalent values to be
used or the methodology to be used for deriving this value, in a State
Supplement. This information may be set forth on a countywide or
statewide basis. The State Director may contact the State's Extension
Service or other knowledgeable sources to assist in establishing the
forage equivalent determination.)
(2) Determine the disaster year gross dollar value. To calculate
this, multiply the number of acres grazed during the disaster year by
the established price per pound or ton (this figure is established by
the State Director in accordance with paragraph (a)(2)(xi)(C)(1) of this
section); by the number of pounds or tons of forage equivalent produced
for forage of the type being used in this calculation produced in the
disaster year. (See paragraph (a)(2)(xi)(C)(1) of this section for
further information.)
(3) Subtract the disaster year gross dollar value (see paragraph
(a)(2)(xi)(C)(2) of this section) from the normal year gross dollar
value (see paragraph (a)(2)(xi)(C)(1) of this section) to determine the
value of pasture loss during the disaster year.
(xii) When a crop cannot be planted, an applicant may treat the loss
either as a production loss or as a physical loss (see paragraph (b) of
this section). When a crop cannot be planted and the applicant chooses
to treat the loss as a production loss, the loss will be calculated as
set out in this paragraph as follows: Add all income that is derived
from the enterprise to the variable costs which were not incurred
because of the disaster. (The cost figures will be derived from current
crop enterprise budgets prepared by State Agricultural Extension Service
economists, based on normal farming conditions in the area.) Subtract
this figure from the value of the normal year's production. The
resulting figure is the gross dollar amount of production loss.
(xiii) When a crop can be only partially planted due to a disaster or
when perennial crops (such as fruits or nuts) already growing cannot be
produced or harvested due to a disaster, the loss will be considered a
production loss. Such loss will be calculated as set out in paragraph
(a)(2)(xii) of this section.
(xiv) When a crop is planted and completely destroyed by a disaster,
a yield of ''zero'' may be shown on Form FmHA 1945-22 for the disaster
year, but only if no part of the crop could be harvested and no
substitute crop could be planted and harvested. When figuring the
actual dollar amount of production losses, subtract the normal costs of
harvesting and marketing which were not incurred for crops that were
completely destroyed by a disaster. If a substitute crop is planted and
harvested during the same crop year, a yield of ''zero'' should be shown
for the original crop, and the actual yield for the substitute crop on
Form FmHA 1945-22. On Form FmHA 1945-26, the dollar value of the
substitute crop must be added to the dollar value of the disaster year's
production and income.
(xv) Losses to feed crops will be established by determining the
normal year's gross dollar value of those crops and substracting the
disaster year's gross dollar value of feed crops. The difference
establishes the disaster year's gross dollar loss for feed crops. The
gross dollar value of feed crops produced is derived by multiplying the
number of feed crop acres by the yield per acre by the unit price.
(xvi) When an applicant elects to sell feeder livestock at an earlier
date than usual rather than purchase feed to replace that which was lost
as a result of the disaster, that is a management decision; and the
difference between what the sale weight would have been if the livestock
had been fed for the normal period and the disaster year's lighter,
premature sale weight may not be claimed as a loss.
(xvii) Calculation of production losses to livestock enterprises may
be based either on loss of production in feed crops, including pasture,
to be fed to the applicant's own livestock; or on loss (from normal) of
weight gain of the livestock or livestock products produced, but not
both. Normally, calculations of production losses to livestock
enterprises will be based on feed crop(s) and pasture losses. In the
case of foundation herds of breeding animals; however, the value of
feed produced on native rangeland and pasture constitutes a small
portion of the total input costs of maintaining a foundation herd of
breeding animals and their offspring. Therefore, loan approval
officials normally will calculate production losses to this type of
livestock operation based on reductions in the natural increase in
numbers and animal unit weight of such offspring. (Example available in
any FmHA office.)
Example:
A rancher has accurate records indicating that the rancher's 200 head
foundation breeding cow herd produced a normal calf crop average of 85
percent (170 calves) with an average weaned weight of 350 pounds per
calf. As a result of a drought, the rancher found it necessary to cull
the cow herd by 50 cows over the normal number culled.
The predisaster value of the cows was $600 per head. The rancher
received 35 cents per pound for the cull cows, which had an average
weight of 1100 pounds.
Additionally, the rancher's calf crop was only 70 calves with an
average weight of 240 pounds in the disaster year (DY). Therefore, the
rancher would have sustained a physical loss on the cow herd (see
1945.163(b)(6)(i)(B) and a production loss on the calf crop.
The established price for calves is 60 cents per pound.
The rancher's normal year's (NY) calf crop was 85 percent. Since the
rancher reduced the breeding herd by 50 cows, an adjustment must be made
to determine the calf losses. The reduced herd size is now 150 cows.
16,800
------
26,880=63% production loss
Additionally, an EM loan may be made based on the physical loss of 50
cows. (See example in 1945.163(b)(6)(i)(B).
(xviii) Any claims of production losses from the applicant will be
verified by FmHA when the applicant's claim(s) appears to be
unreasonable.
(xix) Claims of production losses for orchard crops (fruits or nuts)
will be considered only for the crop loss directly attributable to the
qualifying disaster and determined in accordance with paragraph (a)(2)
of this section.
(xx) When an applicant's farming operation(s) is conducted in a
designated county(ies) and a non-designated county(ies), eligibility
will be established based on losses to a single enterprise which
constitutes a basic part of the total farming operation, without regard
to whether the single enterprise is located in the designated county.
The disaster year's actual yields, both in the designated and
non-designated counties, will be used to determine losses. Compensatory
payments will be subtracted as explained in paragraph (a)(2)(v) of this
section when determining eligibility. The amount of the production loss
loan will be limited to the production loss sustained in the designated
county(ies) only, minus any compensatory payments received or to be
received for that portion of the farming operation located in the
designated county(ies).
(xxi) The County Supervisor will assign normal yields to all
unplanted acreage covered by a Payment in Kind (PIK) contract, when
calculating crop production losses on Form FmHA 1945-26.
(b) Physical losses. (1) In order to qualify for an EM loan(s) for
physical losses, the damaged or destroyed physical property must be
essential to the successful operation of the farm and if not repaired or
replaced, the farmer would be unable to continue operations on a
reasonably sound basis. The financing necessary to recover from the
physical loss must be actually needed to permit the applicant to
continue the operation.
(2) The claimed value of all physical losses due to disaster damage
or destruction must be supported by written estimates for the necessary
repair or replacement requested.
(3) Physical loss loan funds can be used to pay for only contracted
or hired labor and materials and supplies purchased. Labor, machinery,
equipment, and materials contributed by the applicant or borrower will
not be chargeable to the cost of necessary repair and replacement.
(4) Damage to or destruction of nonessential buildings, structures or
other items will not be repaired or replaced with EM physical loss loan
funds. Any insurance compensation received or to be received for such
losses will be considered as compensation for losses to essential farm
buildings, structures and other items which need to be repaired or
replaced.
(5) The maximum physical loss loan(s) will be determined by
subtracting all financial assistance provided through any disaster
relief program and all compensation for disaster losses provided by any
source from the value of all actual physical losses caused by the
disaster.
(6) The physical loss for the following items equals the market value
at the time of the disaster for items lost, damaged or destroyed by or
as a result of the disaster:
(i) Livestock.
(A) Death of an animal(s) caused by the disaster.
(B) Disaster related damage to an animal's(s') health, which has
impaired or reduced its normal production capability and its market
value. This includes forced reductions of foundation breeding stock
caused by the disaster. Physical losses, under these conditions, would
be calculated by establishing a dollar value per head, or unit, at the
time the disaster occurred, and deducting the reduced dollar value
received from the disaster-caused sale of the animals. The difference
in the two values would be considered a physical loss. (THE ANIMALS
SOLD MUST BE OVER AND ABOVE THE NUMBERS NORMALLY CULLED EACH YEAR).
Example:
A physical loss would be calculated as follows:
Predisaster market value -- 50 cows $600/cow=$30,000
Price received for cull cows -- 50 cows 1100 lbs. 35 =$19,250.
Physical loss=$10,750 ($30,000 -- $19,250)
(ii) Livestock products on hand or stored.
(iii) Harvested crops on hand or stored.
(iv) Supplies on hand.
(v) Essential machinery and equipment.
(7) The actual physical loss for farm dwellings and essential
household contents to be used by the operator and existing labor is the
amount required to repair or replace the dwelling and/or household
contents with a dwelling and/or contents of like standards, size and
quality of that being replaced which will meet all applicable code
requirements, and which will provide permanent, adequate, decent, safe,
sanitary and modest living quarters.
(8) The actual physical loss for farm service buildings and farm real
estate other than buildings is the amount required to repair the
property or replace it with a building or property of like standards,
size, quality and capacity of that being replaced which will meet all
applicable code requirements and which will adequately meet the needs of
the farming operation.
(9) The actual physical loss for income-producing trees (fruit or
nuts) is the cost of removing the damaged or destroyed trees, cleaning
debris and preparing the land for replanting, plus the cost of suitable
replacement trees and other expenses necessary to reestablish
income-producing trees. Losses will not be determined by establishing a
value for the trees destroyed or damaged. Any salvage value will be
deducted from the loss. The applicant may choose to replace the damaged
or destroyed trees with a different enterprise and may use actual loss
loan funds for that purpose. (See Exhibit D of this subpart for
physical loss loans to citrus growers.)
(10) The actual physical loss to trees (grown for timber) will be
determined by establishing the value of trees, at the time of the
disaster, less any salvage value. This estimate of value must be
determined by a recognized forester who will cruise the timber and
establish the value of the destroyed and damaged trees. The applicant
may choose to replace the damaged tree enterprise with a different
enterprise and use the actual loss loan funds for that purpose. Those
applicants whose major farming enterprises are other than tree farming,
but who have a wood lot that has been damaged, will have their tree
losses considered as physical losses in the same manner as set forth for
tree farms.
(11) The actual physical loss to growing crops or pasture is the cost
of cleaning debris, preparing the land for replanting, seed, fertilizer,
and other expenses necessary to reestablish the crop(s) or pasture.
These costs can exceed the market value of the crop(s) or pasture at the
time of the disaster.
(12) When a crop cannot be planted during the disaster year due to
the disaster and the applicant chooses to treat the loss as a physical
loss, the actual physical loss is limited to the cost of land
preparation, other expenses incurred to the date of the disaster for
crops that could not be planted, and a pro rata share of the total
operation's fixed costs such as rent, taxes, and insurance. The
applicant must provide an itemized list of all the claimed expenses
incurred in the disaster year for those enterprises for which disaster
losses are claimed. This list must be signed by the applicant. The
amount of an EM loan cannot exceed the total itemized expenses listed by
the applicant.
(13) EM loans will not be made to flood and mudslide victims to
repair or replace damaged or destroyed farm dwellings or farm service
buildings and their contents in areas where ''National Flood Insurance''
is available, except as authorized in 1945.173(b) of this subpart.
(14) When an applicant has dwelling losses only, the applicant may
apply for either an EM loan or SBA disaster housing loan to restore or
replace the dwelling and personal household contents affected by the
disaster.
(c) Personal household content losses (Subtitle B purposes). (1) In
order to qualify for EM loan assistance for this purpose, the damaged or
destroyed household property must be essential to the maintenance of the
household; and if not repaired or replaced, the farmer would be unable
to remain on the property and continue the farming operation on a
reasonably sound basis.
(2) The claimed value of all household losses due to disaster damage
or destruction must be supported by written estimates for the necessary
repair or replacement.
(3) Labor, equipment, and materials contributed by the applicant or
borrower will not be chargeable to the cost of necessary household
repairs and replacements.
(4) Damage to or destruction of non-essential household items will
not be replaced or repaired with EM loan funds. Any insurance
compensation received or to be received for such losses will be
considered as compensation for those losses.
(5) The maximum EM loan(s) for repair or replacement of personal
household contents is $20,000.
(6) The EM loan(s) will be determined by subtracting all insurance
claims and other compensation received or to be received for household
losses from the cost of repairs or replacement value of the essential
household items.
(d) Compensation for losses. All financial assistance provided
through any disaster relief program and all compensation for disaster
losses received from any source by an EM loan applicant will reduce the
applicant's loss by the amount of such compensation. All such
compensation will be considered in determining the applicant's
eligibility for EM loan assistance and the maximum amount of loss loan
entitlement. The amount of any disaster program benefits received from
ASCS, including the Emergency Feed Assistance Program (EFAP), Emergency
Conservation Program (ECP), and Disaster Program payments will be
considered as compensation for losses (ASCS Deficiency Payments are not
to be considered as compensation).
(e) Maximum EM loans. This amount will be limited to the amount
necessary to restore the farm to its pre-disaster condition; however,
this will not exceed the sum of the maximum production loss (paragraph
(a)(2)(x) of this section) and the maximum physical loss (paragraph (b)
of this section) or $500,000, Whichever is the lesser. Indebted EM loan
borrowers can receive additional EM loans based on a subsequent
disaster(s), but not to exceed $500,000 for each additional qualifying
disaster. No applicant or individual member of an entity applicant can
be liable for more than $500,000 in EM loans per disaster.
(53 FR 30392, Aug. 11, 1988, as amended at 55 FR 21530, May 25, 1990;
56 FR 24682, May 31, 1991)
1945.164 -- 1945.165 (Reserved)
07 CFR 1945.166 Loan purposes.
(a) Policy on use of EM loan funds. (1) The maximum amount of an EM
loan(s), in addition to the limitations contained in 1945.163(a)(2)(x)
and (e) of this subpart, is further limited to the actual dollar loss,
or the actual amount of essential family, farm, and nonfarm enterprise
credit, whichever is the lesser, that the applicant needs to carry on
normal operations. EM loan funds will not be used to finance a nonfarm
enterprise, unless the loan is made to an individual applicant and such
enterprise is needed to support a reasonable standard of living for the
family. The use of EM loan funds will be identified in the farm and
home plan so that determination can readily be made as to whether such
loan(s) was used for authorized purposes and compensated the borrower
for all or a portion of the actual dollar loss.
(2) EM loan funds may be used for those purposes described in
paragraphs (b) and (c) of this section.
(b) Real estate (Subtitle A) purposes. EM loans for real estate
purposes may be made to owner-operators only. The following are
authorized real estate purposes for which EM loan funds may be used:
(1) Any Farm Ownership loan purpose (see Subpart A of Part 1943 of
this chapter);
(2) Replace land and/or water resources that cannot be restored due
to the disaster;
(3) Establish a new site for farm dwellings and service buildings so
that the applicant can relocate outside of a flood or mudslide prone
area;
(4) Replace land necessary to restore an effective operation which
was liquidated as a result of the disaster before an EM loan could be
made.
(5) Refinance secured and unsecured debts, including FmHA debts.
(c) Operating (Subtitle B) purposes. EM loans for operating purposes
may be made to owner-operators or tenant-operators. The following are
authorized operating purposes for which EM loan funds may be used:
(1) Any Operating Loan purpose (see Subpart A of Part 1941 of this
chapter);
(2) Purchase and repair of essential household contents, and pay
essential family living expenses. Entity operations are not eligible
for loan funds to be used for these purposes.
(3) Refinance secured and unsecured operating type debts, in whole or
in part, including existing FmHA debts.
(4) Pay reasonable expenses customarily paid when obtaining, planning
and closing a loan made for operating purposes, e.g., fees for legal,
architectural and other technical services, which are required to be
paid by the applicant, and which cannot be paid by the applicant from
other resources. It is not intended that this paragraph be interpreted
to include fees charged applicants by agricultural management
consultants and other professionals for preparation of EM loan dockets,
including farm and home plans and other FmHA forms used in processing
such loans.
07 CFR 1945.167 Loan limitations and special provisions.
(a) EM loans are not authorized for losses to crops grown in areas
where FCIC crop insurance or multi-peril crop insurance is available.
Applicants will not be eligible for EM loans to cover damages and losses
to any crop(s) harvested after December 31, 1986, which was not insured,
but could have been insured with FCIC crop insurance or multi-peril crop
insurance. In such instances, applicants will not qualify for EM loans
based on losses to those crops which could have been insured against the
losses, unless the crop(s) could not be planted due to the
declared/designated/authorized disaster(s). However, as a result of
1990 and 1991 natural disasters, the Food, Agriculture, Conservation and
Trade Act of 1990 and the Dire Supplemental Appropriations Act (Pub. L.
102-229) provide for the waiver of this mandatory crop insurance
requirement, but only for crops planted for harvest in 1990 or 1991.
Under these waiver provisions, disaster related production losses
sustained to crops planted for harvest in 1990 or 1991 will be counted
in the eligibility calculation and the maximum EM loan entitlement
determination, regardless of whether or not crop insurance was available
to the applicant, or whether or not such insurance was purchased by the
applicant. Planted for harvest in 1990 or 1991 means: (1) For annual
crops, planted for harvest in 1990 or 1991; (2) for perennial crops,
planted in 1991 or earlier and producing an annual crop for harvest in
1990 or 1991.
(b) Relationship between EM loans and other FmHA loans. An eligible
EM loan applicant's total credit needs will be first considered through
use of EM loan authorities in the maximum amount of entitlement, before
other regular (FO, OL, SW) FmHA farmer program loan authorities are
considered and used as a means of assisting the applicant/borrower.
(c) Use of EM loan funds is not authorized for expansion purpose(s)
beyond a family size farm. EM loan funds will not be used to expand an
applicant's farming, ranching, or aquaculture operation beyond that
which constitutes a family size farming/ranching operation(s). This
limitation is not intended to prohibit minor changes in crop or
livestock enterprises, provided:
(1) Any new or changed crop or livestock system is proven for the
area; and
(2) The applicant has the knowledge and ability to manage the changed
operation; and
(3) Substantial new or additional capital investment is not required.
EM applicants who operate family farms (as defined in 1941.4 of
Subpart A of Part 1941 of this chapter) may, if eligible, receive
regular FmHA farm ownership (FO), and/or operating (OL) loans
simultaneously with their initial (EM) loan to help finance their
farming operations. If a borrower expands the farming operation beyond
a family size farm after receiving an EM loan, no further EM loan
assistance will be given even though the borrower may suffer qualifying
losses under a new declared/designated/authorized disaster.
(d) Applicants involved in more than one operation. Loans to
applicants involved in more than one farming operation will be
considered so long as the loan limit set out in 1945.163 (e) of this
subpart is not exceeded.
(e) Refinancing guaranteed loans. An EM loan will not be made to
refinance a guaranteed loan, except when the following conditions are
met:
(1) The circumstances causing the need to refinance were beyond the
borrower's control.
(2) Refinancing is in the best interest of the Government.
(f) New appraisals. New ''Appraisal of Real Estate Reports'' are not
required if the appraisal report in the file is not over one year old,
unless the approval official requests a new appraisal report, or unless
significant changes in the market value of real estate have occurred in
an area within the one-year period. Any changes in the value of real
estate or chattel security will be recorded, dated and initialed by the
certified appraiser on the appropriate appraisal reports in the file.
(g) Recordkeeping. EM borrowers receiving or indebted for EM loans
of $100,000 or more are required to keep hard farm records on an
approved format or use an accountant or a farm management service
computer system as long as they are indebted for EM loans. EM borrowers
are required to retain these records for at least three years. (See
Subpart B of Part 1924 of this chapter.)
(h) Disbursement of loan funds. Loan funds which will not be
disbursed for specific purposes at loan closing will not be requested in
the initial request for funds from the Finance Office. The ''Loan
Disbursement System'' will be used to make funds available when they are
actually needed. See 1945.189 (a)(8) of this subpart for instructions
on the use of supervised bank accounts.
(i) Prohibition on guaranteeing repayment of advances from other
credit sources. FmHA employees will not guarantee repayment of advances
from other credit sources, either personally or on behalf of applicants,
borrowers, or FmHA.
(j) Applicants previously indebted to FmHA. An EM loan will not be
approved if the applicant's previous FmHA debts have been settled
pursuant to Subpart B of Part 1956 of this chapter or if a debt
settlement is currently being processed for the applicant in accordance
with these regulations or if the applicant's property has been
foreclosed on or repossessed by FmHA, unless the applicant's failure to
pay the loan indebtedness was the result of circumstances beyond the
applicant's control; the conditions which necessitated the debt
settlement or release, other then weather hazards, disasters, or price
fluctuations have been removed; and the borrower's operations will
afford the borrower a reasonable prospect of repaying the loan and
meeting other obligations. Prior to approval of the loan, the loan
docket and any available case folders, including the County Supervisor's
justification for making the loan, will be submitted to the State Office
for a determination as to whether the loan should be made. Applicants
who are rejected due to debt settlement actions will be sent proper
notification as outlined in 1910.6(b)(1) of Subpart A of Part 1910 of
this chapter.
(k) Highly erodible land and conversion of wetland. Loans may not be
made for any purpose that will contribute to excessive erosion of highly
erodible land or to the conversion of wetlands for the production of an
agricultural commodity, as further explained in Exhibit M to Subpart G
of Part 1940 of this chapter.
(53 FR 30392, Aug. 11, 1988, as amended at 54 FR 48228, Nov. 22,
1989; 56 FR 1565, Jan. 16, 1991; 56 FR 10147, Mar. 11, 1991; 56 FR
67152, Dec. 30, 1991)
07 CFR 1945.168 Rates and terms.
(a) Interest rates. Upon request of the applicant, the interest rate
charged by FmHA will be the lower of the interest rate in effect at the
time of loan approval or loan closing. If the applicant does not
indicate a choice, the loan will be closed at the interest rate in
effect at the time of loan approval. Interest rates are specified in
Exhibit B of FmHA Instruction 440.1 (available in any FmHA office) for
the type assistance involved. Interest on the initial advance will
accrue from the date of the promissory note. Interest on other advances
will accrue from the date of the loan check for each such advance.
(b) Terms of loans. Loans will be scheduled for repayment at such
time as the FmHA approval official may determine, consistent with the
purpose of and need for the loan. The approval official will also
consider the useful life of the security and the repayment ability of
the applicant, as reflected in the completed farm and home plan, when
setting the term of each loan. There must be some payment, e.g., an
irregular payment, scheduled at least annually. Loans will not be
scheduled for terms longer than are justified and supported by the farm
and home plan. EM loans based on production losses and/or physical
losses to chattels, foundation livestock and other intermediate term
capital assets cannot exceed a 20 year payback; and EM loans based on
physical losses to real estate, e.g., land, buildings and structures
cannot exceed a 40 year payback.
(1) Operating purposes (Subtitle B). EM loans made for operating
purposes will be scheduled for repayment as follows:
(i) Normally, loans will be scheduled for payment in a period not to
exceed 7 years. However, loans may be scheduled for a longer repayment
period if the FmHA approval official determines that the needs of the
applicant justify a longer term, and the loan(s) can be secured for the
longer term. Such longer period may be approved as warranted, but
cannot exceed 20 years. This longer repayment period will be used only
when the farm and home plan projections indicate the applicant would be
unable to repay the loan in a shorter period, taking into consideration
rescheduling possibilities. The reason(s) that a term longer than 7
years is given must be documented in the County Office case file.
(ii) Loans made for production expenses under 1945.166(c) of this
subpart, or for payment of bills incurred for such purposes for the
operating or crop year being financed, will be scheduled for repayment
when the principal income from the year's operations is normally
received, unless the loan will be adequately secured with a lien(s) on
items of collateral other than crops that are to be produced with the
loan funds. In the latter event, repayment terms must comply with
paragraph (b)(1) (i) and (iii) of this section.
(iii) Loans made to purchase or produce feed for productive livestock
or livestock to be fed for the market, or to pay bills incurred for such
purposes for the crop year being financed, will be scheduled for
repayment when the principal income from the sale of such livestock or
livestock products is planned to be received, unless the loan will be
adequately secured with a lien(s) on items of collateral other than the
livestock and livestock products that are to be produced with the loan
funds. In the latter event, repayment terms must comply with paragraph
(b)(1) (i) and (ii) of this section.
(iv) When conditions warrant, installments may vary in amount.
However, there must be at least a partial interest payment scheduled
annually. Also, the final installment will not be larger than the
amount which can be expected to be refinanced by other agricultural
lenders or be repaid within a rescheduled period of 15 years. The
applicant must be advised before the loan is closed that FmHA will
review each case at the end of the initial loan term to determine if
rescheduling is warranted, and that there is no obligation for FmHA to
continue with the borrower after the expiration of the initial loan
term.
(2) Real estate purposes (subtitle A). EM loans made for real estate
purposes under 1945.166(b) of this subpart will normally be scheduled
for repayment for a term not to exceed 30 years. Loans may be scheduled
for a longer repayment period if the FmHA approval official determines
that the needs of the applicant justify a longer repayment period. A
longer term may be approved as warranted, but cannot exceed 40 years.
The longer repayment period will be used only when it is evident the
applicant will be unable to repay the loan in a shorter period. The
reason(s) for giving the longer period must be well documented in the
County Office case file.
(c) Consolidation, rescheduling and reamortization. When the loan
approval official determines that consolidation, rescheduling, or
reamortization will assist in the orderly collection of an EM loan, the
loan approval official may take such action in accordance with Subpart S
of Part 1951 of this chapter.
(d) Graduation. Borrowers will be required to graduate when FmHA
determines they are able to obtain their needed credit from conventional
sources. All borrowers will be advised that they will be reviewed for
graduation periodically in accordance with the graduation procedure in
Subpart F of Part 1951 of this chapter. EM borrowers will be reviewed
for graduation three (3) years after their initial loan is made and
every two (2) years thereafter, until graduation is achieved or the EM
indebtedness is paid in full. Applicants will be advised during loan
processing and again at loan closing that they will be required to
refinance at any time when other satisfactory credit is available to
them, even though their loans have not fully matured.
(53 FR 30392, Aug. 11, 1988, as amended at 53 FR 35716, Sept. 14,
1988; 55 FR 21532, May 25, 1990)
07 CFR 1945.169 Security requirements.
The County Supervisor is responsible for seeing that adequate and
proper security is obtained and maintained and that the security
instruments have been properly executed and recorded to protect the
interest of the Government.
(a) General requirements. (1) Except for the modifications contained
in paragraph (d) of this section, security must be of such a nature and
extent that repayment of the loan(s) is assured, considering the
applicant's managerial ability, soundness of the operation, and
projected earnings. Security for loans may include, but is not limited
to the following: Land, buildings, structures, fixtures, furniture,
machinery, equipment, livestock, livestock products, growing crops,
stored crops, inventory, supplies, accounts receivable, cash or special
cash collateral accounts, marketable securities, certificates of
ownership of precious metals, and cash surrender value of life
insurance. Security may also include assignments of leases or leasehold
interests having a mortgageable value; revenues; royalties from
mineral rights, patents and copyrights; and pledges of security by
third parties.
(2) A lien will not be taken on property that cannot be made subject
to a valid lien; nor will a lien be taken on subsistence livestock,
household goods, small tools and small equipment such as handtools,
power lawn mowers, and other items of like type not needed for security
purposes. A lien on feed crops does not have to be taken if the crops
produced by the borrower are used to feed livestock, other than
livestock being fed for market, and the loan is otherwise well secured.
(3) The same collateral may be used to secure two or more loans made,
insured and/or guaranteed, to the same borrower. Accordingly, when an
EM loan is made to an indebted FmHA guaranteed loan borrower, a junior
lien may be taken on the same chattels and/or real estate that serves as
collateral for the guaranteed loan(s).
(b) Personal liability. The promissory will be signed as follows:
(1) Individuals. Only the applicant will sign the note as a
borrower. If a cosigner is needed (see 1910.3(e) of Subpart A of Part
1910 of this chapter), the cosigner will also sign the note. Any other
signatures needed to assure the required security will be obtained as
provided in State supplements. Persons who are minors or mental
incompetents will not execute a promissory note. Except when a person
has pledged only property as security for a loan, the purpose and effect
of signing a promissory note or other evidence of indebtedness for a
loan made or insured by FmHA is to incur individual personal liability
regardless of any State law to the contrary.
(2) Cooperatives or corporations. The appropriate officers will
execute the note on behalf of the cooperative or corporation, and any
other signatures needed, to assure the required security will be
obtained as provided in State supplements.
(3) Partnerships or joint operations. The note will be executed by
the partner or joint operator authorized to sign for the entity, and all
partners in the partnership or joint operators in the joint operation,
as cosigners.
(c) Personal and corporate guarantees by cosigners. (1) If a review
of all credit factors indicates the need for additional security, the
loan approval official may require additional personal and/or corporate
guarantees by a cosigner(s), including guarantees from parent,
subsidiary or affiliated companies; relatives of the applicant; or any
other willing party having equity in mortgageable assets. The loan
approval official will require that such guarantees be secured by
collateral which has an equity value. Any security referred to in
paragraph (a)(1) of this section may be used to secure the guarantees.
(2) Guarantors of applicants will:
(i) In the case of personal guarantees, provide current financial
statements (not over 30 days old at time of filing), signed by the
guarantors and disclosing community or homestead property.
(ii) In the case of corporate guarantees, provide current financial
statements (not over 30 days old at time of filing), certified by an
officer of the corporation.
(3) When security is taken under paragraph (c) of this section, if
chattels, it will be serviced in accordance with Subpart A of Part 1962
of this chapter; and, if real estate, in accordance with Subpart A of
Part 1965 of this chapter.
(d) Applicant's repayment ability. When adequate security is not
available because of the disaster, the loan approval official will
accept as security such collateral as is available, if the following
conditions are met:
(1) A portion or all of the security has depreciated in value due to
the disaster; and
(2) The available security, together with the approval official's
confidence in the applicant's repayment ability, is adequate to secure
the loan. When considering ''repayment ability'' as a form of security,
the reserve or margin between the balance available for debt repayment
shown on the farm and home plan, and the principal and interest
scheduled for payment is the ''repayment ability'' collateral which may
be considered in loan making actions when this plan is developed for the
typical year. The ''typical year'' plan must show that the portion of
the loan secured by ''repayment ability'' will be paid back in a
reasonable period of time, i.e., the loan balance will be reduced to a
fully secured loan within 3 years.
(e) Life insurance. If the loan approval official believes it is
needed as additional security, life insurance may be required for the
individual borrower or for the members, stockholders, partners, joint
operators, of an entity borrower, listing FmHA as the beneficiary. This
life insurance may be decreasing term insurance. A schedule of life
insurance available as security for the loan will be included as part of
the application.
(f) Security for operating type purposes. (1) EM loans made for
Subtitle B (operating) purposes will be secured by a first lien on the
crop(s) and/or livestock and livestock products being financed with EM
loan funds. However, if the applicant does not have sufficient equity
to secure the entire amount of the loan, additional security as
prescribed in paragraph (a)(1) of this section will be taken to assure
that the Government's financial interest will be protected. When the
applicant can provide no security other than a first lien on the crop(s)
and/or livestock and livestock products to be produced, the amount of
the loan will be limited to 75 percent of the planned gross farm income
as shown on the Farm and Home Plan based on normal production and prices
authorized by the State Director for developing annual farm plans within
the State.
(2) The advice of OGC will be obtained on how to perfect a security
interest when milk base and grazing permits are taken as security.
(3) General intangibles, accounts receivable, and contract rights may
be taken as security for production loss loans made to contract feeders,
tenants with share-lease arrangements, or other farmers with similar
arrangements.
(g) Security for real estate type purposes. EM loans made for
Subtitle A (real estate purposes) will be secured by a lien on real
estate. However, if the applicant does not have sufficient equity in
the real estate to secure the entire amount of the loan, additional
security as prescribed in paragraph (a)(1) of this section will be
taken.
(h) Combination of real estate and chattel security. When chattels
are primarily relied upon as security and real estate is taken only as
additional security to better protect the Government's interest, only a
certification of ownership and verification of equity in real estate is
required, if the applicant is an individual. Certification of ownership
may be accepted in the form of a notarized affidavit from the applicant
stating who is the owner of record of the real estate in question and
acknowledging all known debts, with balances owed, against the real
estate. Whenever the County Supervisor is uncertain of the ownership of
or debts against the real estate security, and for all loans to
cooperatives, corporations, partnerships, or joint operations a title
search is required.
(i) Security for personal household contents. EM loan funds advanced
for the purposes authorized in 1945.163(c)(2) of this subpart will be
secured by equity in farm machinery, livestock and/or real estate.
Liens will not be taken on basic essential personal property (See
1945.154(a)(16) of this subpart).
(j) Purchase contracts. If the real estate offered as security is
held under a purchase contract, the following conditions must exist:
(1) The applicant must be able to provide a mortgageable interest in
the real estate.
(2) The applicant and the seller must agree in writing that any
insurance proceeds received for real estate losses will be used only to
replace or repair the damaged real estate improvements which are
essential to the farming operation; or used for other essential real
estate improvements; or paid on the EM loan or on any prior real estate
indebtedness, including the purchase contract. If necessary, the
applicant will negotiate with the seller to arrive at a new contract
without any provisions objectionable to FmHA.
(3) If a satisfactory contract for sale cannot be negotiated or the
seller refuses to enter into the agreement described in paragraph (j)(2)
of this section, the applicant will make every effort to refinance the
existing purchase contract. If the applicant cannot obtain refinancing
from another source, EM loan funds may be considered to pay off the
contract.
(4) If the conditions set out in paragraphs (j)(1), (2), and (3) of
this section exist and an EM loan is approved, it can be closed provided
the FmHA escrow agent or approved attorney certifies on Form 1927-10,
''Final Title Opinion,'' or in separate writing that:
(i) The purchase contract is not subject to summary cancellation on
default and does not contain any other provisions which might jeopardize
either the Government's security position or the borrower's ability to
repay the loan.
(ii) The seller has agreed, in writing, to give FmHA notice of any
breach by the purchaser, and has also agreed to give FmHA the option to
rectify the condition(s) which amounts to a breach within thirty days.
The thirty days begin to run on the day FmHA receives written notice of
the breach.
(k) Prior liens which may jeopardize the Government's security
position. If any prior liens against real estate offered as security
contain future advance provisions or other provisions which might
jeopardize the security position of the Government or the applicant's
ability to meet the obligations of these prior liens and to pay the EM
loan, the prior lienholders involved must agree in writing, before the
loan is closed, to modify, waive, or subordinate such objectionable
provisions to the interest of the Government. However, the Government's
lien may be subject to the lien of another creditor for amounts advanced
or to be advanced for annual operating and family living expenses for
the operating or calendar year. The County Supervisor will determine if
the creditor will be required to execute Form FmHA 441-13, ''Division of
Income and Nondisturbance Agreement,'' or a similar form approved by the
OGC.
(l) Circumstances under which advance notice of foreclosure or
assignment is required. When a junior lien on real estate is to be
taken as security for a loan in States where a prior lienholder may
foreclose the security instrument under power of sale, or otherwise, and
extinguish junior liens of private parties without giving junior
lienholders actual notice of the foreclosure proceedings, the prior
lienholder must agree in writing to give FmHA advance notice of
foreclosure or will offer to assign the mortgage to FmHA for the amount
of the outstanding debt owed to the prior lienholder.
(m) Hazard insurance. Hazard insurance with a standard mortgage
clause naming FmHA as beneficiary may be required for every loan made.
The minimum amount of insurance required is the lesser of the
replacement cost of the property being insured or the amount of the
loan. If essential insurable buildings are located on the property, or
if new buildings are to be erected or major improvements are to be made
to existing buildings, the applicant will provide adequate hazard
insurance coverage at the time of loan closing, or as of the date
materials are delivered to the property, whichever is appropriate.
Notwithstanding the requirements of Subpart A of Part 1806 (FmHA
Instruction 426.1) of this chapter, when the real estate appraisal
report shows that the present market value of the land after deducting
the value of buildings shown on the report exceeds the amount of the
debt (including the EM loan) and the owner has equity equal to or
exceeding the amount of the debt (including the EM loan), real estate
property insurance may not be required. However, the applicant will be
encouraged to obtain such insurance, if the applicant does not already
have it, to protect the applicant's interest. If insurance claims for
loss or damage to buildings to be replaced or repaired with loan funds
are outstanding at the time the loan is approved, the applicant will be
required to agree in writing that, when settlement is made, the proceeds
of such claims will be used for replacement or repair of buildings,
application on debts secured by prior liens, or application on the EM
loan.
(n) Crop insurance. Crop insurance is a good management tool. Loan
approval officials will, therefore, during the loan making process,
encourage all borrowers who grow insurable crops to obtain and maintain
FCIC crop insurance or multi-peril crop insurance, if it is available.
(1) When EM loan funds are to be used as the primary source of
financing for the ensuring year's crop production expenses, and such
crop(s) will serve as security for the loan, and crop insurance is
purchased by the borrower, FmHA will require an ''Assignment of
Indemnity'' on the borrower's crop insurance policy(ies).
(2) When FmHA is not the primary lender for annual crop production
expenses, but has or will have a security interest in the crop(s), and
the applicant has purchased or will purchase crop insurance, an
''Assignment of Indemnity'' will be taken by FmHA, if the primary lender
chooses not to do so.
(3) When EM loans are based on physical losses only, and loan funds
will be used for annual production expenses the same conditions will
prevail as stated in paragraph (n)(1) of this section.
(4) When the payment of crop insurance premiums is not required until
after harvest, the premiums may be paid by releasing insured crop(s)
sale proceeds, notwithstanding the limits in 1962.17 and 1962.29(b) of
Subpart A of Part 1962 of this chapter. If the borrower's crop losses
are sufficient to warrant an indemnity payment, the premium due will be
deducted by the insurance carrier from such payment. The FmHA County
Office will maintain a record on Form FmHA 1905-12, ''Monthly
Expirations,'' of the dates which each borrowers' crop insurance
premium(s) is due. This is in accordance with FmHA Instruction 1905-A,
a copy of which is available in any FmHA County Office.
(5) As a result of 1990 and 1991 natural disasters affecting 1990 or
1991 crops, it is required that all recipients of EM loans, based on
1990 or 1991 production losses, must agree to obtain multi-peril crop
insurance, under the Federal Crop Insurance Act, for the 1992
crop/commodity which suffered disaster losses in 1990 or 1991, and for
which the EM loan is sought. However, applicants shall not be required
to obtain crop insurance for a 1992 crop/commodity when any one of the
following conditions exists:
(i) Crop insurance was not available for the crop for which the loan
is sought, i.e., there was no open season and no opportunity to acquire
said insurance;
(ii) The applicant's annual premium rate for crop insurance will be
more than 25 percent greater than the average premium rate charged for
insurance on the 1990 or 1991 crop (depending upon which year's losses
are claimed) in the county where the applicant's farming operation is
located;
(iii) The annual premium costs for such crop insurance is greater
than 25 percent of the amount of the EM loan sought;
(iv) The applicant's 1990 or 1991 production loss, with respect to
the crop(s) for which the EM loan is made, does not exceed 65 percent.
Calculations for this determination will be performed by ASCS and
entered on Form FmHA 1945-29, ''ASCS Verification of Farm Acreages,
Production and Benefits,'' in part II, column (b). The ASCS County
Office will enter all crops for which an application for disaster
assistance has been filed in the disaster year for each farm unit, and
enter the percent of loss after each crop listed. Any listed crop that
has a loss greater than 65 percent must be insured for 1992, if it is
planned to be planted. Any listed crop that does not have a loss
greater than 65 percent will not have an insurance requirement, but EM
borrowers would be encouraged to purchase insurance on all crops for
which it is available;
(v) The applicant can establish, by appeal to the FmHA County
Committee, that the purchase of crop insurance coverage would impose an
undue financial hardship, i.e., the premium cost of the required
insurance would prevent the applicant from projecting a positive cash
flow, and thus disqualify the applicant for EM loan assistance. Each
appeal to the County Committee for waiver of purchasing crop insurance
for the 1992 crop(s) must be accompanied by a completed FmHA 431-2,
''Farm and Home Plan,'' or comparable plan of operation for 1992, signed
by the applicant and the County Supervisor. When the County Committee
approves the waiver, it will be so stated on the Form FmHA 440-2,
''County Committee Certification or Recommendation.'' If the County
Committee denies the waiver, that decision will be documented on Form
FmHA 440-2 and the applicant will be given full appeal rights under
subpart B of part 1900 of this chapter.
(6) When an applicant purchases the necessary crop insurance for 1992
as a condition to receiving an EM loan and, after the EM loan is closed,
allows the policy(ies) to lapse or causes it(them) to be cancelled
before completion of the 1992 production year, the borrower will become
immediately liable for full repayment of all principal and interest
outstanding on any EM loan made under the provisions of the Supplemental
Appropriations Act of 1991. The loan approval official will insert this
requirement in item 41 of Form FmHA 1940-1, ''Request for Obligation of
Funds,'' which is signed by the applicant and the FmHA loan approval
official.
(o) Indian trust lands. EM loans which are secured by trust or
restricted land will be handled as follows: USDA and the Department of
the Interior have agreed that FmHA loans which are to be secured by real
estate liens may be made to Indians holding land in severalty under
trust patents or deeds containing restrictions against alienation,
subject to statues under which they may, with the approval of the
Secretary of the Interior, give valid and enforceable mortgages on their
land. These statutes include, but are not limited to, the Act of March
29, 1956, (70 Stat. 62). When a lien is to be taken on trust or
restricted property in connection with a loan to be made or insured by
FmHA, the local representatives of the Bureau of Indian Affairs (BIA)
will furnish requested advice and information with respect to the
property and each applicant. The FmHA State Director should arrange
with the Area Director or other appropriate local official of the BIA as
to the manner in which the information will be requested and furnished.
A State supplement will be issued to prescribe the actions to be taken
by FmHA personnel to implement the making of loans under these
conditions.
(p) Unpatented public lands. See Exhibit A of Subpart A of Part 1943
of this chapter for making EM loans to entrymen on unpatented public
lands.
(q) Taking security instruments. The taking and filing of security
instruments will be in accordance with Subpart B of Part 1941 of this
chapter (chattels and crops) and with 1945.169 and 1945.189 of this
subpart (real estate). The borrower must have marketable title to the
property which secures the loan and FmHA must ascertain that, when the
security instruments are filed, no suits are pending or threatened which
would adversely affect the interest of the borrower and the Government.
(r) Assignments and consents. (1) The value of stock required to be
purchased by the Federal Land Bank (FLB) Association borrowers may be
added to the recommended market value of real estate, provided:
(i) An assignment can be obtained on the stock; and
(ii) An agreement is obtained which provides that:
(A) The value of the stock at the time the FLB loan is satisfied will
be applied on the FLB loan as long as any FmHA loan is outstanding, or
(B) The stock refund check is made payable to the borrower and FmHA.
(iii) The total of the stock value and the recommended market value
of real estate is indicated in the comments section of Form FmHA 422-1,
''Appraisal Report (Farm Tract).''
(2) An assignment of all or part of the applicant's share of income
is required when title to a livestock or crop enterprise is held by a
contractor under a written contract or when the enterprise is to be
managed by the applicant under a share lease or share agreement. The
contract, share lease or share agreement will be described specifically
as ''Contract Rights'' or ''Contract Rights in Livestock or Crops,'' (or
as ''Accounts'' or ''Accounts in Livestock or Crops,'' if required by a
State supplement) and so forth, in paragraph (b)(1) of the financing
statement. A form approved by OGC will be used to obtain the
assignment.
(3) An assignment of income will ordinarily be taken to protect
FmHA's interests.
(i) Form FmHA 443-16, ''Assignment of Income from Real Estate
Security,'' will be used for assignments of real estate security income
unless that form is legally inadequate in a particular State, in which
case it may be adopted with the approval of the OGC.
(ii) Form FmHA 441-8, ''Assignment of Proceeds from the Sale of
Products,'' will be used for products or income in which FmHA does not
have a security interest under the UCC. Other forms approved by OGC may
be used when this form is not adequate.
(iii) Form FmHA 441-25, ''Assignment of Proceeds from the Sale of
Dairy Products and Release of Security Interest,'' will be used for
dairy products in which FmHA has a security interest under the UCC.
(iv) Form FmHA 441-18, ''Consent to Payment of Proceeds from Sale of
Farm Products,'' will be used for products or income, except dairy
products, in which FmHA has a security interest under the UCC.
(v) Forms provided by ASCS will be used for assignments of disaster
and regular agricultural program payments.
(4) In UCC states, an assignment of income constitutes a security
agreement and should be treated accordingly.
(53 FR 30392, Aug. 11, 1988, as amended at 53 FR 35716, Sept. 14,
1988; 54 FR 2085, Jan. 19, 1989; 54 FR 48229, Nov. 22, 1989; 55 FR
21532, May 25, 1990; 56 FR 1565, Jan. 16, 1991; 56 FR 67152, Dec. 30,
1991; 56 FR 67483, Dec. 31, 1991)
Effective Date Note: At 56 FR 67483, Dec. 31, 1991, 1945.169 was
amended by revising paragraph (j)(4), effective January 30, 1992. For
the convenience of the user, the superseded text follows:
1945.169 Security requirements.
(j) * * *
(4) If the conditions set out in paragraphs (j) (1), (2) and (3) of
this section exist and an EM loan is approved, it can be closed provided
the FmHA escrow agent or designated attorney certifies on Form FmHA
427-10, ''Final Title Opinion'', or in separate writing that:
1945.170 -- 1945.172 (Reserved)
07 CFR 1945.173 General provisions -- compliance requirements.
(a) Scope of operation to be financed. Only family size farming
operations may be financed with EM loans, subject to the eligibility
requirements, loan amount ceilings, repayment ability, need, available
security, and other provisions of this subpart.
(b) Flood or mudslide prone areas. Flood or mudslide hazards will be
evaluated whenever the farm to be financed is located in special flood
or mudslide prone areas as designated by the Federal Emergency
Management Agency (FEMA). Subpart B of Part 1806 of this chapter (FmHA
Instruction 426.2) and Subpart G of Part 1940 of this chapter will be
complied with when loan funds are used to construct or improve buildings
located in such areas. This will not prevent making loans on farms
where the farmstead is located in a flood or mudslide prone area and
funds are not included for building improvements. The flood or mudslide
hazard will be recognized in the appraisal report.
(1) In identified special flood or mudslide prone areas as designated
by FEMA, the following policies are applicable for EM loans being made
to finance buildings or fixtures and furnishings contained therein.
(i) If flood or mudslide insurance is available and an applicant has
not taken such insurance and has suffered flood or mudslide losses, an
EM loan may be made only if flood or mudslide insurance is purchased
before the EM loan is closed.
(ii) If flood or mudslide insurance is available and an applicant
previously received and still is indebted for an EM loan, Rural Housing
Disaster (RHD), or SBA disaster loan; and a condition of the loan
required the obtaining of flood insurance but the applicant allowed the
insurance to lapse; and the applicant had new flood or mudslide losses,
the applicant will be considered to be in default on the loan agreement
and dealt with accordingly.
(iii) If flood and mudslide insurance is available and an applicant
had previously received an EM, RHD, or SBA disaster loan; and a
condition of the loan required obtaining flood or mudslide insurance and
the applicant paid the loan in full and let the insurance lapse; the
applicant will be handled in accordance with paragraph (b)(1)(i) of this
section.
(iv) In those areas that have been designated by FEMA as special
flood or mudslide hazard areas and flood or mudslide insurance is not
available or has been withdrawn by FEMA, an applicant can receive an EM
loan provided the farm buildings, including the dwelling, are relocated
outside the 100-year flood area.
(v) EM loans to repair or replace farm buildings, including
dwellings, must meet the requirements of 1806.25 (a) or (b) of Subpart
B of Part 1806 of this chapter (paragraph V A or B of FmHA Instruction
426.2) as applicable, or be relocated outside the 100-year flood area.
(2) When land development or improvements such as dikes, terraces,
fences, and intake structures are planned to be located in special flood
or mudslide prone areas, EM loan funds may be used subject to the
following:
(i) The Corps of Engineers or the SCS will be consulted concerning:
(A) Likelihood of flooding.
(B) Probability of flooding damage.
(C) Recommendations on special design and specifications needed to
minimize flood and mudslide hazards.
(ii) FmHA representatives will evaluate the proposal and record the
decision in the loan docket in accordance with the requirements of
Subpart G of Part 1940 of this chapter.
(c) Civil rights. The provisions of Subpart E of Part 1901 of this
chapter will be complied with on all loans made which involve:
(1) Funds used to finance nonfarm enterprises and recreation
enterprises. Applicants will sign Form FmHA 400-4, ''Assurance
Agreement,'' in these cases.
(2) Any development financed by FmHA that will be performed by a
contract or subcontract of more than $10,000.
(d) Protection of historical and archaeological properties. If there
is any evidence to indicate the property to be financed has historical
or archaeological value, the provisions of Subpart F of Part 1901 and
Subpart G of Part 1940 of this chapter will apply.
(e) Environmental requirements. See Subpart G of Part 1940 of this
chapter for applicable requirements.
(f) Real Estate Settlement Procedures Act. The provisions of the
Real Estate Settlement Procedures Act outlined in 1940.406 of Subpart I
of Part 1940 of this chapter apply when EM funds are used involving
tracts of less than 25 acres if:
(1) Any part of the loan is used to purchase all or part of the land
to be mortgaged, and
(2) The loan is secured by a first lien on the property where a
dwelling is located.
(g) Nondiscrimination requirements. In accordance with Federal Law,
the FmHA will not discriminate against any otherwise qualified applicant
on the basis of race, religion, sex, national origin, marital status,
age, or physical/mental handicap (provided the applicant can execute a
legal contract), with respect to any aspect of a credit transaction.
The policy statement set forth in 1945.151(a) of this subpart will also
apply to credit transactions.
(h) Compliance with special laws and regulations. (1) Applicants
will be required to comply with Federal, State and local laws and
regulations governing building construction; diverting, appropriating,
and using water including its use for domestic or nonfarm enterprise
purposes; installing facilities for draining land; and making changes
in the use of land affected by zoning regulations.
(2) State Directors and Farmer Program Staff members will consult
with SCS, U.S. Geological Survey, State Geologist or Engineer, or any
board having official functions relating to water use or farm drainage
requirements and restrictions for water and drainage development. State
supplements will be issued to provide guidelines which:
(i) State all requirements to be met, including the acquisition of
water rights.
(ii) Define areas where development of ground water for irrigation is
not recommended.
(iii) Define areas where land drainage is restricted.
(3) Applicants will comply with all local laws and regulations, and
obtain any special licenses or permits needed for nonfarm, recreation,
specialized or aquaculture farming enterprises.
1945.174 (Reserved)
07 CFR 1945.175 Options, planning and appraisals.
(a) Optioning land. When purchasing real property an applicant is
responsible for obtaining options in accordance with the provisions
contained in 1943.25 (a) of Subpart A of Part 1943 of this chapter.
(b) Planning. (1) Form FmHA 431-2 or other planning forms that
provide similar/necessary information, and Form FmHA 431-4, ''Business
Analysis-Nonagricultural Enterprise,'' when appropriate, will be
completed as provided in subpart B of part 1924 of this chapter and in
accordance with the FMIs. This planning process with the applicant is
essential to making sound loans and, therefore, must receive careful
attention in development of the loan docket. The plan will show any
major items of expenditure and the reason(s) these items are needed.
When preparing a plan of operation, it is usually necessary to plan for
a capital expenditure reserve during interim years and the typical year.
Realistically, this will reflect the depreciating value of machinery,
equipment or other essential capital expenditure items, which it is
prudent to expect will need to be replaced or require major repair.
Also, all recurring and carry-over debts should be considered in a
typical year plan. In addition, when all of the loan funds are not to
be disbursed at loan closing, a Monthly Budget will be prepared showing
the specific amount to be disbursed for each associated loan purpose for
each month. The funds will be disbursed through use of the loan
disbursement system (future advances) or, when determined necessary,
through a supervised bank account.
(2) Development work will be planned and completed in accordance with
Subpart A of Part 1924 of this chapter. Also, the provisions of Subpart
E of Part 1901 of this chapter will be met in connection with EM loans
involving recreational enterprises and the construction of buildings.
(c) Appraisals. (1) Real estate appraisals will be completed on Form
FmHA 422-1, ''Appraisal Report -- Farm Tract'', or Form FmHA 1922-8,
''Uniform Residential Appraisal Report,'' for farm real estate or
residential farm real estate, respectively, by an FmHA employee
authorized to make farm appraisals, when real estate is taken as the
primary security for the EM loan. The rights to mining products,
gravel, oil, gas, coal or other minerals will be considered a portion of
the security and will be specifically included as a part of the
appraised value of the real estate securing the loans using Form FmHA
1922-11, ''Appraisal Form for Mineral Rights.'' Appraisals are not
required when:
(i) The amount of EM loan(s) plus any existing FmHA principal
indebtedness is $25,000 or less, and
(ii) The loan approval official determines the loan is adequately
secured without an appraisal, and
(iii) The County Supervisor indicates in the loan docket an estimate
of the market value of the real estate to be taken as security, and
(iv) The provisions of paragraph (c)(4) of this section are
applicable.
(2) Real estate appraisals will be completed as provided in FmHA
Instruction 422.1 (available in any FmHA office). However, the value of
assets that secure EM loans associated with a disaster having any
portion of its incidence period occurring on or after May 31, 1983, must
be based on the higher of two appraisals; all of which must be made a
part of the file. These appraisals will show:
(i) The asset value on the day before a State Governor's, Indian
Tribal Council's, or an FmHA State Director's first EM designation
request, which is associated with the naming of one or more counties in
a State as a disaster area where eligible farmers may qualify for EM
loans; or
(ii) The asset value one year (365 days) before the date set in
paragraph (c)(2)(i) of this section.
(A) The following types of real estate offered as collateral for
securing EM loans will be appraised at the present market value only;
(1) Farm real estate the applicant/borrower did not own on the dates
set forth in paragraph (c)(2) (i) and (ii) of this section.
(2) Real estate ''not owned'' by the applicant/borrower (for example,
a relative if offering real estate as collateral for the proposed EM
loan).
(3) A single family dwelling located on a nonfarm tract.
(4) Other types of real estate such as apartment houses and
commercial buildings. The County Supervisor will request the assistance
of the State Director in establishing the value of such real estate.
(B) Sales data utilized in the preparation of the necessary
appraisals should conform to the dates set forth in paragrpah (c)(2) (i)
and (ii) of this section, to ensure a fair market value of the property
is established. In addition, it should be confirmed that said sales
resulted from reasonable sales efforts and that both the buyer and
seller were willing, informed, and knowledgeable parties.
(3) When FLB stock is to be used in establishing the Recommended
Market Value (RMV) of the real estate being appraised, see 1945.169
(r)(1) of this subpart.
(4) When real estate is taken as additional security (for loans in
which the primary security is subject to rapid depreciation or is of a
high risk nature, such as crops), no appraisal report will be required
for the additional security, provided the County Supervisor determines
the security is adequate, and records the estimated value in the running
case record, shows the date the property was inspected and certifies
that in his/her opinion the estimates are correct based on knowledge of
the value of the comparable assets in the area.
(5) Chattel appraisals will be completed on Form FmHA 1945-15,
''Value Determination Worksheet (EM Loans Only),'' when chattels are
taken as security. The property which will serve as security will be
described in sufficient detail so it can be identified. Sources such as
livestock market reports and publications reflecting values of farm
machinery and equipment will be used as appropriate. The value of
assets that secure EM loans associated with a disaster having any
portion of the incidence period occurring on or after May 31, 1983, must
be based on the higher of two appraisals, all of which must be made part
of the file. These appraisals will be based on the same information
contained in paragraphs (c)(2) (i) and (ii) of this section. Chattels
not owned by the applicant, and nonfarm chattel property offered as
security (such as planes, house trailers, boats, etc.) will be apprasied
at the present market value only. Chattels that the applicant/borrower
did not own on the dates set forth in paragraph (c)(2) (i) and (ii) of
this section will be appraised at the present market value only.
(6) Abbreviated appraisals may be used and loans approved when:
(i) The loan approval official determines that the applicant's equity
in the collateral will adequately secure the EM loan(s).
(ii) The abbreviated appraisals are prepared as follows:
(A) For real estate -- Form FmHA 422-1, ''Appraisal Report-Farm
Tract,'' complete the heading of the report; Part 1, Item A; Part 2;
Part 3; Part 6; Part 7 and Part 8. The report will be signed and
dated by an FmHA authorized appraiser.
(B) For chattel property -- Form FmHA 1945-15 will list, identify and
show the value of each chattel item. This form will be completed, as
applicable, on all EM loans.
(53 FR 30392, Aug. 11, 1988, as amended at 54 FR 8523, Mar. 1, 1989;
55 FR 21532, May 25, 1990)
1945.176 -- 1945.179 (Reserved)
07 CFR 1945.180 County Committee certification.
The County Committee will certify an applicant's eligibility on Form
FmHA 440-2, ''County Committee Certification or Recommendation,'' before
each loan is approved. In some instances the committee may want to
interview the applicant or see the farm before making any
recommendations. Applications will be processed in accordance with
1910.4(f) of Subpart A of Part 1910 of this chapter.
1945.181 (Reserved)
07 CFR 1945.182 Loan docket preparation.
(a) Processing guide. See Exhibit A of this subpart for Insured
Emergency Loan Processing Guide. When a packager has developed the loan
docket, the County Supervisor will fully analyze the docket to ascertain
that it is complete and conforms with this EM loan regulation. The
County Supervisor will reverify calculations with 1945.183(a) and
insure that the provisions of 1945.183 of this subpart are met, before
a final action is taken on the loan request.
(b) Form FmHA 1940-1, ''Request for Obligation of Funds.'' A separate
Form FmHA 1940-1 will be prepared for each EM loan which has a different
interest rate and/or a different repayment period, as determined under
1945.168 (a) and (b) of this subpart. Also, the new appropriate
disaster number will be shown on each Form FmHA 1940-1, for indebted EM
loan borrowers having new qualifying losses from a subsequent authorized
disaster.
(c) Promissory note. A separate promissory note will be prepared for
each Form FmHA 1940-1 used in approving and obligating each of the EM
loans.
(d) Lease agreement. Generally, copies of written lease agreements
between tenant applicants and their landlords will be obtained and made
a part of the loan docket. When a written lease is not obtainable, a
statement setting forth the terms and conditions of the agreement, which
are not clearly reflected on the farm and home plan, will be prepared
and made a part of the loan docket.
(53 FR 30392, Aug. 11, 1988, as amended at 55 FR 21532, May 25, 1990)
07 CFR 1945.183 Loan approval or disapproval.
(a) Reverification before approval. Before an EM loan is approved
the following actions must be taken:
(1) A County Office employee will verify information provided by ASCS
on all Forms FmHA 1945-29 in accordance with the FMI. If there have
been any changes from the information originally provided and used in
the loan docket preparation, appropriate changes will be made.
(2) A County Office employee will verify information provided by the
Federal Crop Insurance Corporation (FCIC) regarding any insurance
benefits which have been paid or will be paid. If there have been any
changes from the information originally provided and used in the loan
docket preparation, appropriate changes will be made.
(3) All information provided by the applicant on Form FmHA 1945-22,
all transcription of numbers and information from Form FmHA 1945-22 to
Form FmHA 1945-26, and all calculations performed on Form FmHA 1945-26
by an FmHA County Office employee will be checked and verified for
accuracy and propriety by a different County Office employee. This is
to assure that any errors are detected. The verifying employee will
initial and date the Form FmHA 1945-26. If any error(s) is detected,
the County Supervisor or Assistant County Supervisor will make the
necessary corrections; and a computer printout of the corrected Form
FmHA 1945-26 will be signed and dated by the preparer and filed in the
applicant's/borrower's county case file.
(4) To prevent the duplication of benefits, FmHA and SBA have agreed
to coordinate their respective EM and disaster loan program activities.
(i) The FmHA County Offices will notify the approrpiate SBA Disaster
Area Office of all EM disaster farm dwelling loss loan applications
received each week for dwelling and/or household contents.
(ii) For dwelling and/or household content applications, FmHA County
Offices will send a copy of their final action taken on each application
to the appropriate SBA Disaster Area Office. Those actions include:
loan approval on Form FmHA 1940-1; notification of application
withdrawal; notification of loan denial; confirmation of request for
reconsideration or appeal of loan denial; and final determination on an
appeal. A copy of each written communication from FmHA County Offices
to the SBA Area Offices will be sent to the State Director, Attention:
Chief, Farmer Programs; and the District Director.
(iii) Applicants who receive SBA physical loss loans for losses to
dwellings and/or household contents may also file for FmHA EM loan
assistance based on farm losses other than to dwellings. In those cases
where an FmHA loan can be approved, FmHA will either reduce the FmHA EM
loan by the amount of the SBA loan (which may require SBA to subordinate
its lien position(s)), or refinance the SBA loan by using EM loan funds
to pay SBA directly. An EM loan will not be approved until it is
determined that the requirements of 1945.163(e) of this subpart will be
met. When an EM loan is approved, the FmHA County Office will notify
the SBA Disaster Area Office pursuant to paragraph (a)(4)(ii) of this
section.
(b) Administrative determination and responsibilities. When the
County Committee certification has been made and the reverification has
been completed, and before approving the loan, the loan approval
official will determine administratively whether:
(1) The County Committee has certified, in writing, that the
applicant is eligible.
(2) The applicant has satisfactory tenure arrangements on the farm(s)
to be operated.
(3) The proposed farm and home operations of the applicant are
reasonably sound, the purposes are authorized, and the EM loan is
needed.
(4) The proposed loan(s) shows a positive cash flow based upon a
realistic farm and home plan.
(5) The security requirements can be met.
(6) The certification(s) required of the applicant have been made and
are a part of the loan docket.
(7) The loan meets all other FmHA requirements
(8) The applicant has access to any additional financing needed to
continue the farming operation. In making this determination,
consideration will be given to whether the applicant qualifies for OL,
FO and SW loan assistance, or for a loan(s) from other creditors with or
without a FmHA subordination.
(c) Loan docket transmittal to the Administrator. (1) Transmittal
memoranda accompanying EM loan dockets requiring National Office
review/advice must set forth, as a minimum, the following information:
(i) Proposed loan(s), amount(s), rate(s), of interest, and term(s) of
each loan.
(ii) Outstanding FmHA loan(s) balance(s) and the total proposed EM
loan(s) indebtedness
(iii) Status of outstanding FmHA loan(s).
(iv) Brief statements regarding:
(A) Cause and type of disaster losses.
(B) Inability to obtain other suitable credit.
(C) Purposes for which loan funds are to be used.
(D) Overall feasibility and soundness of the planned operation.
(E) Property offered as security for the loan(s).
(v) The State Director's specific positive recommendation that the
requested actions be approved.
(2) Loan dockets should not be forwarded to the National office for
review of any action without the State Director's recommendation.
(d) Loan approval. (1) The loan approval official will date, sign
and distribute Form FmHA 1940-1 in accordance with the FMI and set forth
any special conditions of approval, including any special security
requirements, in the appropriate section on Form FmHA 1940-1.
(2) The County Supervisor will complete Part III of Form FmHA 1945-29
and forward the form to the appropriate ASCS county office(s).
(e) Loan disapproval. The loan approval official must disapprove
applications within the deadlines set out in 1910.4 of Subpart A of
Part 1910 of this chapter.
(1) The County Supervisor or loan approval official will notify the
applicant by letter of the reason(s) for rejection and will advise the
applicant in that letter of appeal rights as set out in Subpart B of
Part 1900 of this chapter. The letter will also include any suggestions
that could result in favorable action.
(2) The County Supervisor will complete Part III of Form FmHA 1945-29
and forward the form to the appropriate ASCS County Office.
(3) In areas where EM loans are being made under a major disaster
declaration, and where the FEMA has advised the State Director that
Section 408 grants are available, a list of applicants with physical
losses, who do not qualify for EM dwelling and/or household content loss
loans, will be prepared and sent to the FEMA by County Supervisors at
the close of business each week. The State Director will be advised by
the FEMA where to send the list and the State Director will so advise
the County Supervisors. The list will be prepared in the following
format:
07 CFR 1945.183 UNITED STATES DEPARTMENT OF AGRICULTURE
07 CFR 1945.183 Farmers Home Administration
TO:
--
The following is a list of applicants not qualifying for Farmers Home
Administration's Emergency (EM) loans in XXXXX County during the week
ending XXXXX, 19XX.
--
Name
--
Address
--
County Supervisor
(53 FR 30392, Aug. 11, 1988, as amended at 55 FR 21532, May 25, 1990)
1945.184 (Reserved)
07 CFR 1945.185 Actions after loan approval.
Loan funds must be provided by the County Office to the applicant(s)
within 15 days after loan approval, unless the conditions prescribed in
1910.6(d) of Subpart A of Part 1910 of this chapter are applicable. If
a longer period is agreed upon by the applicant(s), the same will be
documented in the case file by the County Supervisor.
(a) Cancellation of loan check and/or obligation. If, for any
reason, a loan check and obligation will be cancelled, the County
Supervisory will notify the State Office of loan cancellation by using
Form FmHA 1940-10, ''Cancellation of U.S. Treasury Check and/or
Obligation.'' If a check received in the County Office is to be
cancelled, the check will be returned as prescribed in FmHA Instruction
102.1 (a copy of which is available in any FmHA office).
(b) Cancellation of advances. When an advance is to be cancelled,
the County Supervisor must take the following actions:
(1) Complete and distribute Form FmHA 1940-10.
(2) When necessary, obtain a substitute promissory note reflecting
the revised total of the loan and the revised repayment schedule. When
it is not necessary to obtain a substitute promissory note, the County
Supervisor will show on Form FmHA 440-57, ''Acknowledgement of Obligated
Funds/Check Request,'' the revised amount of the loan and the revised
repayment schedule.
(c) Increase or decrease in loan amount. If it becomes necessary to
increase or decrease the amount of the loan before closing, the County
Supervisor will request that all distributed docket forms be returned to
the County Office for reprocessing, unless the change is minor and
replacement forms can be readily completed and submitted. In the latter
case, a memorandum to that effect will be attached to the revised forms
for referral to the Finance Office.
(53 FR 30392, Aug. 11, 1988, as amended at 54 FR 39728, Sept. 28,
1989)
1945.186-1945.187 (Reserved)
07 CFR 1945.188 Chattel lien search.
See 1941.63 of Subpart B of Part 1941 of this chapter for
regulations concerning lien searches covering chattels.
07 CFR 1945.189 Loan closing.
(a) Closing loans secured by real estate -- (1) General. Loans
secured by real estate are considered closed on the date the mortgage is
filed for record. Such loans will be closed in accordance with the
applicable provisions of subpart B of part 1927 of this chapter.
(1) General. Loans secured by real estate are considered closed on
the date the mortgage is filed for record. Such loans will be closed in
accordance with the applicable provisions of subpart B of part 1927 of
this chapter.
(2) Security instruments. Security instruments referred to in
paragraph (a) of this section are real estate mortgages or deeds of
trust.
(i) FmHA real estate mortgage or deed of trust Firm FmHA 1927-1
(state), ''Real Estate Mortgage for XXX,'' will be used in all cases
where real estate is taken as security.
(ii) Promissory note(s) will be prepared and completed at the time of
loan closing in accordance with the FMI. If insured Rural Housing (RH)
funds are advanced simultaneously with EM funds the RH loan will be
evidenced by a separate note on the proper form as provided in Subpart A
of Part 1944 of this chapter. However, all notes will be described on
the same security instrument(s). When a loan is closed between December
1 and January 1, the first installment will be collected at the time of
loan closing.
(iii) When subsequent loans are made, a new security instrument is
required only when the existing instruments do not cover all required
security or do not secure the subsequent loan.
(iv) A subsequent loan for any authorized purposes may be made
without taking new security instruments when the existing security
instruments cover all the property required to serve as security for the
subsequent loan, the State law and the language of the existing security
instruments will permit the future loan advance to be secured by the
existing security instruments, and the existing security instruments
will provide the same lien priority for the subsequent loan as for the
initial loan. A new security instrument will be taken if any one of
these requirements is not met.
(3) Leasholds. Security instruments for loans secured by leaseholds
will describe security in accordance with subpart B of part 1927 of this
chapter, and the following provisions will also apply:
(i) The following language, or similar language which in the opinion
of the OGC is legally adequate, will be inserted just before the legal
description of the real estate:
All Borrower's rights, title, and interest in and to the leasehold
estate for a term of XXXXX years beginning on XXXXX, 19XX, created and
established by a certain lease dated XXXXX, 19XX, executed by XXXXX, as
lessor(s), recorded on XXXXX, 19XX, in Book XXXXX, Page XXXXX of the
XXXXX Records of said County and State, and any renewals and extensions
thereof, and all Borrower's right, title, and interest in and to said
Lease, covering the following real estate:
(ii) An additional covenant will be inserted in the mortgage to read
as follows:
Borrowers will pay when due all rents and any and all other charges
required by said Lease, will comply with all other requirements of said
Lease, and will not surrender or relinquish, without the Government's
written consent, any of the Borrower's right, title, or interest in or
to said leasehold estate or under said Lease while this instrument
remains in effect.
(iii) A copy of the lease will be made part of the loan docket.
(4) Filing or recording security instruments. The following
appropriate actions will be taken after loan closing:
(i) When the original security instrument is returned by the
recording official, it will be retained in the borrower's case folder.
When the original is retained by the recording official, a conformed
copy, showing the date and place of recordation and the book and page
number, will be prepared and filed in the borrower's case folder. A
conformed copy of the security instrument will be sent to a prior
lienholder if a substantial interest is held by that lienholder, or if
it is required by a working agreement provision with that lienholder.
(ii) The original deed of conveyance, if any, and a copy of the
security instrument will be delivered to the borrower.
(5) Abstracts of Title. Any abstract of title will be delivered to
the borrower and Form FmHA 140-4, ''Transmittal of Documents,'' will be
prepared and a receipt obtained in accordance with the FMI. However,
when an abstract is obtained from a third party with the understanding
it will be returned, such abstract will be sent directly to the third
party and a memorandum receipt will be obtained.
(6) Requesting title service. When the loan is approved, the County
Supervisor will see that title service is requested in accordance with
subpart B of part 1927 of this chapter, if this has not already been
done.
(7) Fees. The borrower will pay all filing, recording, notary and
lien search fees incident to loan transactions from personal or loan
funds. When FmHA employees accept cash for these purposes Form FmHA
440-12, ''Acknowledgment of Payment for Recording, Lien Search, and
Releasing Fees,'' will be executed. FmHA employees will make it clear
to the borrower that any fee so accepted is only for paying fees on
behalf of the borrower, and is not accepted as partial payment on a
loan.
(8) Supervised bank accounts. If a supervised bank account is
required, loan funds will be deposited following loan closing.
Supervised bank accounts will be established in accordance with Subpart
A of Part 1902 of this chapter. Loan funds not to be disbursed for
specific purposes at loan closing and not needed within 30 days after
closing, will not be requested until they are needed. The ''Field
Office Terminal System'' will be used to request future advances at 30
day intervals or as needed. Only in unusual cases will loan funds be
kept in supervised bank accounts for more than 60 days. When such funds
are placed in an interest bearing supervised bank account, the interest
earned will be applied on the EM loan immediately or used for an
authorized EM loan purpose, if the planned EM funds are not sufficient
to cover all of the planned items.
(b) Closing loans secured by chattels and crops. See Subpart B of
Part 1941 of this chapter.
(c) Loan closing review. Immediately prior to loan closing, the FmHA
official responsible for closing the loan(s) will review the file for
compliance with Agency regulations.
(53 FR 30392, Aug. 11, 1988, as amended at 56 FR 67483, Dec. 31,
1991)
Effective Date Note: At 56 FR 67483, Dec. 31, 1991, 1945.189 was
amended by revising paragraphs (a)(1), (a)(2)(i), the introductory text
of paragraph (a)(3), and paragraph (a)(6), effective January 30, 1992.
For the convenience of the user, the superseded text follows:
1945.189 Loan closing.
(a) * * *
(1) General. Loans secured by real estate are considered closed on
the date the mortgage is filed for record. Such loans will be closed in
accordance with the applicable provisions of part 1807 of this chapter
(FmHA Instruction 427.1).
(2) * * *
(i) FmHA real estate mortgage or deed or trust Form FmHA 427-1
(State), ''Real Estate Mortgage for XX,'' will be used in all cases
where real estate is taken as security.
(3) Leaseholds. Security instruments for loans secured by leaseholds
will describe security in accordance with Part 1807 of this chapter
(FmHA Instruction 427.1), and the following provisions will also apply:
(6) Requesting title service. When the loan is approved, the County
Supervisor will see that title service is requested in accordance with
Part 1807 of this chapter (FmHA Instruction 427.1), if this has not
already been done.
07 CFR 1945.190 Revision of the use of EM loan funds.
(a) Requirements. Loan approval officials or their delegates are
authorized to approve changes in the purposes for which loan funds were
planned to be used, provided:
(1) The loan, as changed, is within the respective loan approval
official's authority.
(2) Such a change is for an authorized purpose and within applicable
limitations.
(3) Such a change will not adversely affect either the feasibility of
the operation or the Government's interest.
(4) Such a change is approved in advance of the loan funds being used
for the new purpose(s).
(b) Additional authority. The State Director may delegate additional
authority to approval officials to approve certain kinds of changes in
the use of loan funds by issuing a State Supplement describing such
changes, provided prior approval is obtained from the National Office.
(c) Revisions. When changes are made in the use of loan funds, no
revision will be made in the repayment schedule on the promissory note.
Appropriate changes with respect to the repayment will be made in Table
K of Form FmHA 431-2 (and, if needed, on Form FmHA 1962-1) and will be
initiated by the borrower. The County Supervisor will also make
appropriate notations in the ''Supervisory and Servicing Actions''
section of Form FmHA 1905-1, ''Management System Card -- Individual.''
1945.191 (Reserved)
07 CFR 1945.192 Loan servicing.
Loans will be serviced under Subpart A of Part 1962 and Subpart A of
Part 1965 of this chapter.
1945.193 -- 1945.199 (Reserved)
07 CFR 1945.200 OMB control number.
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 0575-0090. Public reporting
burden for this collection of information is estimated to vary from 10
minutes to 1 hour per response, with an average of .58 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. Send comments regarding
this burden estimate or any other aspect of this collection of
information, including suggestions for reducing this burden, to
Department of Agriculture, Clearance Officer, OIRM, Room 404-W,
Washington, DC 20250; and to the Office of Management and Budget,
Paperwork Reduction Project (OMB 0575-0090), Washington, DC 20503.
(56 FR 24682, May 31, 1991)
07 CFR 1945.200 Exhibits to Subpart D
07 CFR 1945.200 Exhibits A-C -- (Reserved)
07 CFR 1945.200 Pt. 1945, Subpt. D, Exh. D
07 CFR 1945.200 Exhibit D -- Emergency Loans for Citrus Grove
Rehabilitation and/or Reestablishment
I. General: Emergency (EM) loans may be made for rehabilitation
and/or reestablishment of citrus groves, in areas which are determined
not to be freeze prone areas, subject to the requirements of this
subpart, except as modified and supplemented herein. This exhibit shall
be effective on February 22, 1985 for citrus growers who have
applications pending or who file applications in the future.
A. Authority. The authorizations contained in this exhibit provide
the criteria to be used in (1) determining the feasibility of a request
for an EM loan to rehabilitate and/or reestablish a citrus grove(s) and
(2) establishing the dollar amount of physical losses to be compensated
in a single EM loan and disbursed in future advances over a period of up
to 5 years.
B. Policy. It is the policy of FmHA to make EM physical loss loans to
citrus growers under this exhibit, provided their citrus groves can be
reestablished or rehabilitated with the EM funds advanced over a period
not to exceed 5 years. If additional funds are needed and a longer
recovery period is required, the applicant must plan at the outset to
obtain the additional financing needed from either his/her own cash flow
resources or from another lender(s), since FmHA has no authority to
provide any subsequent EM physical loss loans based on the same
disaster.
II. Program Objectives: The objective for making EM loans to
rehabilitate or reestablish citrus groves is to enable eligible
applicants to restore their damaged citrus groves to normal production,
provided (1) the proposed citrus operation can be reestablished on a
reasonably sound basis; and (2) the rehabilitated citrus grove(s) will
afford long range prospects for a reasonably successful operation.
III. Definitions:
A. ''Grove rehabilitation'' means the renovation of an existing
grove, made necessary because of severe damages to trees resulting from
a natural or major disaster occurring in a designated/declared
county(ies).
B. ''Grove reestablishment'' means the planting of new trees to
replace those that were killed or damaged beyond economic
rehabilitation, made necessary because of severe damages resulting from
a natural or major disaster occurring in a designated/declared
county(ies). (Both paragraphs III A and III B involve real estate
development which will require more than one year to complete. Normally
3-5 years will be required for groves to become productive again under
these two types of development procedures.)
C. Building new buildings, repairing existing buildings and improving
chattels are not included in either of these definitions.
IV. Eligibility: Sections 1945.163 and 1945.175 of this subpart are
supplemented to the extent that EM loan may be made, under the
provisions of this Exhibit, only to otherwise eligible applicants who
are owner-operatorsof citrus groves. To be eligible, applicants must:
A. Project, at the outset, realistic annual plans of operation for
the total farming operation, showing positive cash flows. These plans
will be prepared by the County Supervisor and the applicant/borrower for
each year of the adjustment period, until the citrus grove(s), as
projected, is brought into profitable production.
B. Provide verification of income from other farming enterprises
and/or dependable off-farm income in sufficient amount to cover all
family living expenses and all farm operating expenses not related to
the rehabilitation or reestablishment of the citrus grove(s) to be
financed by FmHA.
C. Limit their request for an EM physical loss loan to the actual
physical losses sustained, which will not exceed the value of the
established grove (trees and land), as appraised on the day before the
disaster occurred, or one year and one day before the disaster
designation was requested by a State Governor or an FmHA State Director,
whichever date has the higher value, minus the present market value of
the land and any remaining trees. The maximum EM loan limit of $500,000
per borrower for each designated disaster as prescribed in 1945.163(d)
of this subpart, will prevail.
V. Loan Purposes: EM loans for citrus grove rehabilitation and/or
reestablishment may be made to eligible applicants for the purposes
authorized by Section 1945.166 of this subpart, including the following:
A. Operating purposes. Payment of:
(1) Hired labor, not including operator's own labor.
(2) Actual cost of pruning trees and top grafting.
(3) Purchase of fertilizer, herbicides and fungicides.
(4) Actual cost of land preparation and cultivation.
(5) Machinery and equipment maintenance, repair and replacement, as
needed to sustain the citrus enterprise only.
(6) Actual cost of fuel associated with the citrus enterprise. (For
operation of machinery, irrigation systems, frost protection, etc.).
(7) Accrued interest on outstanding citrus operation debt.
(8) Real estate taxes and real property insurance premiums.
(9) Miscellaneous operating costs associated with the citrus
enterprise.
B. Real Estate purposes. Payment of:
(1) Hired labor, not including operator's own labor.
(2) Removal of destroyed trees and debris.
(3) Land preparation.
(4) Purchase and planting of replacement trees.
(5) Secured and unsecured debts incurred during the disaster year as
related to the citrus enterprise.
(6) Miscellaneous expenses directly related to long term improvement
of the citrus grove(s) rehabilitation and reestablishment.
VI. Loan Limitations: Loan funds will not be approved or advanced
for:
A. Family living expenses.
B. Operating or real estate expenses not directly related to the
rehabilitation and/or reestablishment of the citrus grove(s) damaged or
destroyed by the declared/designated disaster.
VII. Rehabilitation and/or Reestablishment Requirements: Citrus
growers receiving EM loans under this Exhibit will rehabilitate and/or
reestablish their damaged or destroyed citrus groves for production of
similar type(s) citrus crops grown during the disaster year. The
applicant/borrower will also agree to replant or top graft the trees, as
necessary, with a variety(ies) of trees recommended by the Cooperative
Extension Service. This will become a condition of loan approval and
will be inserted in Item 41 of Form FmHA 1940-1, ''Request for
Obligation of Funds.'' The replacement citrus trees and any scion wood
used for budding or top grafting must be ''Certified,'' in writing, as
being disease free and/or ''Registered'' as being true to variety by the
selling nurseryman or other supplier.
VIII. Rates and Terms: See 1945.168(b) and FmHA Instruction 440.1,
Exhibit B (available in any FmHA office). Section 1945.168 of this
subpart is hereby modified, authorizing future advances of EM loans
funds to be disbursed over a period of up to 5 years, when such loan
funds are used to rehabilitate and/or reestablish a citrus grove(s). EM
loans may have reduced annual installments scheduled, of at least
partial interest, for up to 5 years. However, such reduced installments
will not be scheduled longer than the amount of time projected as being
needed to bring the citrus grove(s) back into profitable production.
After the adjustment period, the promissory note may describe a
graduated schedule of annual installments to coincide with projected
increasing cash flow. A State Supplement will be issued setting forth
several examples of a 5-year adjustment period showing scheduled annual
installments.
The maximum repayment period will not exceed 30 years. In cases
where successive natural disaster losses severely affect the total
farming operation, loans may be rescheduled with a new period of
adjustment, provided subparagraphs A and B of paragraph IV of this
exhibit can continue to be met.
IX. Security Requirements: Section 1945.169 of this subpart is
hereby modified to show that the EM loans made for citrus grove
rehabilitation and/or reestablishment will be secured by the following
collateral and lien positions:
A. A first lien on the citrus crop being brought into production;
B. The best lien obtainable on real estate on which the citrus is to
be grown, having sufficient collateral equity to fully secure the EM
loan, based on the per acre appraised value of the citrus grove(s) as
established on the day before the disaster occurred, or one year and one
day before the disaster designation was requested by a State Governor or
an FmHA State Director, whichever date has the higher value;
C. The best lien obtainable on all other assets owned by the
applicant/borrower, when an individual proprietorship. When the
applicant/borrower is an entity, all assets owned by the entity and the
individual(s) as a member, partner or stockholder of the entity will be
taken as collateral; and
D. Full personal liability of all principal members, partners or
stockholders of the borrower entity.
X. Loan Approval and Administrative Determinations: Before an EM
loan is approved under this exhibit, the loan approval official must
make the determinations required by 1945.182 and 1945.183 of this
subpart, and the following additional determinations:
A. That postponement of loan repayment is needed to accomplish
projections of positive cash flows for each year of postponement; and
as necessary, repayment of the loan, except for at least an annual
partial payment(s) of interest, will be postponed for up to 5 annual
installments with a graduated schedule of annual installments after the
adjustment period; and a maximum repayment term, as justified by
realistic income and expense projections, but not in excess of 30 years
from the date of promissory note, will be given.
B. That multiple future advances of loan funds are scheduled over the
period of years needed to bring the citrus grove(s) into profitable
production, but not in excess of 5 years.
C. That annual plans of operation and accompanying cash flow
statements are scheduled for review and revision annually to reflect
current circumstances, and a determination made and documented by the
FmHA servicing official that recovery of the citrus operation is still
feasible, before each future advance is disbursed.
D. That the projected annual plans show the initial and all future EM
advances will be fully secured by equity in the farm real estate to be
rehabilitated or reestablished, and which will serve as collateral for
the EM loan, using the ''as improved'' appraised value.
XI. Understandings and Agreements with Applicant: In the event a
determination is made, at any time during the recovery period, that the
operation is no longer economically feasible (cannot meet its cash flow
requirements), the undisbursed future advances will be cancelled by the
County Supervisor after consultation with the District Director; and
appropriate servicing actions will be pursued. Also, the grove
rehabilitation and/or reestablishment will be considered ''complete''
when profitable production is achieved. If this occurs ahead of
schedule, the remaining future advances will be cancelled and
consideration given to rescheduling the unpaid EM loan balance. The
County Supervisor may cancel a future advance(s) after consultation with
the District Director and the State Director. This will be acknowledged
by the borrower(s) by initialling changes in the Promissory Note, Form
FmHA 1940-17, as follows: on page 1 delete the second sentence of the
third paragraph from the bottom of the page which reads, ''Approval by
the Government will be given provided the advance is requested for a
purpose authorized by the Government.''; and add a footnote at the
bottom of page 1 referring to page 3, where the following statement will
be inserted in the blank space available. ''The Government will approve
advances of loan funds, which were not advanced at loan closing,
provided the funds will be used for authorized purposes, the borrower
has complied with all loan agreements, FmHA determines that the
operation is economically feasible, and FmHA determines that FmHA loan
funds are needed.'' Each Promissory Note thus modified will be
initialled at both changes by the borrower(s) at the time of loan
closing and an explanation of the implications of the changes given to
the borrower(s) by the escrow agent or the FmHA official conducting the
closing.
XII. Issuance of State Supplement: A State Supplement will be issued
to provide guidance on appraising citrus groves, and projecting Farm and
Home Plans or Coordinated Financial Statements during the period of
grove rehabilitation and/or reestablishment. This Supplement will also
contain examples of how loan installments may be scheduled during the
period of adjustment. (See paragraph VIII of this exhibit.)
(50 FR 7567, Feb. 22, 1985, as amended at 50 FR 48176, Nov. 22, 1985;
51 FR 13574, Apr. 21, 1986; 53 FR 30412, Aug. 11, 1988)
07 CFR 1945.200 Pt. 1946
07 CFR 1945.200 PART 1946 -- MEDIATION
07 CFR 1945.200 Subpart A -- Agricultural Loan Mediation Program
Sec.
1946.1 General.
1946.2 Definitions.
1946.3 Process for certification.
1946.4 Matching grants.
1946.5 Monitoring compliance and penalty for non-compliance.
1946.6 Nondiscrimination.
1946.7 Environmental requirements.
1946.8 Delegation of authority.
1946.9 -- 1946.49 (Reserved)
1946.50 OMB control number.
Authority: 7 U.S.C. 1989; 5 U.S.C. 301; 7 CFR 2.23; 7 CFR 2.70.
Source: 53 FR 32599, Aug. 26, 1988, unless otherwise noted.
07 CFR 1945.200 Subpart A -- Agricultural Loan Mediation Program
07 CFR 1946.1 General.
(a) This subpart provides procedures for administration of the
agricultural loan mediation program whereby a State may be certified by
the Farmers Home Administration (FmHA) as a qualifying State for
purposes of FmHA and other USDA agencies' participation in the program.
Such certification is also necessary for a State to receive Federal
matching grant funds to be used for the operation and administration of
the State's agricultural loan mediation program.
(b) FmHA will participate in mediations conducted pursuant to a
State's agricultural loan mediation program under the same terms and
conditions applicable to agricultural creditors generally, and will
cooperate in good faith in such mediations by complying with requests
for information and analysis, and in presenting and exploring debt
restructuring proposals, wherever feasible, when that State is and
remains a qualifying State as defined in 1946.2(b) of this subpart.
07 CFR 1946.2 Definitions.
(a) Agricultural Loan Mediation Program. A State authorized or
administered program which meets the requirements for certification
outlined in 1946.3(a)(2) (i) through (v) of this subpart.
(b) Qualifying State. A State which has been certified by FmHA as
having an agricultural loan mediation program which meets the
requirements outlined in 1946.3(a)(2) (i) through (v) of this subpart,
provided the State's certification has not expired or been withdrawn
under the provisions of 1946.5(c) of this subpart.
07 CFR 1946.3 Process for certification.
(a) No later than August 1, of each year, the Governor of a State or
Head of a State agency designated by the Governor of a State must submit
a written request to the FmHA if the State wishes to be certified as a
qualifying State for the purposes of FmHA participation in the State's
program and for the State to receive a matching grant to be used for the
operation and administration of the program within the State during the
fiscal year commencing October 1 of that same year. The request must
include:
(1) A description of the State's agricultural loan mediation program.
(2) Documentary information to support the request and a
certification by the Governor or Head of a State agency designated by
the Governor that the State's agricultural loan mediation program:
(i) Provides for mediation services to be provided to producers, and
their creditors, that, if decisions are reached, result in mediated,
mutually agreeable decisions between the parties under the program;
(ii) Is authorized or administered by an agency of the State
government or by the Governor of the State;
(iii) Provides for the training of mediators;
(iv) Provides that the mediation session shall be confidential; and
(v) Ensures that all lenders and borrowers of agricultural loans
receive adequate notification of the mediation program.
(b) If the State is a qualifying State at the time the written
request is made, the written request need only describe the changes to
the program since the previous year's request together with such
documentary support as may be necessary concerning such changes, as well
as a certification that the remaining elements of the program remain as
described in the previous application.
(c) The request for certification should be mailed to:
Administrator, Farmers Home Administration, U.S. Department of
Agriculture, 14th Street and Independence Avenue SW., Room 5014,
Washington, DC 20250.
(d) If a matching grant is requested in accordance with 1946.4 of
this subpart, the request for certification also must include the
information required by 1946.4 (e)(2) of this subpart.
(e) Within 15 days from receipt of the request for certification, the
Administrator will notify the State Governor or Head of a State agency
designated by the governor whether or not the State is certified as a
qualifying State as defined in 1946.2(b) of this subpart, or, if
additional information or clarification is needed to make the
determination, the Administrator will advise the State Governor or Head
of a State agency of the additional information or clarification needed.
Upon receipt of the additional information or clarification requested,
the Administrator will respond within 15 days from the date of receipt.
07 CFR 1946.4 Matching grants.
(a) Administration of grants. FmHA will administer the program in
accordance with the requirements of 7 CFR Parts 3015 and 3016. Any
State requesting a grant must comply with the provisions of those
regulations.
(b) Source of funds. All grants awarded to qualifying States will be
made from appropriated funds specifically for this program. A statement
of the amounts appropriated, obligated, and remaining available for the
program at any particular time will be given to any person upon request
to FmHA.
(c) Amount of grant. A grant will not exceed 50 percent of the total
fiscal year funds that a qualifying State requires to operate and
administer its Agricultural Loan Mediation Program which has been
certified by the Administrator as meeting the requirements of 1946.3
(a)(2) (i) through (v) of this subpart. In no case will the total
amount of a grant exceed $500,000 annually.
(d) Distribution criteria. If funds for grants are appropriated on a
fiscal year basis, funds will be obligated on a pro-rata basis to all
States whose programs are certified at the beginning of the fiscal year.
States certified after the beginning of the fiscal year will receive a
share of funds not previously obligated. If, however, when funds for a
fiscal year become available, there are not sufficient funds to give all
qualified States 50 percent of their justified estimated expenses for
the fiscal year, the percentage allocation to each State will be reduced
so as to give all States the same percentage of their expenses. If
after the percentage calculation any State's allocation still exceeds
$500,000, that State's share will be further reduced to $500,000 and the
remaining States' shares will be increased by the same percentage.
(e) Eligibility criteria for amount of grant requested. To be
eligible to receive the amount of grant requested, a State must:
(1) Have an Agricultural Loan Mediation Program that has been
certified by the Administrator in accordance with 1946.3 of this
subpart, which certification has not been withdrawn in accordance with
1946.5 (c) of this subpart.
(2) Provide detailed estimates of the costs of operating and
administering the State's Agricultural Loan Mediation Program.
(f) Grant purposes. (1) Grants made under this subpart will be used
solely for the operation and administration of the State's Agricultural
Loan Mediation Program. There is no other authorized use of grant
funds. Eligible costs are limited to those allowable under 7 CFR
3016.22 that are reasonable and necessary to carry out the mission of
the State's Agricultural Loan Mediation Program in providing mediation
services for agricultural producers and their creditors within the
State, such as:
(i) Salaries of professional, technical, and clerical staffs;
(ii) Payment of necessary, reasonable office expenses such as office
rental, office utilities, and office equipment rental;
(iii) Purchase of office supplies;
(iv) Payment of administrative costs, such as workers' compensation,
liability insurance, employer's share of social security, and travel
that is necessary to provide mediation services;
(v) Training for mediators; and
(vi) Secretary systems necessary to assure confidentiality of
mediation sessions.
(2) Grant funds may not be used for:
(i) The purchase of capital assets, real estate, or vehicles or
repair and maintenance of privately-owned property;
(ii) Political activities; and
(iii) Routine administrative activities not allowable under OMB Cost
Principles.
(g) Application processing. (1) FmHA will have 60 days from the date
of certifying a State as a qualifying State to review the State's
application and supporting information for a grant, mail the obligation
document to the responsible State Government official for signature, to
obligate funds, and notify the State of approval. In any case where
additional information/clarification is needed for processing a grant
application, the 60-day time limit will begin on the date the additional
information of clarification is received. FmHA will notify the Governor
or Head of a State agency within 15 days of receipt of the application
for a grant if information/clarification is needed.
(2) A State requesting a matching grant will submit to the
Administrator:
(i) Standard Form 424, ''Federal Assistance.'' The application form
can be obtained from any FmHA office.
(ii) The information prescribed in paragraph (e)(2) of this section.
(h) Grant approval. (1) The Administrator will notify the Governor
or Head of the State agency designated by the Governor of grant approval
by mailing, on the obligation date, a copy of the completed Form FmHA
1940-1, ''Request for Obligation of Funds.'' The Form FmHA 1940-1 will
indicate that the grant is subject to the requirements of 7 CFR Parts
3015 and 3016, this subpart, and will cite any special grantee
conditions.
(i) Fund disbursement or grant termination or major changes. (1)
Qualifying States approved to receive matching grants under this subpart
will receive payment in accordance with 7 CFR Parts 3015 and 3016.
(2) In the case of a grant reduction, termination or withdrawal of
certification, in accordance with 1946.5 (c) of this subpart, or major
changes in the scope of the State's Agricultural Loan Mediation Program,
the Administrator, or designee, will execute Form FmHA 1940-10,
''Cancellation of U.S. Treasury Check and/or Obligation,'' to stop
further disbursement of funds under the Grant Agreement.
(j) Financial management systems and reporting requirements. (1)
States receiving grants must comply with standards for the financial
management and reporting and program performance reporting found in 7
CFR Parts 3015 and 3016.
(2) Qualifying States receiving matching grants must provide to the
FmHA State Office by September 30 an annual report on:
(i) The effectiveness of the State's Agricultural Loan Mediation
Program;
(ii) Recommendations for improving the delivery of mediation services
to producers; and
(iii) The savings to the State as a result of having an Agricultural
Loan Mediation Program.
(3) FmHA State Offices will include any comments or recommendations
regarding the State's Agricultural Loan Mediation Program and mail the
information to the Administrator no later than November 1.
07 CFR 1946.5 Monitoring compliance and penalty for non-compliance.
(a) FmHA monitoring. The FmHA Assistant to the Assistant
Administrator, Farmer Programs, will monitor compliance of the State's
Agricultural Loan Mediation Program through the reports received in
accordance with 1946.4(j) of this subpart, through information received
from FmHA field offices and the public, and through on-site visits to
observe the operation and administration of the program.
(b) Audit. The qualifying State is subject to the audit requirements
of 7 CFR Parts 3015 and 3016 of this chapter. An audit report will be
submitted to the FmHA Administrator annually or biennially as applicable
in accordance with OMB Circular A-128 by each qualifying State receiving
a grant.
(c) Penalty for non-compliance. If the Administrator determines that
a State's Agricultural Loan Mediation Program does not meet or no longer
meets the requirements set out in 1946.3(a)(2) (i) through (v) of this
subpart for certification or, that grant funds are not being used only
for the operation and administration of the State's Agricultural Loan
Mediation Program, the FmHA Administrator is authorized to withdraw the
certification of the program and terminate additional grant assistance
and/or to impose any penalties or sanctions established in 7 CFR Parts
3015 and 3016. In the event that the penalty for non-compliance is
enforced, the FmHA and other USDA agencies will cease to participate in
mediations conducted by the State Agricultural Loan Mediation Program.
If the penalty for noncompliance is enforced, the reason(s) will be
included in a letter to the Governor or Head of the State agency along
with appeal rights under Subpart B of Part 1900 of this chapter.
07 CFR 1946.6 Nondiscrimination.
The provisions of 7 CFR 1901 Subpart E, ''Civil Rights Compliance
Requirements,'' 7 CFR Part 15, ''Nondiscrimination in Federally-Assisted
Programs of the Department of Agriculture-Effectuation of Title VI of
the Civil Rights Act of 1964,'' 7 CFR Part 15b, ''Nondiscrimination on
the Basis of Handicap in Programs and Activities Receiving or
Benefitting from Federal Financial Assistance,'' and 45 CFR Part 90,
''Nondiscrimination on the Basis of Age in Programs or Activities
Receiving Federal Financial Assistance,'' apply to activities financed
by grants made under this subpart.
07 CFR 1946.7 Environmental requirements.
Environmental requirements are not applicable to this subpart.
07 CFR 1946.8 Delegation of authority.
The Administrator hereby delegates the authority for processing
applications and administering grants under this subpart to the
Assistant to the Assistant Administrator, Farmer Programs.
1946.9 -- 1946.49 (Reserved)
07 CFR 1946.50 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0125. In accordance with 5 CFR Part 1320,
summarized below is the annualized public reporting burden for this
regulation:
07 CFR 1946.50 Pt. 1948
07 CFR 1946.50 PART 1948 -- RURAL DEVELOPMENT
07 CFR 1946.50 Subpart A -- (Reserved)
07 CFR 1946.50 Subpart B -- Section 601 Energy Impacted Area
Development Assistance Program
1948.51 General.
1948.52 Objectives.
1948.53 Definitions.
1948.54 Eligible applicants.
1948.55 Source of funds.
1948.56 Program purposes.
1948.57 Eligible activities.
1948.58 (Reserved)
1948.59 Ineligible activities.
1948.60 Delegation and redelegation of authority.
1948.61 State supplements and guides.
1948.62 Environmental impact requirements.
1948.63 Historic preservation requirements.
1948.64 Equal opportunity requirements.
1948.65 Relocation Act requirements.
1948.66 (Reserved)
1948.67 Procedure for designation.
1948.68 Criteria for designation.
1948.69 (Reserved)
1948.70 Designation approval.
1948.71 (Reserved)
1948.72 Industry reports.
1948.73 -- 1948.77 (Reserved)
1948.78 Growth management and housing planning projects.
1948.79 Application procedure for planning grants.
1948.80 Planning grant selection criteria.
1948.81 State Investment Strategy for Energy Impacted Areas.
1948.82 Plan and State Investment Strategy approval procedure.
1948.83 Performance of site development work.
1948.84 Application procedure for site development and acquisition
grants.
1948.85 (Reserved)
1948.86 Site development and acquisition grant selection criteria.
1948.87 (Reserved)
1948.88 Direct land acquisition by FmHA.
1948.89 Land condemnation by FmHA.
1948.90 Land transfers.
1948.91 Inspections of development.
1948.92 Grant approval and fund obligation.
1948.93 Appeal procedure.
1948.94 Reporting requirements.
1948.95 Grant monitoring.
1948.96 Audit requirements.
1948.97 Grant closing and fund disbursement.
1948.98 Grant agreements.
1948.99 -- 1948.100 (Reserved)
Exhibit A -- Grant Agreement -- Growth Management and Housing
Planning for Approved Designated Energy Impact Area
Exhibit B -- Grant Agreement (Public Bodies) for Site Development
and/or Site Acquisition for Housing and/or Public Facilities and/or
Services
1948.101 Introduction.
1948.102 Definitions and abbreviations.
1948.103 Eligibility requirements.
1948.104-1948.108 (Reserved)
1948.109 Loan purposes.
1948.110 Ineligible loan purposes.
1948.111 Terms of loans to intermediaries.
1948.112 Interest rates.
1948.113 Security.
1948.114 Conflict of interest.
1948.115 Post award requirements.
1948.116 Fees and charges.
1948.117 Other regulatory requirements.
1948.118 Loan agreements between FmHA and the intermediary.
1948.119-1948.121 (Reserved)
1948.122 Application.
1948.123 Filing and processing applications for loans.
1948.124 FmHA evaluation of application.
1948.125 Loan approval and obligating funds.
1948.126 Loan closing.
1948.127 (Reserved)
1948.128 Request to make loans to ultimate recipients.
1948.129 (Reserved)
1948.130 Non-Federal funds.
1948.131 -- 1948.137 (Reserved)
1948.138 Office of Inspector General and Office of General Counsel
referrals.
1948.139 -- 1948.142 (Reserved)
1948.143 Appeals.
1948.144 -- 1948.147 (Reserved)
1948.148 Exception authority.
1948.149 Exhibits.
1948.150 OMB control number.
Authority: 7 U.S.C. 1989; 7 CFR 2.23; 7 CFR 2.70.
07 CFR 1946.50 Subpart A -- (Reserved)
07 CFR 1946.50 Subpart B -- Section 601 Energy Impacted Area
Development Assistance Program
Authority: Sec. 601, Pub. L. 95-620, delegation of authority by the
Sec. of Agri., 7 CFR 2.23; delegation of authority by the Asst. Sec.
for Rural Development, 7 CFR 2.70.
Source: 44 FR 35984, June 19, 1979, unless otherwise noted.
07 CFR 1948.51 General.
This subpart sets forth policies and procedures for designation,
approval of designation, and making grants for assistance to areas
impacted by increased coal and uranium production, processing, or
transportation. The Farmers Home Administration (FmHA) will fully
consider all A-95 clearing-house review comments and recommendations in
selecting applications for funding.
07 CFR 1948.52 Objectives.
The objective of the program is to help areas impacted by coal or
uranium development activities by providing assistance for the
development of growth management and housing plans and in developing and
acquiring sites for housing and public facilities and services.
07 CFR 1948.53 Definitions.
(a) Approved designated area. A group of counties, a county, or a
part of a county designated as an energy impacted area by the Governor
of a State and approved by the Secretary of Energy.
(b) Available financial resources. All existing financial resources
which could be used for impact assistance including Federal, State, and
local financial resources and financial resources accruing to States and
local governments as a result of coal or uranium development activity
and not already committed to other programs by low or historical
precedent.
(c) Coal. Coal means anthracite and bituminous coal, lignite, and
any fuel derivative thereof.
(d) Coal or uranium development activities. The production,
processing, or transportation of coal or uranium.
(1) Production includes the mining of coal or uranium and all mine
site operations connected with such mining operations and processing
activities. This includes construction activities on mine sites
relating to mining, production, and processing.
(2) Processing includes all operations performed on coal or uranium
including construction of processing plants. However, processing does
not include conversion into electrical energy.
(3) Transportation which directly relates to the production and
processing of coal or uranium including transportation networks in the
county of origin of the coal or uranium and counties of processing of
coal and uranium. This includes transportation depots along
transportation networks that are used primarily for the transfer of coal
or uranium for domestic consumption. This also includes unit train
rolling stock construction and repair facilities.
(e) Condemnation by U.S. Department of Agriculture (USDA). The use
of Federal authority by the Secretary of Agriculture to condemn real
property.
(f) Council of local governments. An areawide development
organization which includes one or more local governments servicing at
least a portion of an approved designated area. Such organization must
either have a policymaking body made up of a majority of local elected
officials.
(g) Eligible employment. Full time work related to coal or uranium
development activities.
(h) Eligible employment facility. A coal or uranium mine, processing
plant, or transportation depot.
(i) Energy impacted areas. An area where coal and uranium
development activities have a significant impact on the socio-economic
structure of the area and which meet the criteria set out at 1948.68 of
this subpart.
(j) Fair market value. The price at which a property will sell in
the open market allowing a reasonable period of time for typical,
fully-informed buyers and sellers to react, assuming that the purchaser
and seller are both willing participants in the transaction.
(k) Grantee. An entity with whom FmHA has entered into a grant
agreement under this program.
(l) Growth management planning. Planning for the orderly development
of an approved designated area. This planning includes, but is not
limited to: Planning for provision of resources to support housing,
public facility needs, sewer and water needs; planning for the
provision of additional public services needed; overall plans for the
coordinated development of all approved designated areas within a State;
the development of State Investment Strategies for Energy Impacted
Areas; and coordination of development of approved designated areas at
the interstate level where impact is interstate in nature.
(m) Housing planning. Identification of present and future housing
needs within an approved designated area and providing methods for
developing needed housing. This planning includes, but is not limited
to the identification of: housing sites; housing site development
needs; data and resource needs; funding needs; acquisition methods;
and agencies of government responsible for delivery of housing services.
(n) Industry reports. Those reports concerning production, expected
production, and employment within an approved designated area which are
requested by the Governor and submitted by a person to the Secretary of
Energy.
(o) Local government. Any county, parish, city, town, township,
village, or other general purpose political subdivision of a State with
the power to levy taxes and expend Federal, State, and local funds and
exercise governmental powers and which is located in, or has authority
over, the energy impact area. With the concurrence of the Governor, the
term may also include such school, water, sewer, highway, or other
public special purpose districts or authorities, or public or private
nonprofit corporations as may be appropriate to carry out the purpose
for which a grant is being made. These corporations or special purpose
districts or authorities may apply (including applications previously
received) for grants from fiscal year 1981 and earlier fiscal year funds
only.
(p) Person. Any corporation, individual, partnership, company,
association, firm, institution, society, trust, joint venture, or joint
stock company, any State or any agency or instrumentality thereof.
(q) Public facilities. Installations open to the public and used for
the public welfare. This includes but is not limited to: hospitals,
clinics, firehouses, parks, recreation areas, sewer plants, water
plants, community centers, libraries, city or town halls, jailhouses,
courthouses, and schoolhouses.
(r) Public services. The provision to the public of services such
as: health care, fire and police protection, recreation, etc.
(s) Site. A site is a plot of land which is suitable or can be made
suitable for providing housing, public facilities, or services.
(t) Site acquisition. Obtaining legal title to a site (or sites) or
obtaining leaseholds or other interests in land, by an instrumentality
of a state or local Government, or by FmHA, for housing, public
facilities, or services.
(u) Site development. Site restoration, necessary off-site
improvements and such on-site improvements as the construction of
sewerage collection and water distribution lines (does not include
individual taps) and construction of access roads; but does not include
the construction of houses or public facilities.
(v) Site restoration. On-site improvements to the real property
(such as backfilling, compacting, grading and leveling) necessary for
the construction of houses and public facilities.
(w) State. Any of the fifty States, Puerto Rico, and any territory
or possession of the United States.
(x) State Investment Strategy for Energy Impacted Areas. The
investment strategy for the development of approved designated areas
within a State as proposed by the Governor and approved by FmHA.
(y) Substandard housing. All housing units which do not have
complete plumbing fixtures, lack adequate heating systems, are not
structurally sound, or contain any other conditions that would cause a
safety, sanitary, or health hazard to the family or community.
(44 FR 35984, June 19, 1979, as amended at 45 FR 26943, Apr. 22,
1980; 46 FR 33021, June 26, 1981)
07 CFR 1948.54 Eligible applicants.
Organizations eligible for grants include local governments, councils
of local government, and State governments that have the leval authority
necessary to undertake the proposed project.
(46 FR 33022, June 26, 1981)
07 CFR 1948.55 Source of funds.
(a) Grants will be awarded from appropriate funds specifically
allocated for this program.
(b) Grants made for growth management and housing planning may equal
but will not exceed 10 percent of the total amount of funds appropriated
for and allocated to this program.
07 CFR 1948.56 Program purposes.
(a) FmHA will make grants for assistance to approved designated areas
in accordance with criteria contained in this subpart by providing
assistance to fill gaps in growth management and housing planning, and
to provide supplementary support for acquisition and development of
sites for housing and public facilities and services by States, local
governments, and councils of local government.
(b) Efforts will be made to provide comprehensive assistance to
approved designated areas through the coordination power of the
Secretary of Agriculture by utilizing existing plans, State and local
programs, and other Federal programs to the maximum extent possible.
Particular attention will be given to the utilization of existing FmHA
authorities under other FmHA programs in conjunction with this subpart
for providing assistance to approved designated areas in accordance with
the Governor's approved State Investment Strategy for Energy Impacted
Areas.
(c) Where existing plans are unsuitable or nonexistent, and other
assistance programs are inadequate or unavailable on a timely basis,
FmHA will provide assistance under this subpart to States, councils of
local governments, and local governments for the modification, updating,
and/or development of growth management and/or housing plans to deal
with problems resulting from coal or uranium development within approved
designated areas according to the criteria contained in this subpart.
(d) Where needed, FmHA will provide assistance for the development of
sites and/or the acquisition of sites for housing and public facilities
and services within approved designated areas according to the criteria
contained in this subpart. Such assistance for site development and
acquisition will be made in accordance with FmHA approved plans and
State Investment Strategies for Energy Impacted Areas in accordance with
the criteria contained in the subpart.
(e) At the request of the Governor of the appropriate State, FmHA
will take action to acquire real property directly for sites for housing
and/or public facilities and services in accordance with procedures set
forth in this subpart.
(f) At the request of the Governor of the appropriate State, where
neither the State nor local government has power to do so for this
purpose, FmHA may take action through condemnation to acquire real
property for sites necessary for housing, public facilities, or
services.
07 CFR 1948.57 Eligible activities.
Grant Funds may be used for:
(a) The preparation of growth management and/or housing plans (or
aspects thereof) for which financial resources are not available for
approved designated areas as set forth in the grant agreement, including
but limited to:
(1) One hundred percent of the total cost of developing growth
management and/or housing plans.
(2) One hundred percent of the cost of developing aspects of growth
management plans and/or housing plans including but not limited to:
(i) Sewer plans;
(ii) Water plans;
(iii) Recreation plans;
(iv) Transportation plans;
(v) Education plans; and
(vi) Subdivision plans.
(3) Payment of salaries of professional, technical, and clerical
staff to carry out growth management and housing planning and
evaluation;
(4) Payment of necessary reasonable office expenses such as office
rental, office utilities, and office equipment rental;
(5) Purchase of office supplies;
(6) Payment of necessary reasonable administrative posts, such as
workmen's compensation, liability insurance, and employer's share of
social security and travel; and
(7) Payment of costs to undertake tests, make appraisals, and arrange
for engineering/architectural services necessary for the planning
activity.
(b) Up to 75 percent of the actual cost of developing or acquiring
sites for housing, public facilities, or services for which financial
resources are otherwise not available as set forth in the grant
agreement, including but not limited to:
(1) Necessary grading and leveling;
(2) Sewer and water connections;
(3) Necessary water and sewer lines to housing and public facilities
sites;
(4) Access roads to housing and public facilities sites;
(5) Restoring previously mined sites;
(6) Necessary engineering reports in connection with site
development;
(7) Payment of costs to undertake tests, make appraisals, and
engineering/architectural services necessary for the site development
and/or site acquisition;
(8) Necessary legal fees involved in the transfer of the real
property.
1948.58 (Reserved)
07 CFR 1948.59 Ineligible activities.
(a) Growth management and housing planning grant funds may not be
used for:
(1) Acquisition, construction, repair, or rehabilitation of existing
housing and public facilities;
(2) Replacement of, or substitution for, any financial support
previously provided or assured from any other source which would result
in a reduction of current efforts on the part of the applicant;
(3) Duplication of current services;
(4) Routine administrative activities not allowed under Federal
Management Circular FMC 74-4, ''Cost Principles Applicable to Grants and
Contracts with State and Local Governments;''
(5) Planning for areas other than approved designated areas;
(6) Planning other than growth management and housing planning; or
(7) Political activities.
(b) Grant funds for site development may not be used for:
(1) Construction, repair, or rehabilitation of housing and public
facilities;
(2) Replacement of, or substitution for, any financial support
previously provided or assured from any other source which would result
in a reduction of effort on the part of the applicant;
(3) Administrative expenses not allowed under FMC 74-4;
(4) Purposes for which funding exists under other State or Federal
programs that may reasonably be obtained on a timely basis by the
applicants;
(5) Duplication of current services; or
(6) Political activities.
07 CFR 1948.60 Delegation and redelegation of authority.
The FmHA State Director is responsible for implementing the
authorities contained in this subpart and may issue State supplements
redelegating these authorities to appropriate FmHA employees.
07 CFR 1948.61 State supplements and guides.
FmHA State Directors will obtain National Office clearance for all
State supplements and guides in accordance with paragraph VIII of FmHA
Instruction 021.2, (available in any FmHA office).
(a) State supplements. State Directors may supplement this subpart
as appropriate to meet State and local laws and regulations and to
provide for orderly application processing and efficient service to
applicants. State supplements shall not contain any requirements
pertaining to designations, designation approval, or plan approvals more
restrictive than those in this subpart.
(b) State guides. State Directors may develop guides for use by
applicants if the guides to this subpart are not adequate. State
Directors may prepare guides for: items needed for the application;
items necessary for the docket; and items required prior to grant
closing or construction starts.
07 CFR 1948.62 Environmental impact requirements.
(a) The policies and regulations contained in Subpart G of Part 1940
of this chapter apply to grants made and other actions under this
program.
(b) Subsequent to an energy impact area designation by the Governor
and establishment of priorities, the FmHA State Director, in
consultation with the Governor, shall define the geographic boundaries
or otherwise delineate the areas which will be studied for environmental
impacts.
(c) Boundaries shall define the area within which the environmental
impacts of the proposed action can be reasonably studied. Proper
delineation of impact areas will avoid duplication of effort by using
one assessment or impact statement to study a broad area rather than
numerous overlapping documents prepared for smaller projects.
(44 FR 35984, June 19, 1979, as amended at 49 FR 3764, Jan. 30, 1984)
07 CFR 1948.63 Historic preservation requirements.
The policies and regulations contained in Part 1901, Subpart F, of
this chapter apply to this program.
07 CFR 1948.64 Equal opportunity requirements.
The policies and regulations contained in Part 1901, Subpart E, of
this chapter apply to grants made under this program.
07 CFR 1948.65 Relocation Act requirements.
The policies and regulations contained in Title 7, Subtitle A, Part
21 of the Code of Federal Regulations (Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970) will apply to site
development and acquisition grants and other actions under this program.
1948.66 (Reserved)
07 CFR 1948.67 Procedure for designation.
(a) Local governments may request the Governor of the State in which
they are located to designate an area served by them as an energy
impacted area.
(b) The Governor will define the geographic area of a designated area
consistent with the nature of the impact and the socio-economic
integration of the area.
(c) The Governor may designate an area as an energy impacted area
based on the criteria contained in this subpart.
07 CFR 1948.68 Criteria for designation.
(a) An area designated by the Governor must have the following
characteristics:
(1) During the most recent calendar year, the eligible employment in
coal or uranium development activities within the area has increased by
eight percent or more from the preceding year, or such employment (as
projected by generally acceptable estimates) will increase by eight
percent (of the eligible employment in the year of the designation) or
more per year during each of the next three calendar years.
(2) Because of increased employment in coal or uranium development
activities, a shortage of housing, inadequate public facilities, or
services exists or will exist in the area. Such shortages or
inadequacies may be demonstrated by: Housing shortage statistics;
higher occupancy rates of substandard houses than has historically
occurred within the area; an increase (for which data or projected data
is available) in eligible employment from the year of the designation of
at least 100 workers and one-half of one percent of the designated
area's population; or data showing that available public facilities and
services in the area are below generally accepted standards due to the
increased demand resulting from coal and uranium development activities.
(3) Available State and local financial resources are inadequate to
meet the public need for housing or public facilities and services at
present or in the next three years. In making this determination the
Governor should consider the following:
(i) State revenue increases resulting from coal and uranium
development activity based on existing tax laws;
(ii) Federal funds transferred to the State for impact assistance;
(iii) Local revenue increases resulting from coal or uranium
development activities based on existing tax laws;
(iv) Other federal financial assistance to which the area may have
access;
(v) All other available State and local sources of funding;
(vi) The time during which the resources will be available;
(vii) Existing laws committing increases in State and local revenues
and Federal transfers to purposes other than impact assistance; and
(viii) The estimated cost of development based on the best available
informed judgment.
(b) Designations submitted to the Secretary of Energy for approval
must have the following attached:
(1) A list of all counties and parts of counties covered by the
designation;
(2) If the area is smaller than a county, a map showing the boundary
of the area and the approximate location of all eligible employment
facilities in the area and nearby;
(3) A written justification for the inclusion of an area if the area
is smaller than a county;
(4) The level of eligible employment within the designated area for
each of the two most recent calendar years. This data should be
obtained from a single source for the entire State, if possible;
special surveys may be used when the Governor determines that these more
accurately reflect employment conditions within the designated area, or
in cases where data from other sources for the most recent calendar year
is unavailable at the time of designation. Reference should be made to
the data sources used if it is a Federal source; if a non-Federal
sources is used, a copy of the source and a brief description of the
procedures used for justification should be included. If projections of
eligible employment are to be considered, projections of such employment
for the next three years must be attached; identification of data
sources and methodology used in developing those projections and a copy
of any survey data used should be included.
(c) In areas where the impacted area covers counties or parts of
counties located in more than one State, the Governors of the affected
States may jointly designate such area and submit the designation to the
Secretary of Energy for approval.
(d) After examining these factors and determining that the area meets
the criteria of (a) above, the Governor may so certify in a letter
bearing his or her signature and submit the letter of certification with
all data and estimates upon which the designation is based to the
Secretary of Energy for approval.
(e) Each designation submitted should have the name and phone number
of a contact person in the Governor's designating office.
(f) An original and one copy of the designation should be submitted
to the Secretary of Energy, Department of Energy, Mail Stop 8G-031,
Forrestal Building, Washington, D.C. 20585.
(g) Two copies of all designations submitted for approval shall be
submitted to the appropriate FmHA State Director. The FmHA State
Director shall forward one copy to the Office of Area Development
Assistance in the FmHA National Office.
(h) The Governor should designate all areas expected to be considered
in fiscal year 1979 allocations of funds before July 1, 1979.
(44 FR 35984, June 19, 1979, as amended at 46 FR 33022, June 26,
1981)
1948.69 (Reserved)
07 CFR 1948.70 Designation approval.
Upon receipt of a request for approval of a designation made under
this section, the Secretary of Energy shall:
(a) Determine to the best of his ability the consistency of the
supporting data submitted along with the designation by the Governor;
(b) Confer with FmHA on approval;
(c) Notify the Governor and the Administrator of FmHA of action taken
on each designation within 30 calendar days of the receipt of a request
for approval;
(d) Consult with the Governor before the disapproval of any
designation; and
(e) Publish a description in the Federal Register of all designated
areas approved within 30 days of their approval.
1948.71 (Reserved)
07 CFR 1948.72 Industry reports.
Any person regularly engaged in any coal or uranium development
activity within an area designated and approved in accordance with this
subpart, shall prepare and transmit a report to the Secretary of Energy,
Department of Energy, Mail Stop 8G-031, Forrestal Building, Washington,
D.C. 20585 within 90 days after a written request to such person by the
Governor of the State in which such area is located.
(a) The report shall contain:
(1) Projected levels of employment in coal or uranium development
activities within the approved designated area for the next three
calendar years;
(2) The projected number of new jobs to be created in coal or uranium
development activities by the person within the approved designated area
in each of the following three calendar years;
(3) Current or planned actions of the person in relation to the
provision of housing or public facilities for such person's employees in
the next three calendar years;
(4) Contracts in force whereby the person intends to provide funds to
State government, local governments, and public or private nonprofit
organizations for the provision of housing or public facilities for such
person's employees; and
(5) The projected quantity of coal or uranium to be produced,
processed, or transported by the person in each of the next three years.
(b) The Governor requesting the report will notify the Secretary of
Energy of persons from whom reports have been requested.
(c) The Secretary of Energy shall provide a copy of these reports to
the Secretary of Agriculture, the appropriate Governor, and the
appropriate county or local officials, and make it available for public
inspection and copying in the public reading room of the Department of
Energy, Room GA152, Forrestal Building, Washington, D.C. 20585.
1948.73 -- 1948.77 (Reserved)
07 CFR 1948.78 Growth management and housing planning projects.
(a) Existing plans for growth management and housing may be used to
meet the planning requirements of this subpart.
(b) A reasonable effort should be made to modify existing plans for
use in meeting the planning requirements of this section.
(c) The Governor shall be responsible for the coordination of
planning within a State.
(d) The planning process developed with assistance under this section
should begin at the local level and flow upward to the State.
(e) Planning processes developed with assistance under this section
should have the maximum possible citizen involvement in the development
of plans.
(f) Governors should give full consideration to local and substate
priorities in the development of the State Investment Strategy for
Energy Impacted Areas.
(g) Plans developed with assistance under this section should be
fully coordinated with other Federal, State, substate, and local
planning activities affected by the project.
(h) Planning conducted by the State include effective management
activities for coordinated development of approved designated areas
through the plan implementation stage.
(44 FR 35984, June 19, 1979, as amended at 48 FR 29121, June 24,
1983)
07 CFR 1948.79 Application procedure for planning grants.
(a) Applicants may submit a preapplication for a planning grant upon
designation of the area as an energy impacted area by the Governor.
FmHA will not take final action on the preapplication until the
designation has been approved by the Secretary of Energy.
(b) Intergovernmental consultation should be carried out in
accordance with 7 CFR Part 3015 Subpart V, ''Intergovernmental Review of
Department of Agriculture office.''
(c) Applicants shall file an original and one copy of SF 424.1,
''Application for Federal Assistance (For Non-construction),'' with the
appropriate FmHA office. A copy should also be filed with the
Governor's office of the appropriate State. This form is available in
all FmHA offices. Local governments and councils of local governments
shall submit preapplications to the appropriate FmHA District Office.
State governments shall apply to the appropriate FmHA State Office. The
FmHA District Office will forward the preapplication with written
comments within 10 working days to the appropriate State Office.
(d) All preapplications shall be accompanied by:
(1) Evidence of applicant's legal existence;
(2) Evidence of applicant's authority to prepare growth management
and/or housing plans;
(3) A statement declaring that the planning neither duplicates nor
conflicts with current activities;
(4) An original and one copy of Forms FmHA 400-1, ''Equal Opportunity
Agreement,'' and Form FmHA 400-4, ''Assurance Agreement;'' and
(5) A statement regarding other financial resources available to the
area for this planning.
(e) District and State FmHA Offices receiving preapplications will:
(1) Determine if the area to be covered by this project is an
''approved designated area'' as defined in this subpart;
(2) Comply with the environmental requirements set forth in this
subpart; and
(3) Prepare a Historic Preservation Assessment in accordance with
Part 1901, Subpart F, of this chapter.
(f) District FmHA Offices receiving preapplications will also provide
written comments reflecting planning grant selection criteria listed in
this subpart.
(g) The FmHA District Office will forward the original of the
preapplication and accompanying documents including those described in
paragraphs (e)(1) through (e)(3) and (f) of this section to the
appropriate FmHA State Director within 10 working days of receipt of the
preapplication.
(h) Upon receipt of a preapplication, the FmHA State Office will:
(1) Review and evaluate the preapplication and accompanying
documents;
(2) Consult with the Governor of the appropriate State concerning the
Governor's priorities and recommended funding level for the project;
and
(3) Respond to the applicant within 30 days of the date of receipt of
the preapplication using Form AD-622, ''Notice of Preapplication Review
Action,'' indicating the action taken on the preapplication.
(i) Upon notification that the applicant is eligible to compete with
other applicants for funding, a SF 424.1 may be submitted to the FmHA
State Office by all applicants.
(j) The FmHA State Office will send evidence of the applicant's legal
existence and authority to the USDA Regional Office of General Counsel
(OGC) and request that a legal determination be made of the applicant's
legal existence and authority to prepare growth management and/or
housing plans in those cases where an application (SF 424.1) is
requested.
(k) Upon receipt of an application on SF 424.1 by the FmHA State
Office, a docket will be prepared which will include the following:
(1) Form SF 424.1;
(2) Form AD-622;
(3) Any comments received in accordance with 7 CFR Part 3015 Subpart
V, ''Intergovernmental Review of Department of Agriculture Programs and
Activities''. See FmHA Instruction 1940-J, available in any FmHA
office.
(4) SF 424.1;
(5) Evidence of the applicant's legal existence and authority to
prepare growth management and/or housing plans;
(6) OGC legal determinations;
(7) Grant agreement and scope of work;
(8) Form FmHA 440-1, ''Request for Obligation of Funds;''
(9) Form FmHA 400-1;
(10) Form FmHA 400-4;
(11) Historic Preservation Assessment;
(12) District, where appropriate, and State FmHA written comments,
assessments, and analysis of the proposed projects in accordance with
the grant selection criteria; and
(13) All certificates and statements accompanying the pre-application
and/or application.
(44 FR 35984, June 19, 1979, as amended at 48 FR 29121, June 24,
1983; 49 FR 3764, Jan. 30, 1984; 55 FR 13503 and 13504, Apr. 11, 1990
07 CFR 1948.80 Planning grant selection criteria.
The following criteria will be used in the selection of planning
grant recipients:
(a) Planning assistance which could be used for the purpose of the
proposed planning process is not available from other sources on a
timely basis (Mandatory);
(b) The increase in the number of new employees and the percentage of
increase in employment in coal and/or uranium development activities in
the year of designation within the approved designated area (years
projected will be averaged and treated equally);
(c) The need for planning in relation to the financial resources
available for such planning;
(d) The planning priorities and recommended funding level of the
Governor(s) of the appropriate State(s);
(e) The appropriateness of the proposed planning activity for meeting
the planning needs of the area, including but not limited to the
building of planning capacity and the local priority for the project;
(f) The inadequacy of existing plans for mitigating the effects of
coal and/or uranium development activities; and
(g) The nature of comments and recommendation received in accordance
with 7 CFR Part 3015 Subpart V, ''Intergovernmental Review of Department
of Agriculture Programs and Activities'' (See FmHA Instruction 1940-J,
available in any FmHA office.
(44 FR 35984, June 19, 1979, as amended at 48 FR 29121, June 24,
1983)
07 CFR 1948.81 State Investment Strategy for Energy Impacted Areas.
(a) The State Investment Strategy for Energy Impacted Areas should be
a dynamic document updated as each plan or group of plans is submitted
to FmHA for approval.
(b) The Governor shall consult with the FmHA State Director when
developing or updating a State Investment Strategy for Energy Impacted
Areas.
(c) The State Investment Strategy for Energy Impacted Areas will
include but is not limited to:
(1) A list of projects in order of priority;
(2) The Governor's recommended level of and method of funding for
each project through completion of the project identified in the plans
submitted and incorporated into the State Investment Strategy for Energy
Impacted Areas;
(3) Methods of coordinating assistance with other State and Federal
development programs;
(4) The differential between available financial resources and the
cost of needed site development and acquisition for housing and public
facilities and services within the area covered by the State Investment
Strategy for Energy Impacted Areas;
(5) References to plan and page number of plan on which each priority
project is described.
(d) The State Investment Strategy for Energy Impacted Areas having
projects expected to be funded in FY 1979 should be submitted to the
FmHA State Director of the appropriate State before July 15, 1979. A
copy should also be forwarded to the Administrator, FmHA.
07 CFR 1948.82 Plan and State Investment Strategy approval procedure.
(a) Any plan submitted for FmHA approval, whether it is a plan
developed with assistance under this section, an existing plan, or a
modified plan, should contain:
(1) The present level of coal or uranium production, processing, or
transportation within the approved designated area covered by the plan;
(2) The anticipated level of coal or uranium production, processing,
or transportation in each of the next three calendar years within the
area covered by the plan;
(3) A brief description of the socio-economic impacts that have
occurred during the two most recent calendar years in the approved
designated area covered by the plan;
(4) A brief description of the socio-economic impacts that are
expected to occur in the approved designated area covered by the plan
within each of the next three calendar years;
(5) The anticipated number of new employees expected to be hired in
coal or uranium development activities in each of the next three years
within the approved designated area covered by the plan;
(6) Available financial resources and federal programs that may be
applied to meeting the needs of the approved designated area including
but not limited to the following:
(i) The expected amount of State assistance and State expenditures in
the approved designated area covered by the plan which will be used for
impact assistance in the next three years;
(ii) The amount of tax revenues expected to accrue to local
governments serving the approved designated area covered by the plan in
each of the next three years due to increased economic activities which
have occurred since the year prior to designation or are expected to
occur as a result of coal and uranium development activity;
(iii) Sources and amount of assistance State and local governments
are now receiving or are expected to receive from persons for the
provision of housing and public facility and services; and
(iv) Existing budget surplus at the State and local level.
(7) The specific needs of the area covered by the plan as to the
number of housing units now needed and the number that are expected to
be needed in each of the next three years, and/or the number and type of
public facilities and services now needed or expected to be needed in
the next three years;
(8) The type and quantity of real property now needed or expected to
be needed in the next three years for the construction of public
facilities and/or housing and/or in the provisions of public services;
(9) Proposed method of acquisition for each site to be acquired by
the State or local governments; and
(10) An estimate of assistance that will be necessary under this
section and/or other FmHA or Federal programs for the development of the
site.
(b) All plans meeting the criteria in paragraph (a) of this section
should be forwarded to the Governor of the appropriate State or States
for possible incorporation into the State Investment Strategy for Energy
Impacted Areas.
(c) Appropriate growth management and/or housing plans received by
the Governor under this section may be submitted to the appropriate FmHA
State Office by the Governor.
(d) The Governor shall submit a copy of the State Investment Strategy
for Energy Impacted Areas along with all plans the Governor is
submitting to FmHA for approval.
(e) During fiscal year 1979 the Governor may submit existing plans to
FmHA for qualified approval in which some sections under paragraph (a)
above are incomplete, provided that planning is presently being done to
fill these gaps, or application for a planning grant has been submitted
or is to be submitted to cover the cost of the needed planning. These
plans must be resubmitted for final approval on or before December 31,
1980. No requested grant will be approved for land acquisition or site
development unless the request is cited in the FmHA-approved
comprehensive growth management plan for the designated area in which
the project is located.
(f) The FmHA State Director shall review all plans and the State
Investment Strategy for Energy Impacted Areas and provide comments on
the following:
(1) Appropriateness of FmHA assistance under this section as called
for in the plans;
(2) Appropriateness of FmHA assistance under other programs as called
for in the plans;
(3) Appropriateness of the State Investment Strategy for Energy
Impacted Areas;
(4) Other Federal programs which could be used instead of, or in
addition to, assistance under this section; and
(5) Recommended action.
(g) The FmHA State Director shall submit all plans received from the
Governor, the State Investment Strategy Energy Impacted Areas, and any
comments to the FmHA National Office for approval within 10 days of the
submission of plans and the State Investment Strategies for Energy
Impacted Areas to the State Director.
(h) The FmHA National Office shall review all plans and State
Investment Strategy for Energy Impacted Areas received and approve or
return them for modification within 30 days of their receipt in the FmHA
National Office.
(i) The FmHA National Office shall notify the appropriate State
Director of all plans that have been approved by the Administrator.
(j) Upon approval of the plans and State Investment Strategies for
Energy Impacted Areas by the Administrator, FmHA, the FmHA State
Director may exercise the authority of the Secretary of Agriculture
under Section 603 of the Rural Development Act of 1972 to convene a
meeting of the appropriate representatives of all Federal and State
agencies which are requested to supply development funds by the State
Investment Strategy for Energy Impacted Areas for the purpose of
obtaining tentative funding commitments consistent with their
authorities.
(k) The FmHA State Office shall notify the Governor and the
appropriate District Directors of all plans approved by the
Administrator, FmHA.
(l) Modifications to approved plans shall be approved by the
Administrator of FmHA following the above procedure.
(m) The Governor's modification to the State Investment Strategy for
Energy Impacted Areas may be approved by the FmHA State Director
provided the modification is consistent with FmHA approved plans.
07 CFR 1948.83 Performance of site development work.
Site development work will be done in accordance with 1942.18 of
FmHA Instruction 1942-A.
07 CFR 1948.84 Application procedure for site development and
acquisition grants.
(a) For those projects for which Federal funding is sought in excess
of $100,000 the applicant shall file SF 424.2, ''Application for Federal
Assistance (For Construction)'' with the appropriate FmHA office. For
those projects for which Federal funding is sought for less than
$100,000, the applicant shall file SF 424.2 with the appropriate FmHA
office. A copy should also be filed with the Governor's office of the
appropriate State.
(b) The FmHA office receiving a SF 424.2 shall reply to the applicant
with-in 45 calendar days regarding the applicant's eligibility to
compete for funding under this program using Form AD-622. (FmHA
District offices will send each preapplication to the FmHA State Offices
for review before replying to the applicant. FmHA District offices will
send a copy of Form AD-622 to the FmHA State Office at the time the
AD-622 is sent to the applicant.)
(c) Intergovernmental consultation should be carried out in
accordance with 7 CFR Part 3015 Subpart V, ''Intergovernmental Review of
Department of Agriculture Programs and Activities''. See FmHA
Instruction 1940-J, available in any FmHA office.
(d) Applicants shall file an original and one copy of SF 424.2, with
the appropriate FmHA office. Local governments and councils of local
government shall submit applications to the FmHA District Office and
State governments to the FmHA State Office. Applications shall include:
(1) Evidence of applicant's legal existence and authority to
undertake the proposed project;
(2) Evidence of ownership of or lease on a site to be developed or
''Options to Purchase Real Property,'' Form FmHA 440-34, (Lease on a
site for a public facility will be in accordance with FmHA Instruction
1942-A and lease on a site for housing will be in accordance with Part
1944, Subpart A);
(3) Description of project and relationship to approved growth
management and housing plan. Applicant must cite pages and section of
the approved plan;
(4) A plat of the area including elevations;
(5) Preliminary plans and specifications on proposed development
which will contain an estimate of the projected cost of site development
prepared by independent qualified appraisers or architects/engineers;
(6) The amount of Federal grant needed;
(7) The amount and source of applicant's financial contribution to
the project;
(8) An original and one copy of Form FmHA 1940-20;
(9) An original and one copy of Forms FmHA 400-1 and Form FmHA 400-4;
(10) Evidence that the land is stable if the land has been previously
mined (include relevant data on soil and analysis);
(11) Assurance that the requirements set forth in Title 7, Subtitle
A, Part 21 of the Code of Federal Regulations (Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970) have been
met.
(12) Specific concurrence of the Governor if the proposed applicant
is neither a council of local governments nor a general purpose
political subdivision of a State;
(e) District and State FmHA Offices receiving applications shall:
(1) Determine if the project is in accordance with a FmHA approved
growth management and/or housing plan covering the approved designated
area;
(2) Comply with environmental requirements set forth in Subpart G of
Part 1940 of this chapter;
(3) Prepare a Historic Preservation Assessment in accordance with
Part 1901, Subpart F, of this chapter;
(4) Determine site stability if the land has been previously mined;
and
(f) District FmHA Offices receiving applications shall also provide
written comments reflecting site development and acquisition grant
selection criteria ( 1948.86) listed in this subpart.
(g) The FmHA District Office shall forward the original of the
application and accompanying documents including those required in
paragraph (e) of this section to the FmHA State Director within 10
working days of receipt of the application.
(h) Upon receipt of an application, the FmHA State Office shall:
(1) Review and evaluate the application and accompanying documents;
(2) Determine that the project is a part of and consistent with the
State Investment Strategy for Energy Impacted Areas;
(3) Send a copy of the applicant's evidence of legal existence and
authority to the USDA Regional OGC for review;
(4) If applicant is local government(s), consult with the Governor on
funding recommendation of the project; and
(5) Respond to the applicant within 30 days of the date of receipt of
the application.
(i) Upon receipt of an application by the FmHA State Office, a docket
shall be prepared which shall include the following:
(1) Application SF 424.2 and enclosures;
(2) Any comments received in accordance with 7 CFR Part 3015 Subpart
V, ''Intergovernmental Review of Department of Agriculture Programs and
Activities''. See FmHA Instruction 1940-J, available in any FmHA
office.
(3) Evidence of ownership or lease of site to be developed;
(4) Evidence of applicant's legal existence and authority;
(5) OGC legal determination;
(6) Preliminary plans and specifications concerning the proposed
development;
(7) Grant agreement and scope of work;
(8) An estimate of projected cost of site development prepared by
independent qualified appraisers or engineers/architects;
(9) A topographical map of the area;
(10) Form FmHA 440-1;
(11) Form FmHA 400-1;
(12) Form FmHA 400;
(13) Form FmHA 1940-20, if required by Subpart G of Part 1940 of this
chapter;
(14) A copy of the appropriate FmHA environmental review required by
Subpart G of Part 1940 of this chapter;
(15) Historic Preservation Assessment;
(16) A copy of the State Investment for Energy Areas; and
(17) District, where appropriate, and State FmHA written comments,
assessments and analysis of the proposed project in accordance with the
grant selection criteria.
(44 FR 35984, June 19, 1979, as amended at 46 FR 61991, Dec. 21,
1981; 48 FR 29121, June 24, 1983; 49 FR 3764, Jan. 30, 1984; 55 FR
13503 and 13504, Apr. 11, 1990)
1948.85 (Reserved)
07 CFR 1948.86 Site development and acquisition grant selection
criteria.
The following criteria will be considered in the selection of site
development and/or acquisition grant recipients:
(a) Required criteria. Each project must meet the following
criteria:
(1) The area is covered by a FmHA approved plan;
(2) The FmHA approved plan specifically calls for the site
development and/or acquisition;
(3) Other Federal funds that the community could receive for the
project are inadequate or not available, and no State or local funds for
site development are available to permit development on a timely basis;
(4) The site is to be developed and/or acquired and is to be used for
housing, public facilities, or services;
(5) The applicant has title to the site, lease on site, or an option
on the site and funds to purchase the site, or is applying for site
acquisition funds;
(6) The site will comply with Executive Orders 11988, ''Flood Plain
Management'' and 11990, ''Protection of Wetlands;''
(7) An appraisal of the fair market value of the site must have been
completed;
(8) Priority has been given in the selection of site to unoccupied or
previously mined land;
(9) Class I or Class II farm land was included in the site only if
other suitable land was not available;
(10) The land is stable if previously mined; and
(11) Assurance that the requirements set forth in Title 7, Subtitle
A, Part 21 of the Code of Federal Regulations (Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970) have been
met.
(b) Competitive criteria. The following criteria will be considered
in the selection of grantees:
(1) Priority assigned and recommended funding level by the Governor
in the State Investment Strategy for Energy Impacted Areas;
(2) The increase in the number of new employees and the percentage of
increase in employment in coal and/or uranium development activities in
the year of designation within the approved designated area (years
projected will be averaged and treated equally);
(3) The severity of need for housing, public facilities, services
that has resulted from coal or uranium development activities in
relation to available financial resources within the approved designated
area covered by the plan calling for the project;
(4) Local priority for the project;
(5) The amount of effort by State and local government to meet the
needs of the area covered by the application as called for in the State
Investment Strategy for Energy Impacted Areas in relation to available
financial resources;
(6) An assessment of the environmental impacts of the project; and
(7) The nature of comments and recommendations of A-95 clearing-
house(s).
1948.87 (Reserved)
07 CFR 1948.88 Direct land acquisition by FmHA.
(a) FmHA may take action to acquire real property directly upon the
written request of the Governor of the State in which the real property
is located. FmHA will not acquire real property directly under this
section without such a request.
(b) All requests for direct land acquisition should be submitted to
the FmHA State Director. The following conditions must be met prior to
the submission of a request for direct acquisition by FmHA:
(1) The State or local government serving the area must lack power to
condemn land of this type for this purpose and must supply an opinion by
the State Attorney General that this authority is lacking;
(2) The real property is to be used as a site for needed housing,
public facilities, or services;
(3) The site acquisition is called for in a FmHA approved plan;
(4) The site is specifically identified by a FmHA approved plan;
(5) State and local governments have been unable to obtain the real
property for a price which does not substantially exceed its fair market
value; and suitable alternate sites are not available;
(6) The land is not Indian Trust land;
(7) The land is not U.S. Forest Service land; and
(8) There is legal authority to undertake the proposed project.
(c) FmHA may acquire Federal real property not prohibited in
paragraphs (b) (6) and (7) of this section for purposes contained in
this subpart. Farm land (Class I and II) will not be considered unless
there is no other suitable land available.
(d) If the State Director determines that no other suitable real
property exists that can be obtained at a price which does not
substantially exceed its fair market value, and if the appropriate State
or local government lacks condemnation authority as evidenced by opinion
from the Attorney General, and there is authority to undertake the
proposed project, then the State Director shall follow the procedures
set out in Title 7, Subtitle A, Part 21 of the Code of Federal
Regulations (Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970) and immediately open negotiations to directly
acquire the real property through purchase or trade.
(e) The FmHA State Director may acquire real property by purchase to
trade for other real property when FmHA has been requested to acquire
real property by the Governor of the State in which the real property is
located.
(f) The Governor shall submit, with this request, a commitment from
the State to acquire real property, together with a plan of compensation
to FmHA and evidence of the State's legal authority to enter into this
agreement with FmHA to accept the real property and repay FmHA for the
fair market value of the real property for the intended purpose.
(g) Real property acquired by FmHA shall be transferred to the State
requesting by a quitclaim deed for a price equal to the fair market
value in accordance with the terms of a transfer agreement.
(h) After obtaining title to the real property and prior to transfer
to the State, the property shall be managed by FmHA in accordance with
Part 1955, Subpart B of this chapter.
(i) The State Director shall inform the Governor that FmHA real
property acquisition is not likely to occur by purchase or trade if
negotiations have failed to produce acceptable results within 90 days of
the request for FmHA acquisition of real property.
07 CFR 1948.89 Land condemnation by FmHA.
(a) If FmHA attempts to acquire real property at the request of a
Governor through purchase or trade and is unable to do so, FmHA may take
action to condemn the real property by the following procedures:
(1) A request for condemnation shall be submitted by the FmHA State
Director to the Administrator, FmHA, Washington, D.C. 20250 at the
request of the Governor of the appropriate State. A copy of the
Governor's request for FmHA real property condemnation and the State
Attorney General's opinion that State and local government condemnation
authority is lacking shall be attached to the FmHA State Director's
request.
(2) The Administrator shall forward all requests for Federal
condemnation to the OGC, USDA with a recommendation for action.
(3) The Administrator, FmHA shall inform the Governor of any action
on the request for condemnation.
(4) Real property condemned by FmHA shall be transferred to the
requesting State by a quitclaim Deed for a price equal to the fair
market value of the real property in accordance with terms of a
negotiated real property transfer agreement.
(5) After obtaining title to real property and prior to transfer to
the State, the property shall be managed by FmHA in accordance with Part
1955, Subpart B of this chapter.
(b) FmHA may not condemn Indian Trust Land or U.S. Forest Service
Land.
07 CFR 1948.90 Land transfers.
(a) Transfers of real property acquired by FmHA.
(1) A request for FmHA acquisition of real property by a Governor of
a State constitutes an agreement by that State to receive said real
property and to reimburse FmHA for the fair market value of said real
property for the intended use.
(2) Terms and conditions, including reimbursement terms, for real
property transfers shall be set forth in a Real Property Transfer
Agreement between the Administrator, FmHA and the appropriate Governor.
These terms and conditions will be agreed upon by FmHA and the State
prior to FmHA attempting to acquire the property. These agreements
shall be prepared after consulting with OGC, and forwarded for prior
approval by the FmHA National Office.
(3) All funds from real property transfers received by FmHA shall be
deposited in the U.S. Treasury.
(b) Transfer of real property acquired and/or developed with grant
funds from a grant made under this subpart to a person.
(1) Real property acquired and/or developed under this subpart may be
transferred to a person for the purposes of construction of
privately-owned housing.
(2) All transfers of real property to a person must be approved by
the FmHA State Director of the appropriate State.
(3) Transfer of real property by a recipient of assistance under this
subpart to a person must be by contract which: acknowledges the use of
funds provided under this subpart to acquire or develop the site;
specifies the date of performance prior to delivery of the deed;
provides for FmHA concurrence before changes or modifications; and
assures FmHA that the real property will be used for the purposes under
which the grant was made.
(4) Proceeds derived from the sale of land acquired or developed
through the use of a grant provided under this subpart must be divided
between the grantee and FmHA on a pro rata basis. A grantee may not
recover its costs from sale proceeds to the exclusion of FmHA. The
amount to be returned to FmHA is to be computed by applying the
percentage of FmHA grant participation in the total cost of the project
to the proceeds from the sale. Funds will be transmitted to the Finance
Office in accordance with FmHA Instruction 1951-B, 1951.58(k),
available in FmHA offices.
(5) All funds received by FmHA from real property transfers shall be
deposited in the U.S. Treasury.
(42 U.S.C. 8401; delegation of authority by the Secretary of
Agriculture, 7 CFR 2.23; delegation of authority by the Assistant
Secretary for Rural Development, 7 CFR 2.70)
(44 FR 35984, June 19, 1979, as amended at 46 FR 33022, June 26,
1981; 56 FR 28038, June 19, 1991)
07 CFR 1948.91 Inspections of development.
Inspections will be made by the FmHA State Engineer or other employee
designated by the FmHA State Director to ascertain whether site
development is proceeding in accordance with plans and specifications.
Such inspections are solely for the benefit of the Government and not
for the benefit of the Grantee or any other person.
07 CFR 1948.92 Grant approval and fund obligation.
(a) The FmHA State Office shall review the docket to determine
whether the proposed grant complies with this subpart and that funds are
available.
(b) The FmHA State Director shall be the approving officer on all
grants made under this subpart.
(c) If at any time prior to grant approval it is decided that
favorable action will not be taken on a preapplication or application,
the FmHA State Director will notify the applicant in writing of the
reasons why the request was not favorably considered. The notification
to the applicant will state that a review of this decision by FmHA may
be requested by the applicant in accordance with FmHA Instruction
1900-B.
(d) If a grant is recommended, Form FmHA 440-1 and the proposed grant
agreement and scope of work will be prepared and forwarded to the
applicant for signature.
(e) When Form FmHA 440-1 and the grant agreement and scope of work
are received by the applicant, the applicant will sign these documents
and forward them to the State Director.
(f) Exhibit A to FmHA Instruction 2015-C (available in any FmHA
Office) will be prepared by the State Director and sent to the Director
of Information, Farmers Home Administration.
(g) If the State Director approves the project, the following actions
will be taken in the order listed:
(1) The State Director, or a designee, will telephone the Finance
Office requesting that grant funds for a particular project be
obligated. Immediately after contacting the Finance Office, the
requesting official shall furnish the requesting office's security
identification code. Failure to furnish the security code will result
in the rejection of the request of obligation. After the security code
is furnished, the required information from Form FmHA 440-1 shall be
furnished to the Finance Office. Upon receipt of the telephone request
for obligation of funds, the Finance Office shall record all information
necessary to process the request for obligation in addition to the date
and time of request.
(2) The individual making the request shall record the date and time
of the request.
(3) The Finance Office will notify the FmHA State Office by telephone
when funds are reserved and the date the funds will be obligated. If
funds cannot be reserved for a project, the Finance Office will notify
the FmHA State Office that funds are not available. The obligation date
will be six working days from the date the request for obligation is
processed.
(4) The Finance Office will send Form FmHA 440-57, ''Acknowledgement
of Obligated Funds/Check Request,'' to the FmHA State Director,
informing the State Director of the reservation of funds with the
obligation date inserted as required by Item 9 on the Forms Manual
Insert (FMI) for Form FmHA 440-57.
(5) Form FmHA 440-1 will not be mailed to the Finance Office.
(6) A copy of Form FmHA 440-1 will be sent the FmHA National Office.
(7) The State Director shall notify the Director of Information in
the FmHA National Office with a recommendation that the project
announcement be released.
(8) An executed copy of Form FmHA 440-1 shall be sent to the
applicant along with an executed copy of the grant agreement and scope
of work on or before the date funds are obligated.
(9) The actual date of applicant notification will be entered on the
original of Form FmHA 440-1 and the original of the form will be
included as a permanent part of the file.
(10) For planning grants, Standard Form 270, ''Request for Advance or
Reimbursement,'' will be sent to the applicant for completion and return
to FmHA. For site acquisition and site development grants, Standard
Form 271, ''Outlay Report and Request for Reimbursement for Construction
Programs,'' will be sent to the applicant for completion and returned to
FmHA.
(11) If it is determined that a project will not be funded or if
major changes in the scope of the project are made after release of the
approval announcement, the FmHA State Director will notify the Director,
Legislative Affairs and Public Information Staff (LAPIS) by telephone or
electronic mail giving the reasons for such action. The Director,
LAPIS, will inform all parties who were notified by the project
announcement that the project will not be funded or of major changes in
the project using a procedure similar to the announcement process. Form
FmHA 1940-10, ''Cancellation of U.S. Treasury Check and/or Obligation,''
will not be submitted to the Finance Office until five working days
after notifying the Director, LAPIS.
(7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; sec. 10 Pub. L.
93-357; delegation of authority by the Sec. of Agri., 7 CFR 2.23;
delegation of authority by the Under Secretary for Small Community and
Rural Development, 7 CFR 2.70)
(44 FR 35984, June 19, 1979, as amended at 47 FR 36416, Aug. 20,
1982; 48 FR 30946, July 6, 1983)
07 CFR 1948.93 Appeal procedure.
Any grantee or applicant for FmHA assistance under this subpart who
has been directly and adversely affected by an administrative decision
by FmHA may appeal such decision in accordance with FmHA Instruction
1900-B.
07 CFR 1948.94 Reporting requirements.
(a) For planning grants, SF-270 shall be submitted by grantees on an
as-needed basis but not more frequently that once every 30 days.
SF-269, ''Financial Status Report,'' and a project performance activity
report will be required of all grantees on a quarterly basis. SF-269
and a final project performance report will also be required. These
final reports may serve as the last quarterly reports. Grantees shall
constantly monitor performance to ensure that time schedules are being
met, projected work by time periods is being accomplished, and other
performance objectives are being achieved. All grantees except States
should submit an original of each report and one copy to the appropriate
FmHA District Office. When the grantee is a State, an original should
be submitted to the appropriate FmHA State Office. The project
performance reports shall include, but need not be limited to the
following:
(1) A comparison of actual accomplishments to the objectives
established for that period;
(2) Reasons why established objectives were not met;
(3) Problems, delays, or adverse conditions which will materially
affect attainment of planned project objectives, prevent the meeting of
time schedules or objectives, or preclude the attainment of project work
elements during established time periods. This disclosure shall be
accompanied by a statement of the action taken or contemplated and any
Federal assistance needed to resolve the situation; and
(4) Objectives established for the next reporting period.
(b) For site development and land acquisition grants, grantees shall
submit Form SF-271 for payment of site development costs. Multiple
advances will be made in accordance with FmHA Instruction 402.1
(available in any FmHA office) and will be made as needed to cover
required disbursements for not less than 30 day periods. Advances will
be requested for the next 30 day period by the grantee on Form SF-272,
''Report of Federal Cash Transactions.'' Each payment estimate must be
approved by the grantee. A final Form SF-272 will be submitted to FmHA
to include the final advance not later than 90 days after the final
advance.
07 CFR 1948.95 Grant monitoring.
Each grant will be monitored by FmHA to ensure that the Grantee is
complying with the terms of the grant and that the project activities
are completed as approved. This will involve on-site visits to the
project area and review of quarterly and final reports by FmHA .
07 CFR 1948.96 Audit requirements.
(a) Audit requirements for Site Development and Acquisition Grants
will be made in accordance with FmHA Instruction 1942-G.
(b) Audits for planning grants made in accordance with State statutes
or regulatory agencies will be acceptable provided they are prepared in
sufficient detail to permit FmHA to determine that grant funds have been
used in compliance with the proposal, any applicable laws and
regulations, and the grant agreement. A copy of the audit shall be
submitted to the State Director as soon as possible but in no case later
than 90 days following the period covered by the grant.
07 CFR 1948.97 Grant closing and fund disbursement.
Grant closing and fund disbursement will be accomplished in
accordance with FmHA Instruction 1942-G.
07 CFR 1948.98 Grant agreements.
The following Grant Agreements are a part of this regulation.
(a) Exhibit A of this subpart is a Grant Agreement for Growth
Management and Housing Planning Grants for approved Designated Energy
Impacted Areas.
(b) Exhibit B of this subpart is a Grant Agreement for Site
Development and/or Site Acquisition for Housing and/or Public Facilities
and/or Services.
1948.99 -- 1948.100 (Reserved)
07 CFR 1948.98 Exhibits to Subpart B
07 CFR 1948.98 Pt. 1948, Subpt. B, Exh. A
07 CFR 1948.98 Exhibit A -- Grant Agreement -- Growth Management and
Housing Planning for Approved Designated Energy Impacted Areas
This Agreement is between
(Name),
(Address),(Grantee) and the United States of America acting through
the Farmers Home Administration (Grantor or FmHA). Grantee has
determined to undertake certain growth management and housing planning
for energy impacted areas at an estimated cost of $ -------- and has
duly authorized such planning. The Grantor agrees to grant to Grantee a
sum not to exceed $ -------- subject to the terms and conditions
established by the Grantor; provided, however, that any grant funds
actually advanced and not needed for grant purposes shall be returned
immediately to the Grantor. The Grantor may terminate the grant in
whole, or in part, at any time before the date of completion, whenever
it is determined that the Grantee has failed to comply with the
conditions of the grant. In consideration of said grant by Grantor to
Grantee, to be made pursuant to Section 601 of the Powerplant and
Industrial Fuel Use Act of 1978 (Pub. L. 95-620) for the purpose only of
defraying the planning costs as permitted by applicable Farmers Home
Administration regulations:
Grantor and Grantee agree:
1. This agreement shall be effective when executed by both parties.
2. The scope of work set out below shall be completed prior to
------------ .
3. (a) Use of grant funds for travel which is determined as being
necessary to the program for which the grant is established may be
subject to the travel policies of the Grantee institution if they are
uniformly applied regardless of the source of funds in determining the
amounts and types of reimbursable travel expenses of Grantee staff and
consultants. Where the Grantee institution does not have such specific
policies uniformly applied, the Federal Travel Regulations shall apply
in determining the amount charged to the grant. Grantee may purchase
furniture and office equipment only if specifically approved in the
scope of work. Approval will be given only when Grantee demonstrates
that purchase is necessary and would result in less cost to the
Government in providing Federal-share funds or to the Grantee in
providing its contributions. Commercial purchase under these
circumstances will be approved only after consideration of Federal
supply sources.
(b) Expenses and Purchases Excluded:
(i) In no event shall the Grantee expend or request reimbursement
from Federal-share funds for obligations entered into or for costs
incurred or accrued prior to the effective date of this grant.
(ii) Funds budgeted under this grant may not be used for
entertainment expenses.
(iii) Funds budgeted under this grant may not be used to pay for
capital assets, the purchase of real estate or vehicles, improvement and
renovation of space, and repair and maintenance of privately-owned
vehicles.
(c) Grant funds shall not be used to replace any financial support
previously provided or assured from any other source. The Grantee
agrees that the general level of expenditure by the Grantee for the
benefit of program area and/or program covered by this agreement shall
be maintained and not reduced as a result of the Federal share funds
received under this grant.
4. (a) In accordance with Treasury Circular 1075, grant funds will be
disbursed by the FmHA as cash advances on an as-needed basis not to
exceed one advance every 30 days. The financial management system of
the recipient organization shall provide for effective control over and
accountability for all Federal funds as stated in OMB Circular A-102
revised for State and local governments.
(b) Cash advances to the Grantee shall be limited to the minimum
amounts needed and shall be timed to be in accord only with the actual,
immediate cash requirements of the Grantee in carrying out the purpose
of the planning project.
(c) The timing and amount of cash advances shall be as close as is
administratively feasible to the actual disbursements by the recipient
organization for direct program costs.
(d) Federal funds should be promptly refunded to the FmHA and redrawn
when needed if the funds are erroneously drawn in excess of immediate
disbursement needs. The only exceptions to the requirement for prompt
refunding are when the funds involved:
(i) Will be disbursed by the recipient organization within seven
calendar days, or
(ii) Are less than $10,000 and will be disbursed within 30 calendar
days.
(e) Grantee shall provide satisfactory evidence to FmHA that all
officers of Grantee organization authorized to receive and/or disburse
Federal funds are covered by such bonding and/or insurance requirements
as are normally required by the Grantee.
(f) Grant funds will be placed in a bank account(s). If for any
reason grant funds are invested, income earned on such investment shall
be identified as interest income on grant funds and forwarded to the
Finance Office, FmHA, St. Louis, Missouri, unless the Grantee is a
State. ''State'' includes instrumentalities of a State but not
political subdivisions of a State. A State Grantee is not accountable
for interest earned on grant funds.
5. The Grantee will submit Performance and Financial reports as
indicated below:
(a) As needed, but not more frequently than once every 30 days, an
original and 2 copies of Standard Form 270, ''Request for Advance or
Reimbursement;''
(b) Quarterly, an original and 2 copies of Standard Form 269,
''Financial Status Report,'' and a Project Performance report according
to the schedule below:
Period Date due
(c) Final, an original and 2 copies of Standard Form 269, ''Financial
Status Report,'' and a Project Performance report according to the
schedule below:
Period Date due
Note: Final reports may serve as the last quarterly reports.
(d) The Project Performance reports shall include but need not be
limited to the following:
(i) A comparison of actual accomplishment to the objectives
established for that period;
(ii) Reasons why established objectives were not met;
(iii) Problems, delays, or adverse conditions which will materially
affect attainment of planned project objectives, prevent the meeting of
time schedules or objectives, or preclude the attainment of project work
elements during established time periods. This disclosure shall be
accompanied by a Statement of the action taken or comtemplated and any
Federal assistance needed to resolve the situation; and
(iv) Objectives established for the next reporting period.
(e) All Grantees except States shall submit an original of each
report and one copy to the appropriate FmHA District Office. A State
Grantee shall submit original reports to the appropriate FmHA State
Office.
(f) The plan(s) developed under this grant shall be submitted to the
appropriate Governor for incorporation into the State Investment
Strategy for Energy Impacted Areas. The Governor will submit the plan
and the State Investment Strategy to the appropriate FmHA State
Office(s). The FmHA State Office will forward the plan and State
Investment Strategy to the FmHA National Office for approval of the
plan.
6. The Budget covered by this agreement is:
(a) In accordance with FMC 74-4, Attachment B, compensation for
employees will be considered reasonable to the extent that such
compensation is consistent with that paid for similar work in other
activities of the State or local government.
(b) In accordance with OMB Circular A-102, Attachment K, transfers
among direct cost budget categories of more than 5 percent of the total
budget must have prior written approval by the State Director, Farmers
Home Administration.
7. (a) The scope of work is described in the attached exhibit 1. The
Grantee accepts responsibility for establishing a development process
which will improve local conditions and alleviate problems associated
with increased coal or uranium production in the Grantee areas. The
Grantee shall:
(i) Develop a growth management and housing plan for assistance to
approved designated area(s) impacted by increased coal or uranium
production.
(ii) Contribute to development of a State Investment Strategy for
Energy Impacted Areas.
(iii) Endeavor to coordinate and provide liaison with State
development organizations, where they exist.
(iv) Provide continuing information to FmHA on the status of Grantee
programs, projects, related activities, and problems.
(b) The Grantee shall inform the Grantor as soon as the following
types of conditions become known:
(i) Problems, delays, or adverse conditions which materially affect
the ability to attain program objectives, prevent the meeting of time
schedules or goals, or preclude the attainment of project work units by
established time periods. This disclosure shall be accompanied by a
statement of the action taken or contemplated, and any Grantor
assistance needed to resolve the situation.
(ii) Favorable developments or events which enable meeting time
schedules and goals sooner than anticipated or producing more work units
than originally projected.
Grantee agrees:
1. To comply with property management standards established by
Attachment N of OMB Circular A-102 for expendable and nonexpendable
personal property ''Personal property'' means property of any kind
except real property. It may be tangible -- having physical existence
-- or intangible -- having no physical existence, such as patents,
inventions, and copyrights. ''Nonexpendable personal property'' means
tangible personal property having a useful life of more than one year
and an acquisition cost of $300 or more per unit. A Grantee may use its
own definition of nonexpendable personal property provided that such
definition would at least include all tangible personal property as
defined above. ''Expendable personal property'' refers to all tangible
personal property other than nonexpendable property. When nonexpendable
tangible property is acquired by a Grantee with project funds, title
shall not be taken by the Federal Government but shall vest in the
Grantee subject to the following conditions:
(a) Right to transfer title. For items of nonexpendable personal
property having a unit acquisition cost of $1,000 or more, FmHA may
reserve the right to transfer the title to the Federal Government or to
a third party named by the Federal Government when such third party is
otherwise eligible under existing statutes. Such reservation shall be
subject to the following standards:
(1) The property shall be appropriately identified in the grant or
otherwise made known to the Grantee in writing.
(2) FmHA shall issue disposition instructions within 120 calendar
days after the end of the Federal support of the project for which it
was acquired. If FmHA fails to issue disposition instructions within
the 120 calendar day period, the Grantee shall apply the standards of
paragraph (4) below.
(3) When FmHA exercises its right to take title, the personal
property shall be subject to the provisions for federally owned
nonexpendable property discussed in paragraph (4), below.
(4) When title is transferred either to the Federal Government or to
a third party and the Grantee is instructed to ship the property
elsewhere, the Grantee shall be reimbursed by the benefiting Federal
agency with an amount which is computed by applying the percentage of
the Grantee participation in the cost of the original grant project or
program to the current fair market value of the property, plus any
reasonable shipping or interim storage costs incurred.
(b) Use of other nontangible expendable property for which the
Grantee has title.
(1) The Grantee shall use the property in the project or program for
which it was acquired as long as needed, whether or not the project or
program continues to be supported by Federal funds. When it is no
longer needed for the original project or program, the Grantee shall use
the property in connection with its other Federally sponsored
activities, in the following order of priority:
(a) Activities sponsored by FmHA.
(b) Activities sponsored by other Federal agencies.
(2) Shared use. During the time that nonexpendable personal property
is held for use on the project or program for which it was acquired, the
Grantee shall make it available for use on other projects or programs if
such other use will not interfere with the work on the project or
program for which the property was originally acquired. First
preference for such other use shall be given to other projects or
programs sponsored by FmHA; second preference shall be given to
projects or programs sponsored by other Federal agencies. If the
property is owned by the Federal Government, use on other activities not
sponsored by the Federal Government shall be permissable if authorized
by FmHA. User charges should be considered if appropriate.
(c) Disposition of other nonexpendable property. When the Grantee no
longer needs the property as provided in 1(a)(4) above, the property may
be used for other activities in accordance with the following standards:
(1) Nonexpendable property with a unit acquisition cost of less than
$1,000. The Grantee may use the property for other activities without
reimbursement to the Federal Government or sell the property and retain
the proceeds.
(2) Nonexpendable personal property with a unit acquisition cost of
$1,000 or more. The Grantee may retain the property for other use
provided that compensation is made to FmHA or its successor. The amount
of compensation shall be computed by applying the percentage of Federal
participation in the cost of the original project or program to the
current fair market value of the property. If the Grantee has no need
for the property and the property has further use value, the Grantee
shall request disposition instructions from the original Grantor agency.
FmHA shall determine whether the property can be used to meet the
agency's requirements. If no requirement exists within that agency, the
availability of the property shall be reported, in accordance with the
guidelines of the Federal Property Management Regulations (FPMR), to the
General Services Administration by FmHA to determine whether a
requirement for the property exists in other Federal agencies. FmHA
shall issue instructions to the Grantee no later than 120 days after the
Grantee request and the following procedures shall govern:
(a) If so instructed or if disposition instructions are not issued
within 120 calendar days after the Grantee's request, the Grantee shall
sell the property and reimburse FmHA an amount computed by applying to
the sales proceeds the percentage of Federal participation in the cost
of the original project or program. However, the Grantee shall be
permitted to deduct and retain from the Federal share $100 or ten
percent of the proceeds, whichever is greater, for the Grantee's selling
and handling expenses.
(b) If the Grantee is instructed to dispose of the property other
than as described in (1)(a)(4) above, the Grantee shall be reimbursed by
FmHA for such costs incurred in its disposition.
(c) Property management standards for nonexpendable property. The
Grantee's property management standards for nonexpendable personal
property shall include the following procedural requirements:
(1) Property records shall be maintained accurately and shall
include:
(a) A description of the property.
(b) Manufacturer's serial number, model number, Federal stock number,
national stock number, or other identification number.
(c) Sources of the property including grant or other agreement
number.
(d) Whether title vests in the Grantee or the Federal Government.
(e) Acquisition date (or date received, if the property was furnished
by the Federal Government) and cost.
(f) Percentage (at the end of the budget year) of Federal
participation in the cost of the project or program for which the
property was acquired. (Not applicable to property furnished by the
Federal Government.)
(g) Location, use and condition of the property and the date the
information was reported.
(h) Unit acquisition cost.
(i) Ultimate disposition data, including date of disposal and sales
price or the method used to determine current fair market value where a
Grantee compensates the Federal agency for its share.
(2) Property owned by the Federal Government must be marked to
indicate Federal ownership.
(3) A physical inventory of property shall be taken and the results
reconciled with the property records at least once every two years. Any
differences between quantities determined by the physical inspection and
those shown in the accounting records shall be investigated to determine
the causes of the difference. The Grantee shall, in connection with the
inventory, verify the existence, current utilization, and continued need
for the property.
(4) A control system shall be in effect to insure adequate safeguards
to prevent loss, damage, or theft of the property. Any loss, damage, or
theft of nonexpendable property shall be investigated and fully
documented; if the property was owned by the Federal Government, the
Grantee shall promptly notify FmHA.
(5) Adequate maintenance procedures shall be implemented to keep the
property in good condition.
(6) Where the Grantee is authorized or required to sell the property,
proper sales procedures shall be established which would provide for
competition to the extent practicable and result in the highest possible
return.
(7) Expendable personal property shall vest in the Grantee upon
acquisition. If there is a residual inventory of such property
exceeding $1,000 in total aggregate fair market value, upon termination
or completion of the grant and if the property is not needed for any
other Federally sponsored project or program, the Grantee shall retain
the property for use on nonfederally sponsored activities, or sell it,
but must in either case compensate the Federal Government for its share.
The amount of compensation shall be computed in the same manner as
nonexpendable personal property.
2. To provide Financial Management Systems which will include:
(a) Accurate, current, and complete disclosure of the financial
results of each grant. Financial Reporting will be on an accrual basis.
(b) Records which identify adequately the source and application of
funds for grant-supported activities. Those records shall contain
information pertaining to grant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays, and income.
(c) Effective control over and accountability for all funds,
property, and other assets. Grantee shall adequately safeguard all such
assets and shall assure that they are used solely for authorized
purposes.
(d) Accounting records supported by source documentation.
(e) Provide an audit report prepared in sufficient detail to allow
Grantor to determine that funds have been used in compliance with the
proposal any applicable laws and regulations and this agreement.
3. To retain financial records, supporting documents, statistical
records, and all other records pertinent to the grant for a period of at
least three years after closing except that the records shall be
retained beyond the three-year period if audit findings have not been
resolved. Microfilm copies may be substituted in lieu of original
records. The Grantor and the Comptroller General of the United States,
or any of their duly authorized representatives, shall have access to
any books, documents, papers, and records of the Grantee which are
pertinent to the specific grant program for the purpose of making audit,
examination, excerpts, and transcripts.
4. To provide information as requested by the Grantor to determine
the need for and complete any necessary Environmental Impact Statements.
5. To provide information as requested by the Grantor concerning the
Grantee's actions in soliciting citizen participation in the application
process, including published notice of public meetings, actual public
meetings held, and content of written comments received.
6. To account for and to return to Grantor interest earned on grant
funds pending their disbursement for program purposes unless the Grantee
is a State. See Part A 4(f) above.
7. Not to encumber, transfer, or dispose of the property or any part
thereof, furnished by the Grantor or acquired wholly or in part with
Grantor funds without the written consent of the Grantor except as
provided in Part B 1.
8. To provide Grantor such periodic reports as it may require of
Grantee operations by designated representative of the Grantor.
9. To execute Form FmHA 400-1, ''Equal Opportunity Agreement,'' and
to execute any other agreements required by Grantor to implement the
civil rights requirements.
10. To include in all contracts in excess of $100,000 a provision for
compliance with all applicable standards, orders, or regulations issued
pursuant to the Clean Air Act of 1970. Violations shall be reported to
the Grantor and the Regional Office of the Environmental Protection
Agency.
11. That, upon any default under its representations or agreements
set forth in this instrument, Grantee, at the option and demand of
Grantor, will, to the extent legally permissible, repay to the Grantor
forthwith the original principal amount of the grant stated herein
above, with interest at the rate of five per centum per annum from the
date of the default. The provisions of this Grant Agreement may be
enforced by Grantor, at its option and without regard to prior waivers
by it of previous defaults of Grantee, by judicial proceedings to
require specific performance of the terms of this Grant Agreement or by
such other proceedings in law or equity, in either Federal or State
courts, as may be deemed necessary by Grantor to assure compliance with
the provisions of this Grant Agreement and the laws and regulations
under which this grant is made.
12. That no member of Congress shall be admitted to any share or part
of this grant or any benefit that may arise therefrom; but this
provision shall not be construed to bar as a contractor under the grant
a publicly held corporation whose ownership might include a member of
Congress.
13. That all non-confidential information resulting from its
activities shall be made available to the general public on an equal
basis.
14. That the purpose and scope of work for which this grant is made
shall not duplicate programs for which monies have been received, are
committed, or are applied for from other sources, public and private.
15. That the Grantee shall relinquish any and all copyrights and/or
privileges to the materials developed under this grant, such material
being the sole property of the Federal Government. In the event
anything developed under this grant is published in whole or in part,
the material shall contain notice and be identified by language to the
following effect: ''The material is the result of tax-supported
research and as such is not copyrightable. It may be freely reprinted
with the customary crediting of the source.''
16. That the Grantee shall abide by the policies promulgated in OMB
Circular A-102, Attachment O, which provides standards for use by
Grantees in establishing procedures for the procurement of supplies,
equipment, and other services with Federal grant funds.
17. To the following termination provisions:
(a) Termination for cause: The Grantor agency may terminate any
grant in whole, or in part, at any time before the date of completion,
whenever it is determined that the Grantee has failed to comply with the
conditions of the grant. The Grantor agency shall promptly notify the
Grantee in writing of the determination and the reasons for the
termination, together with the effective date.
(b) Termination for convenience. The Grantor agency or Grantee may
terminate grants in whole, or in part, when both parties agree that the
continuation of the project would not produce beneficial results
commensurate with the further expenditure of funds. The two parties
shall agree upon the termination conditions, including the effective
date and, in the case of partial terminations, the portion to be
terminated. The Grantee shall not incur new obligations for the
terminated portion after the effective date, and shall cancel as many
outstanding obligations as possible. The Grantor agency shall allow
full credit to the Grantee for the Federal share of the noncancelable
obligations, properly incurred by the Grantee prior to termination.
Grantor agrees:
1. That it will assist Grantee, within available appropriations, with
such technical assistance as Grantor deems appropriate in planning the
project and coordinating the plan with local official comprehensive
plans and with any State or area plans for the area in which the project
is located.
2. That at its sole discretion, Grantor may at any time give any
consent, deferment, subordination, release, satisfaction, or termination
of any or all of Grantee's grant obligations, with or without valuable
consideration, upon such terms and conditions as Grantor may determine
to be (a) advisable to further the purposes of the grant or to protect
Grantor's financial interest therein, and (b) consistent with both the
statutory purposes of the grant and the limitations of the statutory
authority under which it is made.
This agreement is subject to current Grantor regulations and any
future regulations not inconsistent with the express terms hereof.
Grantee on -------------------- , 19 ---- , has caused this agreement
to be executed by its duly authorized -------------------- and attested
and its corporate seal affixed by its duly authorized
-------------------- .
Attest:
Grantee:
By ----------------------------------------------
----------------------------------------
(Title)
By --------------------------------------------
----------------------------------------
(Title)
Grantor:
United States of America Farmers Home Administration.
By ----------------------------------------------
------------------------------------------
(Title)
(Approved by the Office of Management and Budget under control number
0575-0040)
(44 FR 35984, June 19, 1979, as amended at 47 FR 745, Jan. 7, 1982)
07 CFR 1948.98 Pt. 1948, Subpt. B, Exh. B
07 CFR 1948.98 Exhibit B -- Grant Agreement (Public Bodies) For Site
Development and/or Site Acquisition For Housing and/or Public Facilities
and/or Services
This agreement dated ------------ , 19 -- , between
------------------------------------ a public body corporate organized
and operating under ------------------------ (Authorizing State Statute)
Herein called ''Grantee,'' and the United States of America acting
through the Farmers Home Administration, Department of Agriculture,
herein called ''Grantor,'' Witnesseth:
Grantee has determined to undertake a project for site acquisition
and/or site development as follows: ------------------------------
(herein called project) to serve the approved designated energy impacted
area under its jurisdiction at an estimated cost of $ ---------- , and
has duly authorized the undertaking of such project;
Grantee is able to finance not more than $ ---------- of the site
acquisition and/or site development costs through revenues, charges,
taxes or assessments, or funds otherwise available to Grantee. Said sum
has been committed to and by Grantee for such project acquisition and/or
site development costs.
The Grantor agrees to grant to Grantee a sum not to exceed $
---------- subject to the terms and conditions established by the
Grantor. Provided, however, that the proportionate share of any grant
funds actually advanced and not needed for grant purposes shall be
returned immediately to the Grantor. The Grantor may terminate the
grant in whole, or in part, at any time before the date of completion,
whenever it is determined that the Grantee has failed to comply with the
conditions of the grant.
In consideration of said grant by Grantor to Grantee, to be made
pursuant to Section 601 of the Powerplant and Industrial Fuel Use Act of
1978 (Pub. L. 95-620) for the purpose only of defraying a part of the
acquisition and/or site development costs, as defined by applicable
Farmers Home Administration regulations:
Grantee agrees that Grantee will:
1. Cause said project to be completed within the total sums available
to it, including said grant, in accordance with the project plans and
specifications and any necessary modifications thereof prepared by
Grantee and approved by Grantor.
2. Permit periodic inspection of the project by a representative of
Grantor.
3. Make the housing or public facility or services available to all
persons in Grantee's servce area without regard to race, color, national
origin, religion, sex, maritial status, age, physical or mental
handicap.
4. Use the real property including land and land improvements for
authorized purposes of the grant as long as needed.
a. The Grantee shall obtain approval of the Grantor before using the
real property for other purposes when the Grantee determines that the
property is no longer for the original purposes.
b. When the real property is no longer needed as provided above,
return all real property furnished or purchased wholly with Federal
grant funds to the Grantor. In the case of property purchased in part
with Federal grant funds, the Grantee may be permitted to take title to
the Federal interest therein upon compensating the Federal Government
for its fair share of the property. The Federal share of the property
shall be the amount computed by applying the percentage of the Federal
Participation in the total cost of the grant program for which the
property was acquired to the current fair market value of the property.
5. Not use grant funds to replace any financial support previously
provided or assured from any other source. The Grantee agrees that the
general level of expenditure by the Grantee for the benefit of program
area and/or program covered by this agreement shall be maintained and
not reduced as a result of the Federal share funds received under this
grant.
6. Not use grant funds to pay for construction costs of housing or
public facilities.
This Grant Agreement covers the following described real property
(use continuation sheets as necessary).
7. Abide by the following conditions pertaining to nonexpendable
personal property which is furnished by the Grantor or acquired wholly
or in part with Grant Funds.
a. The Grantee shall retain such property as long as there is a need
for the property to accomplish the purpose of the grant. When there is
no longer a need for the property to accomplish the purpose of the
grant, the Grantee shall use the property in connection with other
Federal grants it has received in the following order of priority.
(1) Other grant of the Grantor needing the property.
(2) Grants of other Federal agencies needing the property.
b. When the Grantee no longer has need for the property in any of its
Federal grant programs, the property may be used for its own official
activities in accordance with the following standards:
(1) Nonexpendable property with an acquisition cost of less than $500
and used four years or more. The Grantee may use the property for its
own official activities without reimbursement to the Federal Government
or sell the property and retain the proceeds.
(2) All other nonexpendable property. The Grantee may retain the
property for its own use provided that a fair compensation is made to
the Grantor. The amount of compensation shall be computed by applying
the percentage of the Grantor participation in the grant program to the
current fair market value of the property as determined by the Grantor.
c. If the Grantee has no need for the property, disposition shall be
made as follows:
(1) Nonexpendable property with an acquisition cost of $1,000 or
less. Except for that property which meets the criteria of b(1) above,
the Grantee shall sell the property and reimburse the Grantor an amount
which is computed in accordance with (3) below.
(2) Nonexpendable property with an acquisition cost of over $1,000.
The Grantee shall request disposition instructions from Grantor.
(3) If disposition instructions are not issued within 120 days after
reporting, the Grantee shall sell the property and reimburse the Grantor
an amount which is computed by applying the percentage of the Grantor
participation in the grant program to the sales proceeds. Further, the
Grantee shall be permitted to retain $100 or ten percent of the
proceeds, whichever is greater, for the Grantee's selling and handling
expenses.
d. The Grantee's property management standards for nonexpendable
personal property shall also include:
(1) Property records which accurately provide for: a description of
the property; manufacturer's serial number or other identification
number; acquisition date and cost; sources of the property; and
ultimate disposition data including sales price or the method used to
determine current fair market value if the Grantee reimburses the
Grantor for its share.
(2) A physical inventory of property shall be taken and the result
reconciled with the property records at least once every two years to
verify the existence, current utilization, and continued need for the
property.
(3) A control system shall be in effect to insure adequate safeguards
to prevent loss, damage, or theft to the property shall be investigated
and fully documented.
(4) Adequate maintenance procedures shall be implemented to keep the
property in good condition.
(5) Proper sales procedures shall be established for unneeded
property which would provide for competition to the extent practicable
and result in the highest possible return.
This Grant Agreement covers the following described nonexpendable
property (use continuation sheets as necessary).
8. Provide Financial Management Systems which will include:
(a) Accurate, current, and complete disclosure of the financial
results of each grant. Financial Reporting will be on an accrual basis.
(b) Records which identify adequately the source and application of
funds for grant-supporting activities. Those records shall contain
information pertaining to grant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays, and income.
(c) Effective control over and accountability for all funds, property
and other assets. Grantees shall adequately safeguard all such assets
and shall assure that they are used solely for authorized purposes.
(d) Accounting records supported by source documentation.
9. Retain financial records, supporting documents, statistical
records, and all other records pertinent to the grant for a period of at
least three years after grant closing except that the records shall be
retained beyond the three-year period if audit findings have not been
resolved. Microfilm copies may be substituted in lieu of original
records. The Grantor and the Comptroller General of the United States,
or any of their duly authorized representatives, shall have access to
any books, documents, papers, and records of the Grantee governments
which are pertinent to the specific grant program for the purpose of
making audit, examination, excerpts and transcripts.
10. Provide information as requested by the Grantor to determine the
need for and complete any necessary Environmental Impact Statements.
11. Provide an audit report prepared in sufficient detail to allow
the Grantor to determine that funds have been used in compliance with
the proposal, any applicable laws and regulations and this agreement.
12. Agree to account for and to return to Grantor interest earned on
grant funds pending their disbursement for program purposes when the
Grantee is a unit of local government. States and agencies of
instrumentalities of states shall not be held accountable for interest
earned on grant funds pending their disbursement.
13. Not encumber, transfer, or dispose of the property or any part
thereof, furnished by the Grantor or acquired wholly or in part with
Grantor funds without the written consent of the Grantor except as
provided in item 5 above.
14. Provide Grantor with such periodic reports as it may require and
permit periodic inspection of its operations by a designated
representative of the Grantor.
15. Execute Form FHA 400-1, ''Equal Opportunity Agreement,'' Form FHA
400-4, ''Nondiscrimination Agreement,'' and any other agreements
required by Grantor to implement the civil rights requirements. If any
such form has been executed by Grantee as a result of a loan being made
to Grantee by Grantor contemporaneously with the making of this grant,
another form of the same type need not be executed in connection with
this grant.
16. Include in all contracts for construction or repair a provision
for compliance with the Copeland ''Anti-Kick Back'' Act (18 USC 874) as
supplemented in Department of Labor regulations (29 CFR, Part 3). The
Grantee shall report all suspected or reported violations to the
Grantor.
17. In Contracts in excess of $2,000 and in other contracts in excess
of $2,500 which involve the employment of mechanics or laborers, to
include a provision for compliance with sections 103 and 107 of the
Contract Work Hours and Safety Standards Act (40 USC 327-330) as
supplemented by Department of Labor regulations (29 CFR, Part 5).
18. Include in all contracts in excess of $2,500 a provision for
compliance with applicable regulations and standards of the Cost of
Living Council in establishing wages and prices. Grantee shall report
any violations of such regulation and standards to the Grantor and the
local Internal Revenue Service field office.
19. Include in all contracts in excess of $100,000 a provision for
compliance with all applicable standards, orders, or regulations issued
pursuant to the Clear Air Act of 1970. Violations shall be reported to
the Grantor and the Regional Office of the Environmental Protection
Agency.
20. Upon any default under its representations or agreements set
forth in this instrument, Grantee, at the option and the demand of
Grantor, will, to the extent legally permissible, repay to Grantor
forthwith the original principal amount of the grant stated hereinabove,
with interest at the rate of five per centum per annum from the date of
the default. The provisions of this Grant Agreement may be enforced by
Grantor at its option and without regard to prior waivers by it of
previous defaults of Grantee, by judicial proceedings to require
specific performance of the terms of this Grant Agreement or by such
other proceedings in law or equity, in either Federal or State courts,
as may be deemed necessary by Grantor to assure compliance with the
provisions of this Grant Agreement and the laws and regulations under
which this grant is made.
21. That no member of Congress shall be admitted to any share or part
of this grant or any benefit that may arise therefrom; but this
provision shall not be construed to bar as a contractor under the grant
a publicly held corporation whose ownership might include a member of
Congress.
22. That all non-confidential information resulting from its
activities shall be made available to the general public on an equal
basis.
23. That the purpose and scope of work for which this grant is made
shall not duplicate programs for which monies have been received are
committed, or are applied for from other sources, public and private.
24. That Grantee shall relinquish any and all copyrights and/or
privileges to the materials developed under this grant, such material
being the sole property of the Federal Government. In the event
anything developed under this grant is published in whole or in part,
the material shall contain notice and be identified by language to the
following effect: ''The material is the result of tax-supported
research and as such is not copyrightable. It may be freely reprinted
with the customary crediting of the source.''
25. That the Grantee shall abide by the policies promulgated in OMB
Circular A-95, Attachment O, which provides standards for use by
Grantees in establishing procedures for the procurement of supplies,
equipment, and other services with Federal grant funds.
26. To the following termination provisions:
(a) Termination for cause: The Grantor agency may terminate any
grant in whole, or in part, at any time before the date of completion,
whenever it is determined that the Grantee has failed to comply with the
conditions of the grant. The Grantor agency shall promptly notify the
Grantee in writing of the determination and the reasons for the
termination, together with the effective date.
(b) Termination for convenience. The Grantor agency or Grantee may
terminate grants in whole, or in part, when both parties agree that the
continuation of the project would not produce beneficial results
commensurate with the further expenditure of funds. The two parties
shall agree upon the termination conditions, including the effective
date and, in the case of partial terminations, the portion to be
terminated. The Grantee shall not incur new obligations for the
terminated portion after the effective date, and shall cancel as many
outstanding obligations as possible. The Grantor agency shall allow
full credit to the Grantee for the Federal share of the noncancelable
obligations, properly incurred by the Grantee prior to termination.
Grantor agrees that it will:
1. Assist Grantee, within available appropriations, with such
technical assistance as Grantor deems appropriate in planning the
project and coordinating the plan with local official comprehensive
plans and with any State or area plans for the area in which the project
is located.
2. In its sole discretion, Grantor may at any time give any consent,
deferment, subordination, release, satisfaction, or termination of any
or all of Grantee's grant obligations, with or without valuable
consideration, upon such terms and conditions as Grantor may determine
to be (a) advisable to further the purposes of the grant or to protect
Grantor's financial interest therein, and (b) consistent with both the
statutory purposes of the grant and the limitations of the statutory
authority under which it is made.
Grantee on the date first above written has caused this agreement to
be executed by its duly authorized ------------------------
and attested and its corporate seal affixed by its duly authorized
------------------------
Attest:
(Seal)
By
(Title)
Grantee
By
(Title)
Grantor
United States of America
Farmers Home Administration
By
(Title)
(Approved by the Office of Management and Budget under control number
0575-0040)
(44 FR 35984, June 19, 1979, as amended at 47 FR 745, Jan. 7, 1982)
07 CFR 1948.98 Subpart C -- Intermediary Relending Program (IRP)
Source: 53 FR 30647, Aug. 15, 1988, unless otherwise noted.
07 CFR 1948.101 Introduction.
(a) This subpart contains regulations for loans made by the Farmers
Home Administration (FmHA) to eligible intermediaries and applies to
borrowers and other parties involved in making such loans. The
provisions of this subpart supersede conflicting provisions of any other
subpart. The servicing and liquidation of such loans will be in
accordance with Subpart R of Part 1951 of this Chapter.
(b) The purpose of the program is to finance business facilities and
community development projects in rural areas. This purpose is achieved
through loans made by FmHA to intermediaries that establish programs for
the purpose of providing loans to ultimate recipients for business
facilities and community development in a rural area.
(c) The loan program is administered by the FmHA National Office.
The Director, Business and Industry Division, is the point of contact
for processing activities unless otherwise delegated by the
Administrator.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38532, Sept. 19,
1990)
07 CFR 1948.102 Definitions and abbreviations.
(a) General definitions. The following definitions are applicable to
the terms used in this subpart.
(1) Applicant. The intermediary applying to FmHA for loan funds for
relending to ultimate recipients for business facilities and community
development in a rural area.
(2) Intermediary (Borrower). The entity receiving FmHA loan funds
for relending to ultimate recipients pursuant to FmHA requirements found
in 1948.103.
(3) Letter of Conditions. FmHA's letter of proposed terms and
conditions to the intermediary which when accepted by the intermediary
provides the binding conditions under which FmHA will make a loan to the
intermediary.
(4) Loan Agreement. The signed agreement between FmHA and the
intermediary setting forth the terms and conditions of the loan.
(5) 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)).
(6) 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.
(7) Principals of intermediary. Include members, officers,
directors, entities, and other entities directly involved in the
operation and management of an intermediary organization.
(8) Ultimate recipient. The entity or individual receiving financial
assistance from the intermediary.
(9) 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.
(10) 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.
(11) Technical assistance or service. Technical assistance or
service is any function unreimbursed by FmHA performed by the
intermediary for the benefit of the ultimate recipient.
(12) 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 meeting obligations
within the ordinary operating cycle of the business.
(13) Intermediary Relending Program (IRP). A program operated by an
intermediary whereby the intermediary uses loan funds received from
FmHA, along with any other available funds, to make loans to ultimate
recipients. Relending programs will normally establish revolving funds
so that income from loans made to ultimate recipients, in excess of
necessary operating expenses and debt payments, will be used to make
additional loans to ultimate recipients.
(b) Abbreviations. The following abbreviations are applicable to
this subpart:
(1) B&I -- Business and Industry
(2) FmHA -- Farmers Home Administration
(3) IRP -- Intermediary Relending Program
(4) OGC -- Office of the General Counsel
(5) OIG -- Office of Inspector General
(6) RDLF -- Rural Development Loan Fund
(7) USDA -- United States Department of Agriculture
07 CFR 1948.103 Eligibility requirements.
(a) The intermediaries which may receive FmHA loan funds for
relending to ultimate recipients are:
(1) Private nonprofit corporations.
(2) Public agencies -- Any State or local government, or any branch
or agency of such government having the authority to act on behalf of
that government, borrow funds, and engage in activities eligible for
funding under this subpart.
(3) Indian groups -- Indian tribes on a Federal or State reservation
or other federally recognized tribal groups.
(4) Cooperatives -- Incorporated or unincorporated associations, at
least 51 percent of whose members are rural residents, whose members
have one vote each, and which conduct, for the mutual benefit of their
members, such operations as producing, purchasing, marketing, processing
or other activities aimed at improving the income of their members as
producers or their purchasing power as consumers.
(b) The intermediary must:
(1) Have the legal authority necessary for carrying out the proposed
loan purposes and for obtaining, giving security for, and repaying the
proposed loan.
(2) Have a proven record of successfully assisting rural business and
industry. Such record will normally consist of:
(i) Recent experience in loanmaking and servicing for loans that are
similar in nature to this program;
(ii) A delinquency rate acceptable to FmHA on the loans in the
intermediary's portfolio;
(iii) A background and expertise of the intermediary's staff that
will be making and servicing the portfolio acceptable to FmHA; and
(iv) Capitalization of the intermediary (for making such loans)
acceptable to FmHA.
(c) No loans will be extended to an intermediary unless:
(1) There is adequate assurance of repayment of the loan based on the
fiscal and managerial capabilities of the applicant.
(2) The loan is not otherwise available on reasonable (i.e., usual
and customary) rates and terms from private sources or other Federal,
State or local programs. The intermediary and each ultimate recipient
must certify and document that the ultimate recipient is unable to
finance the proposed project from their own resources or through
commercial credit or other Federal, State or local programs at
reasonable rates and terms.
(3) The amount of the loan, together with other funds available, is
adequate to assure completion of the project or achieve the purposes for
which the loan is made.
(4) The total amount of FmHA loan funds requested by the intermediary
plus the outstanding balance of existing IRP loan(s) will not exceed
$2,000,000 per intermediary.
(d) At least 51 percent of the outstanding interest in any
intermediary and ultimate recipient must have membership or be owned by
those who are either citizens of the United States or reside in the
United States after being legally admitted for permanent residence.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38532, Sept. 19,
1990; 56 FR 13068, Mar. 29, 1991)
1948.104 -- 1948.108 (Reserved)
07 CFR 1948.109 Loan purposes.
(a) Intermediaries. FmHA loan funds will be used by the intermediary
to provide loans to ultimate recipients in accordance with paragraph (b)
of this section. Prior to receiving FmHA's concurrence to make a loan
to an ultimate recipient, the intermediary must certify to FmHA that any
assistance to the ultimate recipient, involving FmHA-related funds,
complies with the criteria in this section and 1948.110 of this
subpart.
(b) Ultimate recipients. (1) Financial assistance from the
intermediary to the ultimate recipient must be for community development
projects, the establishment of new businesses and/or the expansion of
existing businesses, creation of employment opportunities and/or saving
existing jobs. Additionally, the ultimate recipients must:
(i) Meet the objective and purpose of the program as described in
1948.101(b) of this subpart,
(ii) To the maximum extent possible use labor of low-income persons,
farm families, and displaced farm families needing additional income to
supplement their farming operations, and
(iii) To the maximum extent possible be innovative in providing
services and/or products for the public.
(2) Financial assistance involving FmHA loan funds from the
intermediary to the ultimate recipient may include but not be limited
to:
(i) Business acquisitions, construction, conversion, enlargement,
repair, modernization, or developent cost.
(ii) Purchasing and development of land, easements, rights-of-way,
building, facilities, leases, or materials.
(iii) Purchasing of equipment, leasehold improvements, machinery or
supplies.
(iv) Pollution control and abatement.
(v) Transportation services.
(vi) Startup operating costs and working capital.
(vii) Interest (including interest on interim financing) during the
period before the facility becomes income producing, but not to exceed 3
years.
(viii) Feasibility studies.
(ix) Reasonable fees and charges only as specifically listed in this
subparagraph. Authorized fees include loan packaging fees,
environmental data collection fees, and other professional fees rendered
by professionals generally licensed by individual State or accreditation
associations, such as Engineers, Architects, Lawyers, Accountants, and
Appraisers. The amount of fee will be what is reasonable and customary
in the community or region where the project is located. Any such fees
are to be fully documented and justified as outlined in 1948.116(b) of
this subpart.
(x) Aquaculture including conservation, development, and utilization
of water for aquaculture. Aquaculture means the culture or husbandary
of aquatic animals or plants by private industry for commerical purposes
including the culture and growing of fish by private industry for the
purpose of granting or augmenting publicly-owned or regulated stocks of
fish.
07 CFR 1948.110 Ineligible loan purposes.
(a) Intermediaries. FmHA loans may not be used by the intermediary:
(1) For payment of the intermediary's own administrative costs or
expenses.
(2) To purchase goods or services or render assistance in excess of
what is needed to accomplish the purpose of the ultimate recipient's
project.
(3) For distribution or payment to the owner, partners, shareholders,
or beneficiaries of the ultimate recipient or members of their families
when such persons will retain any portion of their equity in the
ultimate recipient.
(4) For charitable and educational institutions, churches,
organizations affiliated with or sponsored by churches, and fraternal
organizations.
(5) For assistance to government employees, military personnel, or
principals or employees of the intermediary who are directors, officers
or have major ownership (20 percent or more) in the ultimate recipient.
(6) For relending in a city with a population of twenty-five thousand
or more as determined by the latest decennial census.
(7) For a loan to an ultimate recipient which has an application
pending or has received a loan from another intermediary unless FmHA
provides prior written approval for such loan.
(8) For any line of credit.
(9) To finance more than 75 percent of the total cost of a project by
the ultimate recipient. The total amount of FmHA loan funds requested
by the ultimate recipient plus the total outstanding balance of any
existing loans from IRP funds will not exceed $150,000. Other loans,
grants, and/or intermediary or ultimate recipient contributions or funds
from other sources must be used to make up the difference between the
total cost and the assistance provided by FmHA.
(b) Ultimate recipients. Ultimate recipients may not use assistance
received from intermediaries involving FmHA funds:
(1) For agricultural production, which means the cultivation,
production (growing), harvesting, either directly or through integrated
operations, of agricultural products (crops, animals, birds and marine
life, either for fiber or food for human consumption, and disposal or
marketing thereof, the raising, housing, feeding, breeding, hatching,
control and/or management of farm and domestic animals). Exceptions to
this definition are:
(i) Aquaculture as identified under eligible purposes.
(ii) Commercial nurseries primarily engaged in the production of
ornamental plants and trees and other nursery products such as bulbs,
florists' greens, flowers, shrubbery, flower and vegetable seeds, sod,
the growing of vegetables from seed to the transplant stage.
(iii) Forestry, which includes establishments primarily engaged in
the operation of timber tracts, tree farms, forest nurseries, and
related activities such as reforestation.
(iv) Financial assistance for livestock and poultry processing as
identified under eligible purposes.
(v) The growing of mushrooms or hydroponics.
(2) For the transfer of ownership unless the loan will keep the
business from closing, or prevent the loss of employment opportunities
in the area, or provide expanded job opportunities.
(3) For community antenna television services or facilities.
(4) For any legitimate business activity when more than 10 percent of
the annual gross revenue is derived from legalized gambling activity.
(5) For any illegal activity.
(6) For any otherwise eligible project that is in violation of either
a Federal, State or local environmental protection law or regulation or
an enforceable land use restriction unless the financial assistance
required will result in curing or removing the violation.
(7) For any hotels, recreation, or amusement centers.
(8) For any tourist, recreation, or amusement centers.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38533, Sept. 19,
1990)
07 CFR 1948.111 Terms of loans to intermediaries.
(a) No loans to intermediaries shall be extended for a period
exceeding 30 years. Principal payments on these loans will be made at
least annually. The initial principal payment may be deferred (during
the period before the facility becomes income producing) by FmHA, but
not more than 3 years.
(b) The terms of loan repayment to intermediaries will be those
stipulated in the loan agreement and/or promissory note, as agreed to
and executed by FmHA and intermediaries.
07 CFR 1948.112 Interest rates.
(a) Loans made by FmHA pursuant to this subpart shall bear interest
at a fixed rate of one percent (1%) per annum over the term of the loan.
(b) Interest rates charged by intermediaries to ultimate recipients
shall be negotiated by those parties. Intermediaries are encouraged to
make loans at the lowest possible rate, taking into account the cost of
the loan funds to the intermediary and the cost of administering the
loan portfolio.
(c) Interest income, service fees, and other authorized financing
charges received by intermediaries operating relending programs may be
used to pay for: The costs of administering the IRP, the provision of
technical assistance to borrowers, the absorption of bad debts
associated with IRP loans, and repayment of debt. Proposed budgets to
cover the administrative costs of intermediaries must be submitted
annually to FmHA. All proceeds in excess of those needed to cover
authorized expenses, as described above, must revolve back into the IRP
and be available for relending to eligible ultimate recipients.
07 CFR 1948.113 Security.
(a) Loans to intermediaries. Unless otherwise approved by FmHA,
security for the FmHA loan will be separate and apart from security for
other loans for which the intermediary is either maker or payee.
Security for all loans to intermediaries must be such that the repayment
of the loan is reasonably assured, when considered along with the
intermediary's financial condition, work plan, and management ability.
It is the responsibility of the intermediary to make loans to ultimate
recipients in such a manner that will fully protect the interests of the
intermediary and the Government.
(1) Security for such loans may include but is not limited to:
(i) Any realty, personalty, or intangibles capable of being
mortgaged, pledged, or otherwise encumbered by the intermediary in favor
of FmHA; and
(ii) Any realty, personalty, or intangibles capable of being
mortgaged, pledged, or otherwise encumbered by an ultimate recipient in
favor of FmHA.
(2) Security will normally consist of a lien on the IRP revolving
fund. FmHA will obtain assignments of security pledged by ultimate
recipients including an assignment of the promissory notes given by the
ultimate recipients and take possession of the promissory notes.
Normally, the assignments will not be filed in the public records. They
will be held by FmHA and may be filed at the sole discretion of FmHA, if
FmHA determines the filing is necessary to protect the Government's
interest.
(b) Loans from intermediaries to ultimate recipients. Security
requirements for loans from intermediaries to ultimate recipients will
be negotiated between the intermediaries and ultimate recipients.
(c) Additional security. The FmHA may require additional security at
any time during the term of a loan to an intermediary if, after review
and monitoring, an assessment indicates the need for such security to
protect the Government's interest.
(d) Appraisals for security for all loans to intermediaries and for
loans to ultimate recipients serving as security for loans to
intermediaries. Real property serving as security will be appraised by
a qualified appraiser. For all other types of property, a valuation
shall be made using any recognized, standard technique for the type of
property involved (including standard reference manuals), and this
valuation shall be described in the loan file.
(53 FR 30647, Aug. 15, 1988, as amended at 56 FR 13068, Mar. 29,
1991)
07 CFR 1948.114 Conflict of interest.
The intermediary will, for each proposed loan to an ultimate
recipient, inform FmHA in writing and furnish such additional evidence
as FmHA requests as to whether and the extent to which the intermediary
or its principal officers (including immediate family) hold any legal or
financial interest or influence in the ultimate recipient, or the
ultimate recipient or any of its principal officers (including immediate
family) holds any legal or financial interest or influence in the
intermediary. FmHA shall determine whether such ownership, influence or
financial interest is sufficient to create a potential conflict of
interest. In the event FmHA determines there is a conflict of interest,
the intermediary's assistance to the ultimate recipient will not be
approved until such conflict is eliminated.
07 CFR 1948.115 Post award requirements.
(a) Intermediaries receiving loans under this program shall be
governed by these regulations, the Loan Agreement, the approved work
plan, security interests, and any other conditions which the FmHA may
impose in awarding a loan. Prior to making a loan commitment to an
ultimate recipient, the intermediary must receive FmHA's concurrence in
the proposed use of loan funds outlined in 1948.128 of this Subpart.
(b) Unless otherwise specifically agreed to in writing by the FmHA,
any loan funds held by an intermediary and any funds obtained from
loaning FmHA-derived funds and recollecting them, that are not
immediately needed by the intermediary for an ultimate recipient, should
be deposited in an interest bearing account in a bank or other financial
institution which will be covered by a form of federal deposit
insurance. Any interest or income earned as a results of such deposits
shall be used by the intermediary only for purposes authorized by FmHA.
07 CFR 1948.116 Fees and charges.
(a) Late payment charges. Unpaid principal or interest on the loan
to the intermediary will be handled as specified in the Loan Agreements
attached as Exhibit II to these regulations. Late payment charges on a
loan to an ultimate recipient may be made when a loan payment has not
been received within the customary timeframe allowed as agreed upon by
the ultimate recipient and intermediary. The term ''payment received''
means that the payment in cash or check, money order, or similar medium
has been received by the intermediary at its designated place of
payment.
(b) Documentation of fees. All fees and charges must be specifically
documented and justified on Form FmHA 1948-1, ''Application for Loan
(Intermediary Relending Program),'' or on an addendum to the application
at the time the loan request is submitted to FmHA for processing.
Allowable fees will be those reasonably and customarily charged
intermediaries in similar circumstances in the ordinary course of
business and are subject to FmHA review and concurrence.
(c) Eligible packagers and payment of fees. Packaging fees include
services rendered by others in connection with preparation of the
application and seeing the transaction through to final decision. These
services may or may not be performed by an investment banker. If an
investment banker provides needed assistance in addition to the
packaging of the loan, additional charges may be added to the packaging
fee. The maximum allowable packaging fees are 2 percent of the total
principal amount. Packaging fees, investment banker fees, and any other
fees and charges not specifically provided for in this section are
permitted subject to FmHA review and written approval.
07 CFR 1948.117 Other regulatory requirements.
(a) Intergovernmental consultation. The Intermediary Relending
Program is subject to the provisions of Executive Order 12372 which
requires intergovernmental consultation with State and local officials.
The approval of a loan to an intermediary will be the subject to
intergovernmental consultation. For each ultimate recipient to be
assisted with a loan under this subpart and for which the State in which
the ultimate recipient is to be located has elected to review the
program under their intergovernmental review process, the State Point of
Contact must be notified. Notification, in the form of a project
description, can be initiated by the intermediary or the ultimate
recipient. Any comments from the State must be included with the
intermediary's request to use the FmHA loan funds for the ultimate
recipient. Prior to FmHA's decision on the request, compliance with the
requirements of intergovernmental consultation must be demonstrated for
each ultimate recipient. These requirements should be carried out in
accordance with FmHA Instruction 1940-J, ''Intergovernmental Review of
Farmers Home Administration Programs and Activities,'' available in any
FmHA office.
(b) Environmental requirements. (1) Unless specifically modified by
this section, the requirements of Subpart G of Part 1940 of this Chapter
apply to this subpart. FmHA will give particular emphasis to ensuring
compliance with the environmental policies contained in 1940.303 and
1940.304 in Subpart G of Part 1940 of this Chapter. Intermediaries and
ultimate recipients of loans must consider the potential environmental
impacts of their projects at the earliest planning stages and develop
plans to minimize the potential to adversely impact the environment.
(2) As part of the intermediary's application for a loan, the
intermediary must provide a completed Form FmHA 1940-20, ''Request for
Environmental Information,'' for each Class I or Class II project
specifically identified in its plan submitted with its loan application.
FmHA will review the application, supporting materials, and any
required Forms FmHA 1940-20, and initiate a Class II environmental
assessment for the application. This assessment will focus on the
potential cumulative impacts of the projects as well as any
environmental concerns or problems that are associated with individual
projects and that can be identified at this time from the information
submitted. Because neither the completion of the environmental
assessment nor the approval of the application is an FmHA commitment to
the use of loan funds for a specific project, no public notification
requirements for a Class II assessment will apply to the application.
The affected public has not been sufficiently identified at this stage
of the FmHA review. Should an application be approved, each project to
be assessed will undergo the applicable environmental review and public
notification requirements in Subpart G of Part 1940 of this Chapter
prior to FmHA's consent to use loan funds for an ultimate recipient.
FmHA will prepare an Environmental Impact Statement for any application
for a loan determined to have a significant effect on the quality of the
human environment. Both the intermediary and the ultimate recipient
will cooperate and furnish such information and assistance as FmHA needs
to make any of its environmental determinations.
(3) As part of the intermediary's request to FmHA for concurrence to
make a loan to an ultimate recipient, the intermediary will include for
the ultimate recipient a properly completed Form FmHA 1940-20, if it is
classified as a Class I or Class II action. FmHA will complete the
environmental review required by Subpart G of Part 1940 of this Chapter.
The results of this review will be used by FmHA in making its decision
on the request.
(c) Equal opportunity and nondiscrimination requirements. (1) In
accordance with Title V of Pub. L. 93-495, the Equal Credit Opportunity
Act, neither the intermediary nor FmHA will discriminate against any
applicant on the basis of race, color, religion, national origin, age,
physical or mental handicap (provided that the applicant has the
capacity to enter into a binding contract), sex or marital status with
respect to any aspect of a credit transaction anytime FmHA loan funds
are involved.
(2) The regulations contained in Part 1901, Subpart E of this Chapter
apply to loans made under this program.
(3) The Administrator will assure that equal opportunity and
nondiscrimination requirements are met in accordance with Title VI of
the Civil Rights Act of 1964, ''Nondiscrimination in Federally Assisted
Programs,'' 42 U.S.C. 2000d-2000d-4. If there is indication of
noncompliance with these requirements, such facts will be reported in
writing to the Administrator, ATTN: Equal Opportunity Officer.
07 CFR 1948.118 Loan agreements between FmHA and the intermediary.
A loan agreement must be executed by the intermediary and FmHA at
loan closing for each loan. The loan agreement will be prepared by FmHA
and reviewed by OGC prior to the loan closing. Part 1948, Subpart C,
Exhibit II (available from the FmHA National Office or any FmHA State
Office), may be used as a guide. The loan agreement, as a minimum, must
contain the following provisions:
(a) The loan agreement will set out:
(1) The amount of the loan.
(2) The interest rate.
(3) The term and repayment schedule.
(4) The provisions for late charges. The intermediary shall pay a
late charge of 4 percent of the payment due of principal and/or interest
if payment for either of these is not received within 15 calendar days
following the due date. The late charge shall be considered unpaid if
not received within 30 calendar days of the missed due date for which it
was imposed. Any unpaid late charge shall be added to principal and be
due as an extra payment at the end of the term. Acceptance of a late
charge by FmHA does not constitute a waiver of default.
(5) Disbursement procedure. Disbursement of loan funds by FmHA to
the intermediary shall take place after the loan agreement and
promissory note are executed, and any other conditions precedent to
disbursement of funds are fully satisfied. The intermediary may draw
down only such funds as are necessary to cover a 30-day period in
implementing its approved work program. Advances will be requested by
the intermediary in writing. The intermediary may use Form FmHA 440-11,
''Estimate of Funds Needed for 30-Day Period Commencing XXXX,'' to show
the amount of funds needed during the 30-day period.'' The date of such
drawdown shall constitute the date the funds are advanced under the loan
agreement for purposes of computing interest payments.
(6) Provisions regarding default. On the occurrence of any event of
default, FmHA may declare all or any portion of the debt and interest to
be immediately due and payable and may proceed to enforce its rights
under the loan agreement or any other instruments securing or relating
to the loan and in accordance with the applicable law and regulations.
Any of the following may be regarded as an ''event of default'' in the
sole discretion of the FmHA:
(i) Failure of the intermediary to carry out or comply with the
specific activities in its loan application as approved by FmHA, or loan
terms and conditions, or any terms or conditions of the loan agreement,
or any applicable Federal or State laws, or with such USDA or FmHA
regulations as may become generally applicable at any time.
(ii) Failure of the intermediary to pay within 15 calendar days of
its due date any installment of principal or interest on its promissory
note to FmHA.
(iii) The occurrence of:
(A) The intermediary's becoming insolvent, or ceasing, being unable,
or admitting in writing its inability to pay its debts as they mature,
or making a general assignment for the benefit of, or entering into any
composition or arrangement with creditors;
(B) Proceedings for the appointment of a receiver, trustee or
liquidator of the intermediary, or of a substantial part of its assets,
being authorized or instituted by or against it.
(iv) Submission or making of any report, statement, warranty, or
representation by the intermediary or agent on its behalf to USDA or
FmHA in connection with the financial assistance awarded hereunder which
is false, incomplete or incorrect in any material respect.
(v) Failure of the intermediary to remedy any material adverse change
in its financial or other condition (such as the representational
character of its board of directors or policymaking body) arising since
the date of FmHA's award of assistance hereunder, which condition was an
inducement to FmHA's original award.
(7) Insurance requirements. (i) Hazard insurance with a standard
mortgage clause naming the intermediary as beneficiary will be required
by the intermediary on every ultimate recipient's project in an amount
that is at least the lesser of the depreciated replacement value of the
property being insured or the amount of the loan. Hazard insurance
includes fire, windstorm, lightning, hail, business interruption,
explosion, riot, civil commotion, aircraft, vehicle, marine, smoke,
builder's risk, public liability, property damage, flood or mudslide, or
any other hazard insurance that may be required to protect the security.
The intermediary's interest in the insurance will be assigned to the
FmHA.
(ii) Ordinarily, life insurance, which may be decreasing term
insurance, is required for the principals and key employees of the
ultimate recipient and will be assigned or pledged to the intermediary
and subsequently to FmHA. A schedule of life insurance available for
the benefit of the loan will be included as part of the application.
(iii) Workmen's compensation insurance on ultimate recipients is
required in accordance with State law.
(iv) The intermediary is responsible for determining if an ultimate
recipient is located in a special flood or mudslide hazard area anytime
FmHA loan funds are involved. If the ultimate recipient is in a flood
or mudslide area, then flood or mudslide insurance must be provided in
accordance with Subpart B of Part 1806 of this Chapter (FmHA Instruction
426.2).
(v) Intermediaries will provide fidelity bond coverage for all
persons who have access to intermediary funds. Coverage may be provided
either for all individual positions or persons, or through ''blanket''
coverage providing protection for all appropriate employees and/or
officials. FmHA may also require the intermediary to carry other
appropriate insurance, such as public liability, workers compensation,
and/or property damage.
(A) The amount of fidelity bond coverage required by FmHA will
normally approximate the total annual debt service requirements for the
FmHA loans.
(B) Form FmHA 440-24, ''Position Fidelity Schedule Bond
Declarations,'' may be used. Similar forms may be used if determined
acceptable to FmHA. Other types of coverage may be considered
acceptable if it is determined by FmHA that they fulfill essentially the
same purpose as a fidelity bond.
(C) Applicants must provide evidence of adequate fidelity bond and
other appropriate insurance coverage by loan closing. Adequate coverage
in accordance with this section must then be maintained for the life of
the loan. It is the responsibility of the intermediary and not that of
FmHA to assure and provide evidence that adequate coverage is
maintained. This may consist of a listing of policies and coverage
amounts in annual reports required by paragraph (b)(4) of this section,
or other documentation.
(8) Authority to operate. The loan agreement will provide that the
intermediary has permission and authority to collect on all notes given
to it, service all loans it makes, and manage the relending program as
if FmHA had not taken assignments on security pledged by ultimate
recipients. It is the responsibility of the intermediary to make and
service loans to ultimate recipients in such a manner that will fully
protect the interests of the intermediary and the Government. After an
event of default by the intermediary, FmHA may terminate this permission
and authority by providing the intermediary with written notice.
(b) The intermediary will agree:
(1) Not to make any changes in the intermediary's articles of
incorporation, charter, or by-laws without the concurrence of FmHA.
(2) Not to make a loan commitment to an ultimate recipient without
first receiving FmHA's written concurrence in the proposed use of loan
funds.
(3) To maintain a separate ledger and segregated account for IRP
funds.
(4) To FmHA reporting requirements on the intermediary by providing:
(i) An annual audit; dates of audit report period need not
necessarily coincide with other reports on the 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. FmHA
does not require an unqualified audit opinion as a result of the audit.
Compilations or reviews do not satisfy the audit requirement.
(ii) Quarterly reports for periods ending March 31, June 30,
September 30, and December 31 (due 30 days after the end of the period).
FmHA at its option may change this requirement to semiannual reports.
These reports shall contain information only on the IRP loan funds, or
if other funds are included, the IRP loan program portion shall be
segregated from the others; and in the case where the intermediary has
more than one IRP loan, from FmHA, a separate report shall be made for
each of these IRP loans. The reports will include:
(A) Form FmHA 1951-4, ''Report of IRP/RDLF Lending Activity''
(available in the FmHA National Office). This report will include
information on the intermediary's lending activity, income and expenses,
and financial condition and a summary of names and characteristics of
the ultimate recipients the intermediary has financed.
(B) Project Progress Review Narrative
(iii) An annual report on the extent to which increased employment,
income and ownership opportunities are provided to low-income persons,
for each loan made by such intermediary.
(iv) Proposed budget for the following year.
(v) Other reports as FmHA may require from time to time.
(5) Before the first relending of FmHA funds to the ultimate
recipient, to obtain written FmHA approval of:
(i) All forms to be used for relending purposes, including
application forms, loan agreements, promissory notes, and security
instruments.
(ii) Intermediary's policy with regard to the amount and form of
security to be required.
(6) To obtain approval of FmHA before making any major changes in
forms or policy.
(7) To secure the indebtedness by pledging its portfolio of
investments derived from the proceeds of the loan award, including
providing assignments to FmHA of security pledged by ultimate recipients
including the promissory notes of ultimate recipients and transferring
possession to FmHA of promissory notes given by ultimate recipients,
and/or pledging its real and personal property, and other rights and
interests as FmHA may require.
(8) To provide additional security and execute any additional lien
instruments as FmHA may require at any time during the term of the loan
if, after review and monitoring, an assessment indicates the need for
such security to protect the Government's interest.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38533, Sept. 19,
1990; 56 FR 13069, Mar. 29, 1991)
1948.119 -- 1948.121 (Reserved)
07 CFR 1948.122 Application.
An application will consist of:
(a) Form FmHA 1948-1, ''Application For Loan (Intermediary Relending
Program).''
(b) A written work plan and other evidence FmHA requires to
demonstrate the feasibility of the intermediary's program to meet the
objectives of this program. The plan must, at a minimum:
(1) Document the intermediary's ability to administer an Intermediary
Relending Program in accordance with the provisions of this subpart. In
order to adequately demonstrate the ability to administer the program,
the intermediary must provide a complete listing of all personnel
responsible for administering this program along with a statement of
their qualifications and experience. The personnel may be either
members or employees of the intermediary's organization or contract
personnel hired for this purpose. If the personnel are to be contracted
for, the contract between the intermediary and the entity providing such
service will be submitted for FmHA's review and the terms of the
contract and its duration must be sufficient to adequately service the
FmHA loan through to its ultimate conclusion. If FmHA determines the
personnel lack the necessary expertise to administer the program, the
loan request will not be approved.
(2) Document the intermediary's ability to commit financial resources
under the control of the intermediary to the establishment of an
Intermediary Relending Program. This should include a statement of the
source(s) of non-FmHA funds for administration of the intermediary's
operations and financial assistance for projects.
(3) Include a proposal for adequately securing the FmHA loan. The
proposal should specifically address those items of security outlined in
1948.113 of this subpart.
(4) Include a detailed statement of the proposed use of FmHA loan
funds. This should include an outline of what will constitute project
eligibility for financial assistance the intermediary will make
available to ultimate recipients.
(5) Demonstrate a need for loan funds. As a minimum, the
intermediary should identify a sufficient number of proposed and known
ultimate recipients it has on hand to justify FmHA funding of its loan
request.
(6) Include a list of proposed fees and other charges it will assess
the ultimate recipients it funds.
(7) Demonstrate to FmHA's satisfaction that the intermediary has
secured commitments of significant financial support from public
agencies and private organizations.
(8) Provide evidence to FmHA's satisfaction that the intermediary has
a proven record of obtaining private and/or philanthropic funds for the
operation of similar programs to the one contained in this subsection.
(9) Include the intermediary's plan (specific loan purposes) for
relending the loan funds. The plan must be of sufficient detail to
provide FmHA with a complete understanding of what the intermediary will
accomplish by lending the funds to the ultimate recipient and the
complete mechanics of how the funds will get from the intermediary to
the ultimate recipient. The eligibility criteria, the application
process, method of disposition of the funds to the ultimate recipient,
monitoring of the ultimate recipient's accomplishments, and reporting
requirements by the ultimate recipient's management are some of the
items that must be addressed by the intermediary's relending plan.
(c) Form FmHA 1940-20, ''Request for Environmental Information,'' for
all projects identified in the intermediary's plan that are Class I or
Class II actions under Subpart G of Part 1940 of this Chapter.
(d) Comments from the State single point of contact, if the State has
elected to review the program under Executive Order 12372,
''Intergovernmental Review of Federal Programs.''
(e) Cost estimates and forecasts of contingency funds to cover
inflation or project changes.
(f) A pro forma balance sheet at startup and for at least 3
additional projected years; financial statements for the last 3 years,
or from inception of the operations of the intermediary if less than 3
years; and projected cash flow and earnings statements for at least 3
years supported by a list of assumptions showing the basis for the
projections. The projected earnings statement and balance sheet must
include one set of projections that shows the IRP fund only and a
separate set of projections that shows the applicant organization's
total operations.
(g) A written agreement will be signed by the intermediary to assure
that there is no misunderstanding concerning FmHA audit requirements.
(h) Form FmHA 400-1, ''Equal Opportunity Agreement.''
(i) Form FmHA 400-4, ''Assurance Agreement.''
(j) Complete organizational documents, including evidence of
authority to conduct the proposed activities.
(k) Evidence that the loan is not available at reasonable rates and
terms from private sources or other Federal, State, or local programs.
(1) Latest audit report, if available.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38533, Sept. 19,
1990)
07 CFR 1948.123 Filing and processing applications for loans.
(a) Intermediaries' contact. Intermediaries desiring FmHA assistance
in this subpart may file applications with the FmHA National Office,
Director, Business and Industry (B&I) Division, Washington, DC 20250.
The Director, Business and Industry Division, may be contacted to
discuss assembly, preparation, and processing of applications.
(b) Filing applications. Intermediaries must file the complete
application, in one package. Applications received by FmHA will be
reviewed and ranked quarterly and funded in the order of priority
ranking. At the intermediary's direction FmHA may retain unsuccesful
applications for consideration in subsequent reviews, through a total of
4 quarterly reviews.
(c) Loan priorities. Priority consideration will be given to
proposed intermediaries based on the following factors. Points will be
allowed only for factors indicated by well documented, reasonable plans
which, in the opinion of FmHA, provide assurance that the items have a
high probability of being accomplished. The points awarded will be as
specified in each paragraph or subparagraph. If an application does not
fit one of the categories listed, it receives no points for that
paragraph or subparagraph.
(1) Other funds. Points allowed under this paragraph should be based
on documented successful history or written evidence that the funds are
available.
(i) The intermediary will obtain non-Federal loan or grant funds to
pay part of the cost of the ultimate recipients' projects. The amount
of funds from other sources will average:
(A) At least 10% but less than 25% of the total project cost -- 10
points.
(B) At least 25% but less than 50% of the total project cost -- 20
points.
(C) 50% or more of the total project cost -- 30 points.
(ii) The intermediary will provide loans to the ultimate recipient
from its own funds (not loan or grant) to pay part of the costs of the
ultimate recipients' projects. The amount of non-FmHA derived
intermediary funds will average:
(A) At least 10% but less than 25% of the total project costs -- 10
points.
(B) At least 25% but less than 50% of total project costs -- 20
points.
(C) 50% or more of total project costs -- 30 points.
(2) Employment. For computations under this paragraph, income data
should be from the latest decennial census of the United States, updated
according to changes in consumer price index (CPIU). The poverty line
used will be as defined in section 673 (2) of the Community Services
Block Grant Act (42 U.S.C. 9902 (2)). Unemployment data used will be
that published by The Bureau of Labor Statistics, U.S. Department of
Labor.
(i) The median household income in the service area of the proposed
intermediary equals the following percentage of the poverty line for a
family of 4:
(A) At least 100% but not more than 110% -- 5 points.
(B) At least 80% but less than 100% -- 10 points.
(C) below 80% -- 15 points.
(ii) The unemployment rate in the intermediary's service area equals
the following percentage of the national unemployment rate:
(A) At least 100% but less than 125% -- 5 points.
(B) At least 125% but less than 150% -- 10 points.
(C) 150% or more -- 15 points.
(iii) The intermediary will require as a condition of eligibility for
a loan to an ultimate recipient that the ultimate recipient certify in
writing that it will employ the following percentage of its workforce
from members of families with income below the poverty line.
(A) At least 10% but less than 20% of the workforce -- 5 points.
(B) At least 20% but less than 30% of the workforce -- 10 points.
(C) 30% of the workforce or more -- 15 points.
(3) Equity. All assets of the IRP fund will serve as security for
the IRP loan and the intermediary will contribute funds not derived from
FmHA into the IRP fund along with the proceeds of the IRP loan. The
amount of non-FmHA derived funds contributed to the IRP fund will equal
the following percentage of the FmHA IRP loan:
(i) At least 5% but less than 15% -- 15 points.
(ii) At least 15% but less than 25% -- 30 points.
(iii) 25% or more -- 50 points.
(4) Experience. The intermediary has actual experience in making and
servicing commercial loans, with a successful record, for the following
number of full years:
(i) At least 1 but less than 3 years -- 5 points.
(ii) At least 3 but less than 5 years -- 10 points.
(iii) At least 5 but less than 10 years -- 20 points.
(iv) 10 or more years -- 30 points.
(5) Community representation. The service area is not more than 10
counties and the intermediary utilizes local opinions and experience by
including community representatives on its Board of Directors or
equivalent oversight board. For purposes of this section, community
representatives are people, such as civic leaders, business
representatives or bankers, who reside in the service area and are not
employees of the intermediary.
(i) At least 10% but less than 40% of the board members are community
representatives -- 5 points.
(ii) At least 40% but less than 75% of the board members are
community representatives -- 10 points.
(iii) At least 75% of the board members are community representatives
-- 15 points.
(6) Administrative. The Administrator may assign up to 35 additional
points to an application to account for items such as geographic
distribution of funds and emergency conditions caused by economic
problems or natural disasters. An assignment of points by the
Administrator will be by memorandum stating the Administrator's reasons,
and that memorandum will be appended to the calculation of the project
score maintained in the case file.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38533, Sept. 19,
1990)
07 CFR 1948.124 FmHA evaluation of application.
(a) FmHA will input the necessary data via terminal screens into the
Rural Community Facility Tracking System (RCFTS). If FmHA so desires, a
Form FmHA 2033-34, ''Management System Card -- Business and Industry,''
may be prepared in accordance with FmHA Instruction 2033-F.
(b) Applications will be organized in a loan file in accordance with
FmHA Instruction 2033-A. The intermediary's Internal Revenue Service
(IRS) tax number preceded by State and County code numbers will
constitute the case number to be used on all FmHA forms.
(c) The FmHA Administrator or designee will complete Form FmHA
1948-2, IRP Project Summary, evaluate the application and make a
determination whether: the intermediary is eligible; the proposed loan
is for an eligible purpose; there is reasonable assurance of repayment
ability, sufficient collateral, and sufficient equity; there is a need
for an environmental impact statement or environmental mitigation;
there are any unresolved intergovernmental consultation issues; and the
proposed loan complies with all applicable statutes and regulations. If
FmHA determines it is unable to provide the loan, the intermediary will
be informed in writing. Such notification will include the reasons for
denial of the loan. If FmHA is able to provide the loan, it will
provide the intermediary a letter of conditions listing all requirements
for such loan.
(1) Requirements listed in letters of conditions will ordinarily
include: maximum amount of loan which may be considered, terms of loan,
description of the use of loan funds, verification requirements,
disbursement of funds, security requirements, and audit reports
required.
(2) The letter of conditions will contain the following paragraphs:
This letter establishes conditions which must be understood and
agreed to by you before further consideration may be given to the
application. Any changes in project cost, source of funds, project
scope, or any other significant changes in the project of intermediary
must be reported to and approved by FmHA by written amendment to this
letter. Any changes not approved by FmHA shall be cause for
discontinuing processing of the application.
This letter is not to be considered as loan approval or as
representation to the availability of funds. The docket may be
completed on the basis of a loan not to exceed $XXXX.
The intermediary must certify at loan closing that since FmHA's
issuance of the letter of conditions there has been no material adverse
change(s) in its financial condition nor any other material adverse
change in the intermediary.
The loan will be considered approved on the date a signed copy of
Form FmHA 1940-1, ''Request for Obligation of Funds,'' is mailed to you.
Please complete and return the attached Form FmHA 1942-46, ''Letter
of Intent to Meet Conditions,'' if you desire that further consideration
be given your application.
If the conditions set forth in this letter are not met within XXX
days from the date hereof, FmHA reserves the right to discontinue the
processing of the application. The intermediary will be notified, in
writing, by the Administrator or designee of any such discontinuances.
(3) The Administrator or designee is the only person authorized to
execute the letter of conditions.
(d) Immediately after reviewing the conditions and requirements in
the letter of conditions, the intermediary should complete, sign and
return the Form FmHA 422-46 to the FmHA Administrator. If certain
conditions cannot be met, the borrower may propose alternate conditions
to FmHA. The Administrator or designee must concur with any changes
made to the initially issued or proposed letter of conditions.
(e) If at any time prior to loan approval it is decided that
favorable action will not be taken on an application, FmHA will notify
the applicant in writing of the reasons why the request was not
favorably considered. The notification to the applicant will state that
a review of this decision by FmHA may be requested by the applicant in
accordance with Subpart B of Part 1900 of this Chapter.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38534, Sept. 19,
1990)
07 CFR 1948.125 Loan approval and obligating funds.
The loan will be considered approved on the date the signed copy of
Form FmHA 1940-1 is mailed to the intermediary. The Administrator or
designee may request an obligation of funds when available and according
to the following:
(a) Form FmHA 1940-1, authorizing funds to be reserved, may be
executed by the loan approving official providing the intermediary has
the legal authority to contract for a loan, and to enter into required
agreements and has signed Form FmHA 1940-1.
(b) If approval was concurred in by the National Office, a copy of
the concurring memorandum will be attached to the original of Form FmHA
1940-1.
(c) The Administrator or designee will request an obligation of loan
funds by signing Form FmHA 1940-1, contacting the Finance Office
Appropriation Accounting Section by telephone, and then mailing a copy
of the Form FmHA 1940-1 to the Finance Office.
(d) The obligation date and date the intermediary is notified of loan
approval is six working days from the date funds are reserved unless an
exception is granted by the National Office.
(e) Immediately after verifying by telephone contact with the Finance
Office that funds have been reserved, the Administrator or designee will
notify the Legislative Affairs and Public Information Staff in the
National Office as required by FmHA Instruction 2015-C (available in any
FmHA State Office).
(f) The Administrator or designee will record the date of
intermediary notification on the original of Form FmHA 1940-1 and
include it as a permanent part of the official FmHA file.
(g) If a transfer of obligation of funds is necessary, complete Form
FmHA 450-10, ''Advice of Borrower's Change of Address, Name, Case
Number, or Loan Number,'' and mail a copy to the Finance Office. An
obligation of funds established for an intermediary may be transferred
to a different (substituted) intermediary provided:
(1) The substituted intermediary is eligible to receive the
assistance approved for the original intermediary;
(2) The substituted intermediary bears a close and genuine
relationship to the original intermediary; and
(3) The need for and scope of the project and the purpose(s) for
which FmHA funds will be used remain substantially unchanged.
07 CFR 1948.126 Loan closing.
(a) After the letter of conditions has been issued and proposed
closing documents have been prepared, FmHA will forward the loan docket
to the Regional OGC in the region in which the borrower is located for
review. For the purpose of this paragraph, the District of Columbia is
considered to be in Maryland. After an administrative review, FmHA will
include with the docket a letter with recommendations and indicating any
special items, documents, or problems that need to be addressed
specifically which may have a significant impact upon the loan or may be
contrary to the regulation. The docket will be assembled for OGC review
and indexed and tabbed. The OGC will review the docket and furnish
advice to FmHA on noted deficiencies. Upon receipt of the OGC's advice,
FmHA will correct or cause to be corrected any noted deficiencies.
Loans will be closed by FmHA with the assistance of the OGC Regional
Attorney who will issue closing instructions detailing the requirements
and any actions necessary to proceed with the loan closing.
(b) In all cases, the Administrator or designee will conduct a review
before the loan is closed to assure that all requirements of the
application, letter of conditions, and Loan Agreement have been met
including required certifications, and will provide such verification in
the loan file, including arrangements for annual audit reports. The
intermediary's certifications will include the following:
(1) No major changes have been made in the intermediary's work plan
except those approved in the interim by FmHA.
(2) All requirements of the letter of conditions have been met.
(3) Equity requirements have been met. A reconciliation of the
intermediary's assets and net worth from the latest financial statement
to the date of loan closing will be provided with this certification.
(4) There has been no material adverse change in the intermediary's
financial condition nor any material adverse change in the intermediary
since the issuance of the letter of conditions. If there have been
adverse changes, they must be explained by the intermediary. They may
be waived, at the sole discretion of FmHA. Financial data must not be
more than 60 days old at loan closing.
(c) FmHA personnel shall not sign any documents other than those
specifically provided for in this subpart.
(d) The National Office will review any requests for changes to the
letter of conditions. The National Office will approve only minor
changes which do not materially affect the project, its capacity,
employment, original projections or credit factors. Changes in legal
entities or where tax considerations are the reason for change will not
be approved.
(e) At loan closing the intermediary will provide sufficient evidence
to enable FmHA to ascertain that no claim or liens of laborers,
materialmen, contractors, subcontractors, suppliers of machinery and
equipment, or other parties are against the security of the
intermediary, and that no suits are pending or threatened that would
adversely affect the security of the intermediary when the security
instruments are filed.
(f) When the loan has been closed, the administrator or designee will
submit the security instruments, other documents used in closing, and a
statement that administrative requirements have been met to the Regional
Attorney. The Regional Attorney will review the submitted material and
determine whether all legal requirements have been met.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38534, Sept. 19,
1990)
1948.127 (Reserved)
07 CFR 1948.128 Requests to make loans to ultimate recipients.
(a) When an intermediary proposes to use funds obtained from FmHA to
make a loan to an ultimate recipient, and prior to final approval of
such loan, the intermediary will submit to FmHA a copy of the ultimate
recipient's application and provide certification that the ultimate
recipient is eligible; the proposed loan is for an eligible purpose;
and the proposed loan complies with all applicable statutes and
regulations. No commitment of loan funds to the ultimate recipient may
be made by the intermediary until an affirmative decision on proceeding
with funding to the ultimate recipient is rendered by FmHA.
(b) As part of the intermediary's request to FmHA for concurrence to
make a loan to an ultimate recipient, the intermediary will include for
the project a properly completed Form FmHA 1940-20 executed by the
ultimate recipient. FmHA will review the Form FmHA 1940-20, and
complete the environmental review in accordance with 1948.117 of this
Subpart. The results of this review will be used by FmHA in making its
decision on the request.
(c) The intermediary will provide, for FmHA review, all comments
obtained in accordance with paragraph (a) of 1948.117 of this Subpart,
''Intergovernmental review.''
(d) If FmHA determines it is unable to concur with the loan request,
the intermediary will be informed in writing the reasons for denial.
1948.129 (Reserved)
07 CFR 1948.130 Non-Federal funds.
Once all the FmHA-derived loan funds have been utilized by the
intermediary for assistance to ultimate recipients according to the
provisions of these regulations and loan agreement, new ultimate
recipients financed thereafter from the intermediary's revolving loan
fund shall not be considered as being derived from Federal funds and the
requirements of these regulations will not be imposed on those new
ultimate recipients. Ultimate recipients assisted by the intermediary
with FmHA-derived loan funds shall be required to comply with the
provisions of these regulations and/or loan agreement.
1948.131 -- 1948.137 (Reserved)
07 CFR 1948.138 Office of Inspector General and Office of General
Counsel referrals.
When facts or circumstances indicate that criminal violations, civil
fraud, misrepresentations, or regulatory violations may have been
committed by an applicant or an intermediary, FmHA will refer the case
to the appropriate Regional Inspector General for Investigations, OIG,
USDA, in accordance with FmHA Instruction 2012-B (available in any FmHA
office) for criminal investigation. Any questions as to whether a
matter should be referred will be resolved through consultation with OIG
for Investigations and the FmHA designee 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 OGC. OGC
will be consulted on legal questions. After OIG has accepted any matter
for investigation, FmHA staff must coordinate with OIG in advance
regarding routine servicing actions on existing loans.
1948.139 -- 1948.142 (Reserved)
07 CFR 1948.143 Appeals.
Any appealable adverse decision made by FmHA which affects the
borrower may be appealed upon written request of the aggrieved party in
accordance with Subpart B of Part 1900 of this Chapter.
1948.144 -- 1948.147 (Reserved)
07 CFR 1948.148 Exception authority.
The Administrator may in individual cases grant an exception to any
requirement or provision of this Subpart which is not inconsistent with
an applicable law or opinion of the Comptroller General, provided the
Administrator determines that application of the requirement or
provision would adversely affect the Government's interest. The basis
for this exception will be fully documented. The documentation will:
demonstrate the adverse impact; identify the particular requirement
involved; and show how the adverse impact will be eliminated.
07 CFR 1948.149 Exhibits.
The following documents may be used in connection with this program;
they are incorporated into this Subpart and made a part hereof. They
are not published in the Federal Register but may be obtained in any
FmHA State Office or in the National Office.
(a) Exhibit I, ''Note (Intermediary Relending Program).''
(b) Exhibit II, ''Loan Agreement (Intermediary Relending Program).''
(c) Exhibit III, ''Loan Docket.''
(d) Exhibit IV, ''Priority Scoresheet''.
(53 FR 30647, Aug. 15, 1988, as amended at 55 FR 38534, Sept. 19,
1990)
07 CFR 1948.150 OMB control number.
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 0575-0130. Public reporting
burden for this collection of information is estimated to vary from 1 to
120 hours per response, with an average of 12 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. Send comments regarding this
burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to Department of
Agriculture, Clearance Officer, OIRM, room 404-W, Washington, DC 20250;
and to the Office of Management and Budget, Paperwork Reduction Project
(OMB 0575-0130), Washington, DC 20503.
(56 FR 13069, Mar. 29, 1991)
07 CFR 1948.150 PART 1949 (RESERVED)
07 CFR 1948.150 FINDING AIDS
A list of CFR titles, subtitles, chapters, subchapters and parts and
an alphabetical list of agencies publishing in the CFR are included in
the CFR Index and Finding Aids volume to the Code of Federal Regulations
which is published separately and revised annually.
Table of CFR Titles and Chapters
Alphabetical List of Agencies Appearing in the CFR
List of CFR Sections Affected
Chap.
07 CFR 1948.150 Table of CFR Titles and Chapters
07 CFR 1948.150 Title 1 -- General Provisions
I Administrative Committee of the Federal Register (Parts 1 -- 49)
II Office of the Federal Register (Parts 50 -- 299)
III Administrative Conference of the United States (Parts 300 -- 399)
IV Miscellaneous Agencies (Parts 400 -- 500)
07 CFR 1948.150 Title 2 -- (Reserved)
07 CFR 1948.150 Title 3 -- The President
I Executive Office of the President (Parts 100 -- 199)
07 CFR 1948.150 Title 4 -- Accounts
I General Accounting Office (Parts 1 -- 99)
II Federal Claims Collection Standards (General Accounting Office --
Department of Justice) (Parts 100 -- 299)
III General Accounting Office (CASB) (Parts 300 -- 499)
07 CFR 1948.150 Title 5 -- Administrative Personnel
I Office of Personnel Management (Parts 1 -- 1199)
II Merit Systems Protection Board (Parts 1200 -- 1299)
III Office of Management and Budget (Parts 1300 -- 1399)
IV Advisory Committee on Federal Pay (Parts 1400 -- 1499)
V The International Organizations Employees Loyalty Board (Parts 1500
-- 1599)
VI Federal Retirement Thrift Investment Board (Parts 1600 -- 1699)
VII Advisory Commission on Intergovernmental Relations (Parts 1700 --
1799)
VIII Office of Special Council (Parts 1800 -- 1899)
IX Appalachian Regional Commission (Parts 1900 -- 1999)
XI United States Soldiers' and Airmen's Home (Parts 2100 -- 2199)
XIV Federal Labor Relations Authority, General Counsel of the Federal
Labor Relations Authority and Federal Service Impasses Panel (Parts 2400
-- 2499)
XV Office of Administration, Executive Office of the President (Parts
2500 -- 2599)
XVI Office of Government Ethics (Parts 2600 -- 2699)
07 CFR 1948.150 Title 6 -- (Reserved)
07 CFR 1948.150 Title 7 -- Agriculture
Subtitle A -- Office of the Secretary of Agriculture (Parts 0 -- 26)
Subtitle B -- Regulations of the Department of Agriculture
I Agricultural Marketing Service (Standards, Inspections, Marketing
Practices), Department of Agriculture (Parts 27 -- 209)
II Food and Nutrition Service, Department of Agriculture (Parts 210
-- 299)
III Animal and Plant Health Inspection Service, Department of
Agriculture (Parts 300 -- 399)
IV Federal Crop Insurance Corporation, Department of Agriculture
(Parts 400 -- 499)
V Agricultural Research Service, Department of Agriculture (Parts 500
-- 599)
VI Soil Conservation Service, Department of Agriculture (Parts 600 --
699)
VII Agricultural Stabilization and Conservation Service (Agricultural
Adjustment), Department of Agriculture (Parts 700 -- 799)
VIII Federal Grain Inspection Service, Department of Agriculture
(Parts 800 -- 899)
IX Agricultural Marketing Service (Marketing Agreements and Orders;
Fruits, Vegetables, Nuts), Department of Agriculture (Parts 900 -- 999)
X Agricultural Marketing Service (Marketing Agreements and Orders;
Milk), Department of Agriculture (Parts 1000 -- 1199)
XI Agricultural Marketing Service (Marketing Agreements and Orders;
Miscellaneous Commodities), Department of Agriculture (Parts 1200 --
1299)
XIV Commodity Credit Corporation, Department of Agriculture (Parts
1400 -- 1499)
XV Foreign Agricultural Service, Department of Agriculture (Parts
1500 -- 1599)
XVI Rural Telephone Bank, Department of Agriculture (Parts 1600 --
1699)
XVII Rural Electrification Administration, Department of Agriculture
(Parts 1700 -- 1799)
XVIII Farmers Home Administration, Department of Agriculture (Parts
1800 -- 2099)
XXI Foreign Economic Development Service, Department of Agriculture
(Parts 2100 -- 2199)
XXII Office of International Cooperation and Development, Department
of Agriculture (Parts 2200 -- 2299)
XXV Office of the General Sales Manager, Department of Agriculture
(Parts 2500 -- 2599)
XXVI Office of Inspector General, Department of Agriculture (Parts
2600 -- 2699)
XXVII Office of Information Resources Management, Department of
Agriculture (Parts 2700 -- 2799)
XXVIII Office of Operations, Department of Agriculture (Parts 2800 --
2899)
XXIX Office of Energy, Department of Agriculture (Parts 2900 -- 2999)
XXX Office of Finance and Management, Department of Agriculture
(Parts 3000 -- 3099)
XXXI Office of Environmental Quality, Department of Agriculture
(Parts 3100 -- 3199)
XXXII Office of Grants and Program Systems, Department of Agriculture
(Parts 3200 -- 3299)
XXXIII Office of Transportation, Department of Agriculture (Parts
3300 -- 3399)
XXXIV Cooperative State Research Service, Department of Agriculture
(Parts 3400 -- 3499)
XXXVI National Agricultural Statistics Service, Department of
Agriculture (Parts 3600 -- 3699)
XXXVII Economic Research Service, Department of Agriculture (Parts
3700 -- 3799)
XXXVIII World Agricultural Outlook Board, Department of Agriculture
(Parts 3800 -- 3899)
XXXIX Economic Analysis Staff, Department of Agriculture (Parts 3900
-- 3999)
XL Economics Management Staff, Department of Agriculture (Parts 4000
-- 4099)
XLI National Agricultural Library, Department of Agriculture (Part
4100)
07 CFR 1948.150 Title 8 -- Aliens and Nationality
I Immigration and Naturalization Service, Department of Justice
(Parts 1 -- 499)
07 CFR 1948.150 Title 9 -- Animals and Animal Products
I Animal and Plant Health Inspection Service, Department of
Agriculture (Parts 1 -- 199)
II Packers and Stockyards Administration, Department of Agriculture
(Parts 200 -- 299)
III Food Safety and Inspection Service, Meat and Poultry Inspection,
Department of Agriculture (Parts 300 -- 399)
07 CFR 1948.150 Title 10 -- Energy
I Nuclear Regulatory Commission (Parts 0 -- 199)
II Department of Energy (Parts 200 -- 699)
III Department of Energy (Parts 700 -- 999)
X Department of Energy (General Provisions) (Parts 1000 -- 1099)
XV Office of the Federal Inspector for the Alaska Natural Gas
Transportation System (Parts 1500 -- 1599)
XVII Defense Nuclear Facilities Safety Board (Parts 1700 -- 1799)
07 CFR 1948.150 Title 11 -- Federal Elections
I Federal Election Commission (Parts 1 -- 9099)
07 CFR 1948.150 Title 12 -- Banks and Banking
I Comptroller of the Currency, Department of the Treasury (Parts 1 --
199)
II Federal Reserve System (Parts 200 -- 299)
III Federal Deposit Insurance Corporation (Parts 300 -- 399)
IV Export-Import Bank of the United States (Parts 400 -- 499)
V Office of Thrift Supervision, Department of The Treasury (Parts 500
-- 599)
VI Farm Credit Administration (Parts 600 -- 699)
VII National Credit Union Administration (Parts 700 -- 799)
VIII Federal Financing Bank (Parts 800 -- 899)
IX Federal Housing Finance Board (Parts 900 -- 999)
XI Federal Financial Institutions Examination Council (Parts 1100 --
1199)
XIII Farm Credit System Assistance Board (Parts 1300 -- 1399)
XIV Farm Credit System Insurance Corporation (Parts 1400 -- 1499)
XV Oversight Board (Parts 1500 -- 1599)
XVI Resolution Trust Corporation (Parts 1600 -- 1699)
07 CFR 1948.150 Title 13 -- Business Credit and Assistance
I Small Business Administration (Parts 1 -- 199)
III Economic Development Administration, Department of Commerce
(Parts 300 -- 399)
07 CFR 1948.150 Title 14 -- Aeronautics and Space
I Federal Aviation Administration, Department of Transportation
(Parts 1 -- 199)
II Office of the Secretary, Department of Transportation (Aviation
Proceedings) (Parts 200 -- 399)
III Office of Commercial Space Transportation, Department of
Transportation (Parts 400 -- 499)
V National Aeronautics and Space Administration (Parts 1200 -- 1299)
07 CFR 1948.150 Title 15 -- Commerce and Foreign Trade
Subtitle A -- Office of the Secretary of Commerce (Parts 0 -- 29)
Subtitle B -- Regulations Relating to Commerce and Foreign Trade
I Bureau of the Census, Department of Commerce (Parts 30 -- 199)
II National Institute of Standards and Technology, Department of
Commerce (Parts 200 -- 299)
III International Trade Administration, Department of Commerce (Parts
300 -- 399)
IV Foreign-Trade Zones Board (Parts 400 -- 499)
VII Bureau of Export Administration, Department of Commerce (Parts
700 -- 799)
VIII Bureau of Economic Analysis, Department of Commerce (Parts 800
-- 899)
IX National Oceanic and Atmospheric Administration, Department of
Commerce (Parts 900 -- 999)
XI Technology Administration, Department of Commerce (Parts 1100 --
1199)
XII United States Travel and Tourism Administration, Department of
Commerce (Parts 1200 -- 1299)
XIII East-West Foreign Trade Board (Parts 1300 -- 1399)
XIV Minority Business Development Agency (Parts 1400 -- 1499)
Subtitle C -- Regulations Relating to Foreign Trade Agreements
XX Office of the United States Trade Representative (Parts 2000 --
2099)
Subtitle D -- Regulations Relating to Telecommunications and
Information
XXIII National Telecommunications and Information Administration,
Department of Commerce (Parts 2300 -- 2399)
07 CFR 1948.150 Title 16 -- Commercial Practices
I Federal Trade Commission (Parts 0 -- 999)
II Consumer Product Safety Commission (Parts 1000 -- 1799)
07 CFR 1948.150 Title 17 -- Commodity and Securities Exchanges
I Commodity Futures Trading Commission (Parts 1 -- 199)
II Securities and Exchange Commission (Parts 200 -- 399)
IV Department of the Treasury (Parts 400 -- 499)
07 CFR 1948.150 Title 18 -- Conservation of Power and Water Resources
I Federal Energy Regulatory Commission, Department of Energy (Parts 1
-- 399)
III Delaware River Basin Commission (Parts 400 -- 499)
VI Water Resources Council (Parts 700 -- 799)
VIII Susquehanna River Basin Commission (Parts 800 -- 899)
XIII Tennessee Valley Authority (Parts 1300 -- 1399)
07 CFR 1948.150 Title 19 -- Customs Duties
I United States Customs Service, Department of the Treasury (Parts 1
-- 199)
II United States International Trade Commission (Parts 200 -- 299)
III International Trade Administration, Department of Commerce (Parts
300 -- 399)
07 CFR 1948.150 Title 20 -- Employees' Benefits
I Office of Workers' Compensation Programs, Department of Labor
(Parts 1 -- 199)
II Railroad Retirement Board (Parts 200 -- 399)
III Social Security Administration, Department of Health and Human
Services (Parts 400 -- 499)
IV Employees' Compensation Appeals Board, Department of Labor (Parts
500 -- 599)
V Employment and Training Administration, Department of Labor (Parts
600 -- 699)
VI Employment Standards Administration, Department of Labor (Parts
700 -- 799)
VII Benefits Review Board, Department of Labor (Parts 800 -- 899)
VIII Joint Board for the Enrollment of Actuaries (Parts 900 -- 999)
IX Office of the Assistant Secretary for Veterans' Employment and
Training, Department of Labor (Parts 1000 -- 1099)
07 CFR 1948.150 Title 21 -- Food and Drugs
I Food and Drug Administration, Department of Health and Human
Services (Parts 1 -- 1299)
II Drug Enforcement Administration, Department of Justice (Parts 1300
-- 1399)
07 CFR 1948.150 Title 22 -- Foreign Relations
I Department of State (Parts 1 -- 199)
II Agency for International Development, International Development
Cooperation Agency (Parts 200 -- 299)
III Peace Corps (Parts 300 -- 399)
IV International Joint Commission, United States and Canada (Parts
400 -- 499)
V United States Information Agency (Parts 500 -- 599)
VI United States Arms Control and Disarmament Agency (Parts 600 --
699)
VII Overseas Private Investment Corporation, International
Development Cooperation Agency (Parts 700 -- 799)
IX Foreign Service Grievance Board Regulations (Parts 900 -- 999)
X Inter-American Foundation (Parts 1000 -- 1099)
XI International Boundary and Water Commission, United States and
Mexico, United States Section (Parts 1100 -- 1199)
XII United States International Development Cooperation Agency (Parts
1200 -- 1299)
XIII Board for International Broadcasting (Parts 1300 -- 1399)
XIV Foreign Service Labor Relations Board; Federal Labor Relations
Authority; General Counsel of the Federal Labor Relations Authority;
and the Foreign Service Impasse Disputes Panel (Parts 1400 -- 1499)
XV African Development Foundation (Parts 1500 -- 1599)
XVI Japan-United States Friendship Commission (Parts 1600 -- 1699)
07 CFR 1948.150 Title 23 -- Highways
I Federal Highway Administration, Department of Transportation (Parts
1 -- 999)
II National Highway Traffic Safety Administration and Federal Highway
Administration, Department of Transportation (Parts 1200 -- 1299)
III National Highway Traffic Safety Administration, Department of
Transportation (Parts 1300 -- 1399)
07 CFR 1948.150 Title 24 -- Housing and Urban Development
Subtitle A -- Office of the Secretary, Department of Housing and
Urban Development (Parts 0 -- 99)
Subtitle B -- Regulations Relating to Housing and Urban Development
I Office of Assistant Secretary for Equal Opportunity, Department of
Housing and Urban Development (Parts 100 -- 199)
II Office of Assistant Secretary for Housing-Federal Housing
Commissioner, Department of Housing and Urban Development (Parts 200 --
299)
III Government National Mortgage Association, Department of Housing
and Urban Development (Parts 300 -- 399)
V Office of Assistant Secretary for Community Planning and
Development, Department of Housing and Urban Development (Parts 500 --
599)
VI Office of Assistant Secretary for Community Planning and
Development, Department of Housing and Urban Development (Parts 600 --
699)
VII Office of the Secretary, Department of Housing and Urban
Development (Section 8 Housing Assistance Programs and Public and Indian
Housing Programs) (Parts 700 -- 799)
VIII Office of the Assistant Secretary for Housing -- Federal Housing
Commissioner, Department of Housing and Urban Development (Section 8
Housing Assistance Programs and Section 202 Direct Loan Program) (Parts
800 -- 899)
IX Office of Assistant Secretary for Public and Indian Housing,
Department of Housing and Urban Development (Parts 900 -- 999)
X Office of Assistant Secretary for Housing -- Federal Housing
Commissioner, Department of Housing and Urban Development (Interstate
Land Sales Registration Program) (Parts 1700 -- 1799)
XI Solar Energy and Energy Conservation Bank, Department of Housing
and Urban Development (Parts 1800 -- 1899)
XII Office of Inspector General, Department of Housing and Urban
Development (Parts 2000 -- 2099)
XV Mortgage Insurance and Loan Programs under the Emergency
Homeowners' Relief Act, Department of Housing and Urban Development
(Parts 2700 -- 2799)
XX Office of Assistant Secretary for Housing -- Federal Housing
Commissioner, Department of Housing and Urban Development (Parts 3200 --
3699)
XXV Neighborhood Reinvestment Corporation (Parts 4100 -- 4199)
07 CFR 1948.150 Title 25 -- Indians
I Bureau of Indian Affairs, Department of the Interior (Parts 1 --
299)
II Indian Arts and Crafts Board, Department of the Interior (Parts
300 -- 399)
III National Indian Gaming Commission (Parts 500 -- 599)
IV Office of Navajo and Hopi Indian Relocation (Parts 700 -- 799)
07 CFR 1948.150 Title 26 -- Internal Revenue
I Internal Revenue Service, Department of the Treasury (Parts 1 --
799)
07 CFR 1948.150 Title 27 -- Alcohol, Tobacco Products and Firearms
I Bureau of Alcohol, Tobacco and Firearms, Department of the Treasury
(Parts 1 -- 299)
07 CFR 1948.150 Title 28 -- Judicial Administration
I Department of Justice (Parts 0 -- 199)
III Federal Prison Industries, Inc., Department of Justice (Parts 300
-- 399)
V Bureau of Prisons, Department of Justice (Parts 500 -- 599)
VI Offices of Independent Counsel, Department of Justice (Parts 600
-- 699)
VII Office of Independent Counsel (Parts 700 -- 799)
07 CFR 1948.150 Title 29 -- Labor
Subtitle A -- Office of the Secretary of Labor (Parts 0 -- 99)
Subtitle B -- Regulations Relating to Labor
I National Labor Relations Board (Parts 100 -- 199)
II Bureau of Labor-Management Relations and Cooperative Programs,
Department of Labor (Parts 200 -- 299)
III National Railroad Adjustment Board (Parts 300 -- 399)
IV Office of Labor-Management Standards, Department of Labor (Parts
400 -- 499)
V Wage and Hour Division, Department of Labor (Parts 500 -- 899)
IX Construction Industry Collective Bargaining Commission (Parts 900
-- 999)
X National Mediation Board (Parts 1200-1299)
XII Federal Mediation and Conciliation Service (Parts 1400-1499)
XIV Equal Employment Opportunity Commission (Parts 1600-1699)
XVII Occupational Safety and Health Administration, Department of
Labor (Parts 1900 -- 1999)
XX Occupational Safety and Health Review Commission (Parts 2200 --
2499)
XXV Pension and Welfare Benefits Administration, Department of Labor
(Parts 2500 -- 2599)
XXVI Pension Benefit Guaranty Corporation (Parts 2600 -- 2699)
XXVII Federal Mine Safety and Health Review Commission (Parts 2700 --
2799)
07 CFR 1948.150 Title 30 -- Mineral Resources
I Mine Safety and Health Administration, Department of Labor (Parts 1
-- 199)
II Minerals Management Service, Department of the Interior (Parts 200
-- 299)
III Board of Surface Mining and Reclamation Appeals, Department of
the Interior (Parts 300 -- 399)
IV Geological Survey, Department of the Interior (Parts 400 -- 499)
VI Bureau of Mines, Department of the Interior (Parts 600 -- 699)
VII Office of Surface Mining Reclamation and Enforcement, Department
of the Interior (Parts 700 -- 999)
07 CFR 1948.150 Title 31 -- Money and Finance: Treasury
Subtitle A -- Office of the Secretary of the Treasury (Parts 0 -- 50)
Subtitle B -- Regulations Relating to Money and Finance
I Monetary Offices, Department of the Treasury (Parts 51 -- 199)
II Fiscal Service, Department of the Treasury (Parts 200 -- 399)
IV Secret Service, Department of the Treasury (Parts 400 -- 499)
V Office of Foreign Assets Control, Department of the Treasury (Parts
500 -- 599)
VI Bureau of Engraving and Printing, Department of the Treasury
(Parts 600 -- 699)
VII Federal Law Enforcement Training Center, Department of the
Treasury (Parts 700 -- 799)
VIII Office of International Investment, Department of the Treasury
(Parts 800 -- 899)
07 CFR 1948.150 Title 32 -- National Defense
Subtitle A -- Department of Defense
I Office of the Secretary of Defense (Parts 1 -- 399)
V Department of the Army (Parts 400 -- 699)
VI Department of the Navy (Parts 700 -- 799)
VII Department of the Air Force (Parts 800 -- 1099)
Subtitle B -- Other Regulations Relating to National Defense
XII Defense Logistics Agency (Parts 1200-1299)
XVI Selective Service System (Parts 1600-1699)
XIX Central Intelligence Agency (Parts 1900 -- 1999)
XX Information Security Oversight Office (Parts 2000 -- 2099)
XXI National Security Council (Parts 2100 -- 2199)
XXIV Office of Science and Technology Policy (Parts 2400 -- 2499)
XXVII Office for Micronesian Status Negotiations (Parts 2700 -- 2799)
XXVIII Office of the Vice President of the United States (Parts 2800
-- 2899)
07 CFR 1948.150 Title 33 -- Navigation and Navigable Waters
I Coast Guard, Department of Transportation (Parts 1 -- 199)
II Corps of Engineers, Department of the Army (Parts 200 -- 399)
IV Saint Lawrence Seaway Development Corporation, Department of
Transportation (Parts 400 -- 499)
07 CFR 1948.150 Title 34 -- Education
Subtitle A -- Office of the Secretary, Department of Education (Parts
1 -- 99)
Subtitle B -- Regulations of the Offices of the Department of
Education
I Office for Civil Rights, Department of Education (Parts 100 -- 199)
II Office of Elementary and Secondary Education, Department of
Education (Parts 200 -- 299)
III Office of Special Education and Rehabilitative Services,
Department of Education (Parts 300 -- 399)
IV Office of Vocational and Adult Education, Department of Education
(Parts 400 -- 499)
V Office of Bilingual Education and Minority Languages Affairs,
Department of Education (Parts 500 -- 599)
VI Office of Postsecondary Education, Department of Education (Parts
600 -- 699)
VII Office of Educational Research and Improvement, Department of
Education (Parts 700 -- 799)
07 CFR 1948.150 Title 35 -- Panama Canal
I Panama Canal Regulations (Parts 1 -- 299)
07 CFR 1948.150 Title 36 -- Parks, Forests, and Public Property
I National Park Service, Department of the Interior (Parts 1 -- 199)
II Forest Service, Department of Agriculture (Parts 200 -- 299)
III Corps of Engineers, Department of the Army (Parts 300 -- 399)
IV American Battle Monuments Commission (Parts 400 -- 499)
V Smithsonian Institution (Parts 500 -- 599)
VII Library of Congress (Parts 700 -- 799)
VIII Advisory Council on Historic Preservation (Parts 800 -- 899)
IX Pennsylvania Avenue Development Corporation (Parts 900-999)
XI Architectural and Transportation Barriers Compliance Board (Parts
1100 -- 1199)
XII National Archives and Records Administration (Parts 1200 -- 1299)
07 CFR 1948.150 Title 37 -- Patents, Trademarks, and Copyrights
I Patent and Trademark Office, Department of Commerce (Parts 1 --
199)
II Copyright Office, Library of Congress (Parts 200 -- 299)
III Copyright Royalty Tribunal (Parts 300 -- 399)
IV Assistant Secretary for Technology Policy, Department of Commerce
(Parts 400-499)
V Under Secretary for Technology, Department of Commerce (Parts 500
-- 599)
07 CFR 1948.150 Title 38 -- Pensions, Bonuses, and Veterans' Relief
I Department of Veterans Affairs (Parts 0 -- 99)
07 CFR 1948.150 Title 39 -- Postal Service
I United States Postal Service (Parts 1-999)
III Postal Rate Commission (Parts 3000 -- 3099)
07 CFR 1948.150 Title 40 -- Protection of Environment
I Environmental Protection Agency (Parts 1 -- 799)
V Council on Environmental Quality (Parts 1500-1599)
07 CFR 1948.150 Title 41 -- Public Contracts and Property Management
Subtitle B -- Other Provisions Relating to Public Contracts
50 Public Contracts, Department of Labor (Parts 50-1 -- 50-999)
51 Committee for Purchase from the Blind and Other Severely
Handicapped (Parts 51-1 -- 51-99)
60 Office of Federal Contract Compliance Programs, Equal Employment
Opportunity, Department of Labor (Parts 60-1 -- 60-999)
61 Office of the Assistant Secretary for Veterans Employment and
Training, Department of Labor (Parts 61-1 -- 61-999)
Subtitle C -- Federal Property Management Regulations System
101 Federal Property Management Regulations (Parts 101-1 -- 101-99)
105 General Services Administration (Parts 105-1 -- 105-999)
109 Department of Energy Property Management Regulations (Parts 109-1
-- 109-99)
114 Department of the Interior (Parts 114-1 -- 114-99)
115 Environmental Protection Agency (Parts 115-1 -- 115-99)
128 Department of Justice (Parts 128-1 -- 128-99)
132 Department of the Air Force (Parts 132-1 -- 132-99)
Subtitle D -- Other Provisions Relating to Property Management
(Reserved)
Subtitle E -- Federal Information Resources Management Regulations
System
201 Federal Information Resources Management Regulation (Parts 201-1
-- 201-99)
Subtitle F -- Federal Travel Regulation System
301 Travel Allowances (Parts 301-1 -- 301-99)
302 Relocation Allowances (Parts 302-1 -- 302-99)
303 Payment of Expenses Connected with the Death of Certain Employees
(Parts 303-1 -- 303-2)
304 Payment from a non-Federal source for travel expenses (Parts
304-1 -- 304-99)
07 CFR 1948.150 Title 42 -- Public Health
I Public Health Service, Department of Health and Human Services
(Parts 1 -- 199)
IV Health Care Financing Administration, Department of Health and
Human Services (Parts 400 -- 499)
V Office of Inspector General-Health Care, Department of Health and
Human Services (Parts 1000 -- 1999)
07 CFR 1948.150 Title 43 -- Public Lands: Interior
Subtitle A -- Office of the Secretary of the Interior (Parts 1 --
199)
Subtitle B -- Regulations Relating to Public Lands
I Bureau of Reclamation, Department of the Interior (Parts 200 --
499)
II Bureau of Land Management, Department of the Interior (Parts 1000
-- 9999)
07 CFR 1948.150 Title 44 -- Emergency Management and Assistance
I Federal Emergency Management Agency (Parts 0 -- 399)
IV Department of Commerce and Department of Transportation (Parts 400
-- 499)
07 CFR 1948.150 Title 45 -- Public Welfare
Subtitle A -- Department of Health and Human Services, General
Administration (Parts 1 -- 199)
Subtitle B -- Regulations Relating to Public Welfare
II Office of Family Assistance (Assistance Programs), Family Support
Administration, Department of Health and Human Services (Parts 200 --
299)
III Office of Child Support Enforcement (Child Support Enforcement
Program), Family Support Administration, Department of Health and Human
Services (Parts 300 -- 399)
IV Office of Refugee Resettlement, Family Support Administration,
Department of Health and Human Services (Parts 400 -- 499)
V Foreign Claims Settlement Commission of the United States,
Department of Justice (Parts 500 -- 599)
VI National Science Foundation (Parts 600 -- 699)
VII Commission on Civil Rights (Parts 700 -- 799)
VIII Office of Personnel Management (Parts 800 -- 899)
X Office of Community Services, Family Support Administration,
Department of Health and Human Services (Parts 1000 -- 1099)
XI National Foundation on the Arts and the Humanities (Parts 1100 --
1199)
XII ACTION (Parts 1200 -- 1299)
XIII Office of Human Development Services, Department of Health and
Human Services (Parts 1300 -- 1399)
XVI Legal Services Corporation (Parts 1600 -- 1699)
XVII National Commission on Libraries and Information Science (Parts
1700 -- 1799)
XVIII Harry S. Truman Scholarship Foundation (Parts 1800 -- 1899)
XX Commission on the Bicentennial of the United States Constitution
(Parts 2000 -- 2099)
XXI Commission on Fine Arts (Parts 2100 -- 2199)
XXII Christopher Columbus Quincentenary Jubilee Commission (2200 --
2299)
07 CFR 1948.150 Title 46 -- Shipping
I Coast Guard, Department of Transportation (Parts 1 -- 199)
II Maritime Administration, Department of Transportation (Parts 200
-- 399)
III Coast Guard (Great Lakes Pilotage), Department of Transportation
(Parts 400 -- 499)
IV Federal Maritime Commission (Parts 500 -- 599)
07 CFR 1948.150 Title 47 -- Telecommunication
I Federal Communications Commission (Parts 0 -- 199)
II Office of Science and Technology Policy and National Security
Council (Parts 200 -- 299)
III National Telecommunications and Information Administration,
Department of Commerce (Parts 300 -- 399)
07 CFR 1948.150 Title 48 -- Federal Acquisition Regulations System
1 Federal Acquisition Regulation (Parts 1 -- 99)
2 Department of Defense (Parts 200 -- 299)
3 Department of Health and Human Services (Parts 300 -- 399)
4 Department of Agriculture (Parts 400 -- 499)
5 General Services Administration (Parts 500 -- 599)
6 Department of State (Parts 600 -- 699)
7 Agency for International Development (Parts 700 -- 799)
8 Department of Veterans Affairs (Parts 800 -- 899)
9 Department of Energy (Parts 900 -- 999)
10 Department of the Treasury (Parts 1000 -- 1099)
12 Department of Transportation (Parts 1200 -- 1299)
13 Department of Commerce (Parts 1300 -- 1399)
14 Department of the Interior (Parts 1400 -- 1499)
15 Environmental Protection Agency (Parts 1500 -- 1599)
16 Office of Personnel Management Federal Employees Health Benefits
Acquisition Regulation (Parts 1600 -- 1699)
17 Office of Personnel Management (Parts 1700 -- 1799)
18 National Aeronautics and Space Administration (Parts 1800 -- 1899)
19 United States Information Agency (Parts 1900 -- 1999)
22 Small Business Administration (Parts 2200 -- 2299)
24 Department of Housing and Urban Development (Parts 2400 -- 2499)
25 National Science Foundation (Parts 2500 -- 2599)
28 Department of Justice (Parts 2800 -- 2899)
29 Department of Labor (Parts 2900 -- 2999)
34 Department of Education Acquisition Regulation (Parts 3400 --
3499)
35 Panama Canal Commission (Parts 3500 -- 3599)
44 Federal Emergency Management Agency (Parts 4400 -- 4499)
51 Department of the Army Acquisition Regulations (Parts 5100 --
5199)
52 Department of the Navy Acquisition Regulations (Parts 5200 --
5299)
53 Department of the Air Force Federal Acquisition Regulation
Supplement (Parts 5300 -- 5399)
57 African Development Foundation (Parts 5700 -- 5799)
61 General Services Administration Board of Contract Appeals (Parts
6100 -- 6199)
63 Department of Transportation Board of Contract Appeals (Parts 6300
-- 6399)
99 Cost Accounting Standards Board, Office of Federal Procurement
Policy, Office of Management and Budget (Parts 9900-9999)
07 CFR 1948.150 Title 49 -- Transportation
Subtitle A -- Office of the Secretary of Transportation (Parts 1 --
99)
Subtitle B -- Other Regulations Relating to Transportation
I Research and Special Programs Administration, Department of
Transportation (Parts 100 -- 199)
II Federal Railroad Administration, Department of Transportation
(Parts 200 -- 299)
III Federal Highway Administration, Department of Transportation
(Parts 300 -- 399)
IV Coast Guard, Department of Transportation (Parts 400 -- 499)
V National Highway Traffic Safety Administration, Department of
Transportation (Parts 500 -- 599)
VI Urban Mass Transportation Administration, Department of
Transportation (Parts 600 -- 699)
VII National Railroad Passenger Corporation (AMTRAK) (Parts 700 --
799)
VIII National Transportation Safety Board (Parts 800 -- 899)
X Interstate Commerce Commission (Parts 1000 -- 1399)
07 CFR 1948.150 Title 50 -- Wildlife and Fisheries
I United States Fish and Wildlife Service, Department of the Interior
(Parts 1 -- 199)
II National Marine Fisheries Service, National Oceanic and
Atmospheric Administration, Department of Commerce (Parts 200 -- 299)
III International Regulatory Agencies (Fishing and Whaling) (Parts
300 -- 399)
IV Joint Regulations (United States Fish and Wildlife Service,
Department of the Interior and National Marine Fisheries Service,
National Oceanic and Atmospheric Administration, Department of
Commerce); Endangered Species Committee Regulations (Parts 400 -- 499)
V Marine Mammal Commission (Parts 500 -- 599)
VI Fishery Conservation and Management, National Oceanic and
Atmospheric Administration, Department of Commerce (Parts 600 -- 699)
07 CFR 1948.150 CFR Index and Finding Aids Subject/Agency Index
List of Agency Prepared Indexes Parallel Tables of Statutory Authorities
and Rules Acts Requiring Publication in the Federal Register List of CFR
Titles, Chapters, Subchapters, and Parts
07 CFR 1948.150 Alphabetical List of Agencies Appearing in the CFR
CFR Title, Subtitle or
Agency
Chapter
ACTION 45, XII
Administrative Committee of the Federal Register 1, I
Administrative Conference of the United States 1, III
Advisory Commission on Intergovernmental Relations 5, VII
Advisory Committee on Federal Pay 5, IV
Advisory Council on Historic Preservation 36, VIII
African Development Foundation 22, XV; 48, 57
Agency for International Development 22, II; 48, 7
Agricultural Marketing Service 7, I, IX, X, XI
Agricultural Research Service 7, V
Agricultural Stabilization and Conservation Service 7, VII
Agriculture Department
Agricultural Marketing Service 7, I, IX, X, XI
Agricultural Research Service 7, V
Agricultural Stabilization and Conservation Service 7, VII
Animal and Plant Health Inspection Service 7, III; 9, I
Commodity Credit Corporation 7, XIV
Cooperative State Research Service 7, XXXIV
Economic Analysis Staff 7, XXXIX
Economic Research Service 7, XXXVII
Economics Management Staff 7, XL
Energy, Office of 7, XXIX
Environmental Quality, Office of 7, XXXI
Farmers Home Administration 7, XVIII
Federal Acquisition Regulation 48, 4
Federal Crop Insurance Corporation 7, IV
Federal Grain Inspection Service 7, VIII
Finance and Management, Office of 7, XXX
Food and Nutrition Service 7, II
Food Safety and Inspection Service 9, III
Foreign Agricultural Service 7, XV
Foreign Economic Development Service 7, XXI
Forest Service 36, II
General Sales Manager, Office of 7, XXV
Grants and Program Systems, Office of 7, XXXII
Information Resources Management, Office of 7, XXVII
Inspector General, Office of 7, XXVI
International Cooperation and Development Office 7, XXII
National Agricultural Library 7, XLI
National Agricultural Statistics Service 7, XXXVI
Operations Office 7, XXVIII
Packers and Stockyards Administration 9, II
Rural Electrification Administration 7, XVII
Rural Telephone Bank 7, XVI
Secretary of Agriculture, Office of 7, Subtitle A
Soil Conservation Service 7, VI
Transportation, Office of 7, XXXIII
World Agriculture Outlook Board 7, XXXVIII
Air Force Department 32, VII; 41, Subtitle C, Ch. 132
Federal Acquisition Regulation Supplement 48, 53
Alaska Natural Gas Transportation System, Office of the Federal
Inspector 10, XV
Alcohol, Tobacco and Firearms, Bureau of 27, I
AMTRAK 49, VII
American Battle Monuments Commission 36, IV
Animal and Plant Health Inspection Service 7, III; 9, I
Appalachian Regional Commission 5, IX
Architectural and Transportation Barriers Compliance Board 36, XI
Arms Control and Disarmament Agency, U.S. 22, VI
Army Department 32, V
Engineers, Corps of 33, II; 36, III
Federal Acquisition Regulation 48, 51
Assistant Secretary for Technology Policy, Department of Commerce 37,
IV
Benefits Review Board 20, VII
Bicentennial of the United States Constitution, Commission on the 45,
XX
Bilingual Education and Minority Languages Affairs, Office of 34, V
Blind and Other Severely Handicapped, Committee for Purchase from 41,
51
Board for International Broadcasting 22, XIII
Budget, Office of Management and 5, III
Census Bureau 15, I
Central Intelligence Agency 32, XIX
Child Support Enforcement, Office of 45, III
Christopher Columbus Quincentenary Jubilee Commission 45, XXII
Civil Rights Commission 45, VII
Civil Rights, Office for (Education Department) 34, I
Claims Collection Standards, Federal 4, II
Coast Guard 33, I; 46, I, III; 49, IV
Commerce Department 44, IV
Census Bureau 15, I
Assistant Secretary for Technology Policy 37, IV
Economic Affairs, Under Secretary 37, V
Economic Analysis, Bureau of 15, VIII
Economic Development Administration 13, III
Endangered Species Committee 50, IV
Export Administration Bureau 15, VII
Federal Acquisition Regulation 48, 13
Fishery Conservation and Management 50, VI
International Trade Administration 15, III; 19, III
National Institute of Standards and Technology 15, II
National Marine Fisheries Service 50, II, IV
National Oceanic and Atmospheric Administration 15, IX; 50, II, III,
IV, VI
National Telecommunications and Information Administration 15, XXIII;
47, III
Patent and Trademark Office 37, I
Productivity, Technology and Innovation, Assistant Secretary for 37,
IV
Secretary of Commerce, Office of 15, Subtitle A
Technology Administration 15, XI
Under Secretary for Technology 37, V
United States Travel and Tourism Administration 15, XII
Commercial Space Transportation, Office of, Department of
Transportation 14, III
Commission on the Bicentennial of the United States Constitution 45,
XX
Committee for Purchase from the Blind and Other Severely Handicapped
41, 51
Commodity Credit Corporation 7, XIV
Commodity Futures Trading Commission 17, I
Community Planning and Development, Office of Assistant Secretary for
24, V, VI
Community Services, Office of 45, X
Comptroller of the Currency 12, I
Construction Industry Collective Bargaining Commission 29, IX
Consumer Product Safety Commission 16, II
Cooperative State Research Service 7, XXXIV
Copyright Office 37, II
Copyright Royalty Tribunal 37, III
Cost Accounting Standards Board, Office of Federal Procurement Policy
48, 99
Council on Environmental Quality 40, V
Customs Service, United States 19, I
Defense Department 32, Subtitle A
Air Force Department 32, VII; 41, Subtitle C, Ch. 132
Army Department 32, V; 33, II; 36, III, 48, 51
Engineers, Corps of 33, II; 36, III
Federal Acquisition Regulation 48, 2
Navy Department 32, VI; 48, 52
Secretary of Defense, Office of 32, I
Defense Logistics Agency 32, XII
Defense Nuclear Facilities Safety Board 10, XVII
Delaware River Basin Commission 18, III
Drug Enforcement Administration 21, II
East-West Foreign Trade Board 15, XIII
Economic Affairs, Under Secretary (Commerce) 37, V
Economic Analysis, Bureau of 15, VIII
Economic Analysis Staff, Department of Agriculture 7, XXXIX
Economic Development Administration 13, III
Economics Management Staff 7, XL
Economic Research Service 7, XXXVII
Education, Department of
Bilingual Education and Minority Languages Affairs, Office of 34, V
Civil Rights, Office for 34, I
Educational Research and Improvement, Office of 34, VII
Elementary and Secondary Education, Office of 34, II
Federal Acquisition Regulation 48, 34
Postsecondary Education, Office of 34, VI
Secretary of Education, Office of 34, Subtitle A
Special Education and Rehabilitative Services, Office of 34, III
Vocational and Adult Education, Office of 34, IV
Educational Research and Improvement, Office of 34, VII
Elementary and Secondary Education, Office of 34, II
Employees' Compensation Appeals Board 20, IV
Employees Loyalty Board, International Organizations 5, V
Employment and Training Administration 20, V
Employment Standards Administration 20, VI
Endangered Species Committee 50, IV
Energy, Department of 10, II, III, X; 41, 109
Federal Acquisition Regulation 48, 9
Federal Energy Regulatory Commission 18, I
Energy, Office of, Department of Agriculture 7, XXIX
Engineers, Corps of 33, II; 36, III
Engraving and Printing, Bureau of 31, VI
Environmental Protection Agency 40, I; 41, 115; 48, 15
Environmental Quality, Office of (Agriculture Department) 7, XXXI
Equal Employment Opportunity Commission 29, XIV
Equal Opportunity, Office of Assistant Secretary for 24, I
Executive Office of the President 3, I
Administration, Office of 5, XV
Export Administration Bureau 15, VII
Export-Import Bank of the United States 12, IV
Family Assistance, Office of 45, II
Family Support Administration 45, II, III, IV, X
Farm Credit Administration 12, VI
Farm Credit System Assistance Board 12, XIII
Farm Credit System Insurance Corporation 12, XIV
Farmers Home Administration 7, XVIII
Federal Acquisition Regulation 48, 1
Federal Aviation Administration 14, I
Federal Claims Collection Standards 4, II
Federal Communications Commission 47, I
Federal Contract Compliance Programs, Office of 41, 60
Federal Crop Insurance Corporation 7, IV
Federal Deposit Insurance Corporation 12, III
Federal Election Commission 11, I
Federal Emergency Management Agency 44, I; 48, 44
Federal Energy Regulatory Commission 18, I
Federal Financial Institutions Examination Council 12, XI
Federal Financing Bank 12, VIII
Federal Grain Inspection Service 7, VIII
Federal Highway Administration 23, I, II; 49, III
Federal Home Loan Mortgage Corporation 1, IV
Federal Housing Finance Board 12, IX
Federal Information Resources Management Regulations 41, Subtitle E,
Ch. 201
Federal Inspector for the Alaska Natural Gas Transportation System,
Office of 10, XV
Federal Labor Relations Authority, and General Counsel of the Federal
Labor Relations Authority 5, XIV; 22, XIV
Federal Law Enforcement Training Center 31, VII
Federal Maritime Commission 46, IV
Federal Mediation and Conciliation Service 29, XII
Federal Mine Safety and Health Review Commission 29, XXVII
Federal Pay, Advisory Committee on 5, IV
Federal Prison Industries, Inc. 28, III
Federal Procurement Policy Office 48, 99
Federal Property Management Regulations 41, 101
Federal Property Management Regulations System 41, Subtitle C
Federal Railroad Administration 49, II
Federal Register, Administrative Committee of 1, I
Federal Register, Office of 1, II
Federal Reserve System 12, II
Federal Retirement Thrift Investment Board 5, VI
Federal Service Impasses Panel 5, XIV
Federal Trade Commission 16, I
Federal Travel Regulation System 41, Subtitle F
Finance and Management, Department of Agriculture 7, XXX
Fine Arts Commission 45, XXI
Fiscal Service 31, II
Fish and Wildlife Service, United States 50, I, IV
Fishery Conservation and Management 50, VI
Fishing and Whaling, International Regulatory Agencies 50, III
Food and Drug Administration 21, I
Food and Nutrition Service 7, II
Food Safety and Inspection Service 9, III
Foreign Agricultural Service 7, XV
Foreign Assets Control, Office of 31, V
Foreign Claims Settlement Commission of United States 45, V
Foreign Economic Development Service 7, XXI
Foreign Service Grievance Board 22, IX
Foreign Service Impasse Disputes Panel 22, XIV
Foreign Service Labor Relations Board 22, XIV
Foreign-Trade Zones Board 15, IV
Forest Service 36, II
General Accounting Office 4, I, II, III
General Sales Manager, Office of 7, XXV
General Services Administration
Contract Appeals Board 48, 61
Federal Acquisition Regulation 48, 5
Federal Information Resources Management Regulations 41, Subtitle E,
Ch. 201
Federal Property Management Regulations System 41, 101, 105
Federal Travel Regulation System 41, Subtitle F
Payment of Expenses Connected With the Death of Certain Employees 41,
303
Reduction in Meeting and Training Allowance Payments 41, 304
Relocation Allowances 41, 302
Travel Allowances 41, 301
Geological Survey 30, IV
Government Ethics, Office of 5, XVI
Government National Mortgage Association 24, III
Grants and Program Systems, Office of 7, XXXII
Great Lakes Pilotage 46, III
Harry S. Truman Scholarship Foundation 45, XVIII
Health and Human Services, Department of 45, Subtitle A
Child Support Enforcement, Office of 45, III
Community Services, Office of 45, X
Family Assistance, Office of 45, II
Family Support Administration 45, II, III, IV, X
Federal Acquisition Regulation 48, 3
Food and Drug Administration 21, I
Health Care Financing Administration 42, IV
Human Development Services Office 45, XIII
Inspector General, Office of 42, V
Public Health Service 42, I
Refugee Resettlement, Office of 45, IV
Social Security Administration 20, III; 45, IV
Health Care Financing Administration 42, IV
Housing and Urban Development, Department of
Community Planning and Development, Office of Assistant Secretary for
24, V, VI
Equal Opportunity, Office of Assistant Secretary for 24, I
Federal Acquisition Regulation 48, 24
Government National Mortgage Association 24, III
Housing -- Federal Housing Commissioner, Office of Assistant
Secretary for 24, II, VIII, X, XX
Inspector General, Office of 24, XII
Mortgage Insurance and Loan Programs Under Emergency Homeowners'
Relief Act 24, XV
Public and Indian Housing, Office of Assistant Secretary for 24, IX
Secretary, Office of 24, Subtitle B, VII
Solar Energy and Energy Conservation Bank 24, XI
Housing -- Federal Housing Commissioner, Office of Assistant
Secretary for 24, II, VIII, X, XX
Human Development Services Office 45, XIII
Immigration and Naturalization Service 8, I
Indian Affairs, Bureau of 25, I
Indian Arts and Crafts Board 25, II
Information Agency, United States 22, V; 48, 19
Information Resources Management, Office of, Agriculture Department
7, XXVII
Information Security Oversight Office 32, XX
Inspector General, Office of, Agriculture Department 7, XXVI
Inspector General, Office of, Health and Human Services Department
42, V
Inspector General, Office of, Housing and Urban Development
Department 24, XII
Inter-American Foundation 22, X
Intergovernmental Relations, Advisory Commission on 5, VII
Interior Department
Endangered Species Committee 50, IV
Federal Acquisition Regulation 48, 14
Federal Property Management Regulations System 41, 114
Fish and Wildlife Service, United States 50, I, IV
Geological Survey 30, IV
Indian Affairs, Bureau of 25, I
Indian Arts and Crafts Board 25, II
Land Management Bureau 43, II
Minerals Management Service 30, II
Mines, Bureau of 30, VI
National Park Service 36, I
Reclamation Bureau 43, I
Secretary of the Interior, Office of 43, Subtitle A
Surface Mining and Reclamation Appeals, Board of 30, III
Surface Mining Reclamation and Enforcement, Office of 30, VII
United States Fish and Wildlife Service 50, I, IV
Internal Revenue Service 26, I
International Boundary and Water Commission, United States and Mexico
22, XI
International Cooperation and Development Office, Department of
Agriculture 7, XXII
International Development, Agency for 22, II
International Development Cooperation Agency 22, XII
International Development, Agency for 22, II
Overseas Private Investment Corporation 22, VII
International Joint Commission, United States and Canada 22, IV
International Organizations Employees Loyalty Board 5, V
International Regulatory Agencies (Fishing and Whaling) 50, III
International Trade Administration 15, III; 19, III
International Trade Commission, United States 19, II
Interstate Commerce Commission 49, X
Japan-United States Friendship Commission 22, XVI
Joint Board for the Enrollment of Actuaries 20, VIII
Justice Department 28, I; 41, 128
Drug Enforcement Administration 21, II
Federal Acquisition Regulation 48, 28
Federal Claims Collection Standards 4, II
Federal Prison Industries, Inc. 28, III
Foreign Claims Settlement Commission of the United States 45, V
Immigration and Naturalization Service 8, I
Offices of Independent Counsel 28, VI
Prisons, Bureau of 28, V
Labor Department
Benefits Review Board 20, VII
Employees' Compensation Appeals Board 20, IV
Employment and Training Administration 20, V
Employment Standards Administration 20, VI
Federal Acquisition Regulation 48, 29
Federal Contract Compliance Programs, Office of 41, 60
Federal Procurement Regulations System 41, 50
Labor-Management Relations and Cooperative Programs, Bureau of 29, II
Labor-Management Standards, Office of 29, IV
Mine Safety and Health Administration 30, I
Occupational Safety and Health Administration 29, XVII
Pension and Welfare Benefits Administration 29, XXV
Public Contracts 41, 50
Secretary of Labor, Office of 29, Subtitle A
Veterans' Employment and Training, Office of the Assistant Secretary
for 41, 61; 20, IX
Wage and Hour Division 29, V
Workers' Compensation Programs, Office of 20, I
Labor-Management Relations and Cooperative Programs, Bureau of 29, II
Labor-Management Standards, Office of 29, IV
Land Management, Bureau of 43, II
Legal Services Corporation 45, XVI
Library of Congress 36, VII
Copyright Office 37, II
Management and Budget, Office of 5, III; 48, 99
Marine Mammal Commission 50, V
Maritime Administration 46, II
Merit Systems Protection Board 5, II
Micronesian Status Negotiations, Office for 32, XXVII
Mine Safety and Health Administration 30, I
Minerals Management Service 30, II
Mines, Bureau of 30, VI
Minority Business Development Agency 15, XIV
Miscellaneous Agencies 1, IV
Monetary Offices 31, I
Mortgage Insurance and Loan Programs Under the Emergency Homeowners'
Relief Act, Department of Housing and Urban Development 24, XV
National Aeronautics and Space Administration 14, V; 48, 18
National Agricultural Library 7, XLI
National Agricultural Statistics Service 7, XXXVI
National Archives and Records Administration 36, XII
National Bureau of Standards 15, II
National Capital Planning Commission 1, IV
National Commission for Employment Policy 1, IV
National Commission on Libraries and Information Science 45, XVII
National Credit Union Administration 12, VII
National Foundation on the Arts and the Humanities 45, XI
National Highway Traffic Safety Administration 23, II, III; 49, V
National Indian Gaming Commission 25, III
National Institute of Standards and Technology 15, II
National Labor Relations Board 29, I
National Marine Fisheries Service 50, II, IV
National Mediation Board 29, X
National Oceanic and Atmospheric Administration 15, IX; 50, II, III,
IV, VI
National Park Service 36, I
National Railroad Adjustment Board 29, III
National Railroad Passenger Corporation (AMTRAK) 49, VII
National Science Foundation 45, VI; 48, 25
National Security Council 32, XXI
National Security Council and Office of Science and Technology Policy
47, II
National Telecommunications and Information Administration 15, XXIII;
47, III
National Transportation Safety Board 49, VIII
Office of Navajo and Hopi Indian Relocation 25, IV
Navy Department 32, VI; 48, 52
Neighborhood Reinvestment Corporation 24, XXV
Nuclear Regulatory Commission 10, I
Occupational Safety and Health Administration 29, XVII
Occupational Safety and Health Review Commission 29, XX
Office of Independent Counsel 28, VII
Offices of Independent Counsel, Department of Justice 28, VI
Operations Office, Department of Agriculture 7, XXVIII
Overseas Private Investment Corporation 22, VII
Oversight Board 12, XV
Packers and Stockyards Administration 9, II
Panama Canal Commission 48, 35
Panama Canal Regulations 35, I
Patent and Trademark Office 37, I
Payment of Expenses Connected With the Death of Certain Employees 41,
303
Peace Corps 22, III
Pennsylvania Avenue Development Corporation 36, IX
Pension and Welfare Benefits Administration, Department of Labor 29,
XXV
Pension Benefit Guaranty Corporation 29, XXVI
Personnel Management, Office of 5, I; 45, VIII; 48, 17
Federal Employees Health Benefits Acquisition Regulation 48, 16
Postal Rate Commission 39, III
Postal Service, United States 39, I
Postsecondary Education, Office of 34, VI
President's Commission on White House Fellowships 1, IV
Presidential Documents 3
Prisons, Bureau of 28, V
Productivity, Technology and Innovation, Assistant Secretary
(Commerce) 37, IV
Property Management Regulations System, Federal 41, Subtitle C
Public Contracts, Department of Labor 41, 50
Public Health Service 42, I
Railroad Retirement Board 20, II
Reclamation Bureau 43, I
Reduction in Meeting and Training Allowance Payments 41, 304
Refugee Resettlement, Office of 45, IV
Regional Action Planning Commissions 13, V
Relocation Allowances 41, 302
Research and Special Programs Administration 49, I
Resolution Trust Corporation 12, XVI
Rural Electrification Administration 7, XVII
Rural Telephone Bank 7, XVI
Saint Lawrence Seaway Development Corporation 33, IV
Science and Technology Policy, Office of 32, XXIV
Science and Technology Policy, Office of, and National Security
Council 47, II
Secret Service 31, IV
Securities and Exchange Commission 17, II
Selective Service System 32, XVI
Small Business Administration 13, I; 48, 22
Smithsonian Institution 36, V
Social Security Administration 20, III; 45, IV
Soil Conservation Service 7, VI
Solar Energy and Energy Conservation Bank, Department of Housing and
Urban Development 24, XI
Soldiers' and Airmen's Home, United States 5, XI
Special Counsel, Office of 5, VIII
Special Education and Rehabilitative Services, Office of 34, III
State Department 22, I
Federal Acquisition Regulation 48, 6
Surface Mining and Reclamation Appeals, Board of 30, III
Susquehanna River Basin Commission 18, VIII
Technology Administration 15, XI
Tennessee Valley Authority 18, XIII
Thrift Supervision Office, Department of the Treasury 12, V
Trade Representative, United States, Office of 15, XX
Transportation, Department of 44, IV
Coast Guard 33, I; 46, I, III; 49, IV
Commercial Space Transportation, Office of 14, III
Contract Appeals Board 48, 63
Federal Acquisition Regulation 48, 12
Federal Aviation Administration 14, I
Federal Highway Administration 23, I, II; 49, III
Federal Railroad Administration 49, II
Maritime Administration 46, II
National Highway Traffic Safety Administration 23, II, III; 49, V
Research and Special Programs Administration 49, I
Saint Lawrence Seaway Development Corporation 33, IV
Secretary of Transportation, Office of 14, II; 49, Subtitle A
Urban Mass Transportation Administration 49, VI
Transportation, Office of, Department of Agriculture 7, XXXIII
Travel Allowance 41, 301
Travel and Tourism Administration, United States 15, XII
Treasury Department 17, IV
Alcohol, Tobacco and Firearms, Bureau of 27, I
Comptroller of the Currency 12, I
Customs Service, United States 19, I
Engraving and Printing, Bureau of 31, VI
Federal Acquisition Regulation 48, 10
Federal Law Enforcement Training Center 31, VII
Fiscal Service 31, II
Foreign Assets Control, Office of 31, V
Internal Revenue Service 26, I
Monetary Offices 31, I
Secret Service 31, IV
Secretary of the Treasury, Office of 31, Subtitle A
Thrift Supervision Office 12, V
United States Customs Service 19, I
Truman, Harry S. Scholarship Foundation 45, XVIII
Under Secretary for Technology, Department of Commerce 37, V
United States and Canada, International Joint Commission 22, IV
United States Arms Control and Disarmament Agency 22, VI
United States Customs Service 19, I
United States Fish and Wildlife Service 50, I, IV
United States Information Agency 22, V; 48, 19
United States International Development Cooperation Agency 22, XII
United States International Trade Commission 19, II
United States Postal Service 39, I
United States Soldiers' and Airmen's Home 5, XI
United States Trade Representative, Office of 15, XX
United States Travel and Tourism Adminstration 15, XII
Urban Mass Transportation Administration 49, VI
Veterans Affairs Department 38, I; 48, 8
Veterans' Employment and Training, Office of the Assistant Secretary
for 41, 61; 20, IX
Vice President of the United States, Office of 32, XXVIII
Vocational and Adult Education, Office of 34, IV
Wage and Hour Division 29, V
Water Resources Council 18, VI
Workers' Compensation Programs, Office of 20, I
World Agriculture Outlook Board 7, XXXVIII
07 CFR 1948.150 7 CFR Ch. XVIII (1-1-92 Edition)
07 CFR 1948.150 List of CFR Sections Affected
07 CFR 1948.150 List of CFR Sections Affected
All changes in this volume of the Code of Federal Regulations which
were made by documents published in the Federal Register since January
1, 1986, are enumerated in the following list. Entries indicate the
nature of the changes effected. Pages numbers refer to Federal Register
pages. The user should consult the entries for chapters and parts as
well as sections for revisions.
For the period before January 1, 1986, see the ''List of CFR Sections
Affected, 1949-1963, 1964-1972, and 1973-1985,'' published in seven
separate volumes.
07 CFR 1948.150 1986
7 CFR
51 FR
Page
Chapter XVIII
1940 Section authority citations removed 17447
1940.301 (c)(18) added; interim 23508
Comment time extended 30835
1940.304 (a)(1) revised; interim 23508
Comment time extended 30835
1940.310 (e)(2) revised; interim 23508
Comment time extended 30835
(c) heading revised; interim 34928
1940.311 (a) (1) and (2) amended; (a)(3) added 17447
(b) introductory text revised; interim 34928
1940.312 (b) revised; interim 34928
1940.319 (e) revised 17447
1940.301 -- 1940.350 (Subpart G) Exhibit C amended; Exhibit M added;
interim 23508
Exhibit M corrected 29902
Comment time extended 30835
1941 Authority citation revised 6733, 22273
Technical correction 17922
1941.1 Revised; interim 13445
1941.4 (d)(3)(ii), (4)(ii) revised; (g) through (o) redesignated as
(h) through (l) and (n) through (q); new (g) and (m) added; interim
13445
1941.11 (b) revised; interim 13446
(a) revised; interim 23513
Comment time extended 30835
1941.12 (a)(1) and (8) and (b) introductory text, (1), (3), (4)
introductory text, (i), and (v), (5) and (6) revised; (b)(7) added;
interim 13446
Introductory text added 40785
1941.16 Introductory text revised; (l) added; interim 13447
1941.17 Existing text designated as (a); (b) added; interim 22273
(a) revised; interim 23513
Comment time extended 30835
1941.18 (a) introductory text revised 6733
1941.19 Introductory text and (b) revised; interim 13447
1941.25 Introductory text revised; interim 13447
1941.29 Heading and (a) through (d) revised; interim 13447
1941.30 Revised; interim 13447
1941.33 (b)(1) introductory text, (2)(i), and (vi), (c) and (d)
revised; interim 13447
1941.35 (a) and (b) revised; interim 13448
1941.54 (b)(3) revised; interim 13448
1941.57 (a)(2) revised; interim 13448
1941.84 Revised; interim 13448
1942.17 (f)(2)(ii) and (3) revised 10186
1943 Authority citation revised 4136, 6733, 22274
Technical correction 17922
1943.4 (d)(3)(ii) and (4)(ii) revised; (g) through (n) redesignated
as (h) through (m) and (o) and (p); new (g) and (n) added; new (i)
revised; interim 13449
1943.6 (d) revised; interim 13449
1943.11 (b) revised; interim 13449
(a) revised; interim 23513
Comment time extended 30835
1943.12 (a)(1) and (8) and (b) heading, introductory text, (1), (2),
(3), (4) introductory text, (i), and (v), (5), and (6) revised; (b)(7)
added; interim 13449
Introductory text added 40785
1943.17 (d) added; interim 22274
(e) added; interim 23513
Comment time extended 30835
1943.18 (c) introductory text revised 6733
1943.25 (c)(2) revised; interim 13450
1943.29 Revised; interim 13450
1943.32 Table amended; interim 13450
1943.33 (b)(1) introductory text, (2)(i), (iv), and (vi), (c)(1),
(2), (3), and (4), and (d) introductory text, (1), and (2) revised;
interim 13450
1943.35 (a) introductory text and (2), (b)(2), and (c) introductory
text revised; interim 13451
1943.38 (f) introductory text revised 4136
(g)(4)(iii) revised; interim 13451
1943.42 Revised 4136
1943.44 Revised 4136
1943.54 (g) through (l) redesignated as (h) through (m); new (g)
added; new (i) revised; interim 13451
1943.56 (d) revised; interim 13451
1943.61 (b) revised; interim 13451
(a) revised; interim 23513
1943.62 (a)(1) and (b) introductory text, (3), (5), (7), and (9)
revised; interim 13452
Introductory text added 40785
1943.67 (d) added; interim 23513
Comment time extended 30835
1943.68 (c) revised 6733
1943.74 (f) removed; (g) and (h) redesignated as (f) and (g);
interim 13452
1943.75 (c)(2) revised; interim 13452
1943.76 Revised; interim 13452
1943.79 Heading and (b) revised; (c) removed; (d) redesignated as
(c) and revised; interim 13452
1943.82 (a) table amended; interim 13452
1943.83 (b)(1) introductory text, (2)(i), (iv), and (vi), (c)(1)(i)
and (iv), (2), (3)(i), and (4), and (d) introductory text, (1), and (2)
revised; interim 13452
1943.85 (a) introductory text and (2), (b)(2), and (c) introductory
text revised; interim 13453
1943.88 (f) introductory text revised 4136
(g)(4)(iii) revised; interim 13453
1943.92 Revised 4136
1943.94 Revised 4136
1943.118 (c) revised 6733
1943.138 (f) introductory text revised 4137
1943.142 Revised 4137
1943.144 Revised 4137
1943 Exhibit A amended 4136
1944 Authority citation revised 6733
Section and Subpart authority citations removed 11299
Technical correction 17922
1944.2 Revision confirmed 6393
1944.3 (a)(3) and (b)(9) amended 41607
1944.4 (c) revised 45432
1944.5 Addition confirmed 6393
1944.6 Addition confirmed 6393
1944.8 (a)(1) revision, (b) amendment, and (c) removal confirmed 6393
1944.10 (a)(2)(ii)(A) revision confirmed 6393
(a) through (f) revised; (g) redesignated as (i); new (g) and (h)
added; eff. 1-14-87 44898
1944.11 (a) amended; eff. 1-14-87 44899
1944.16 (a)(6) amendment confirmed 6393
(b) and (c) amended; (e) added 41607
1944.17 (a)(1) amended; (a)(2)(vi) added 41607
1944.22 (a) revised 41607
1944.24 (a) and (b) revision and (c)(1) amendment confirmed 6393
(b) revised 41607
1944.25 (b) amendment confirmed 6393
(b) revised 6733
(c) amended 41607
(a) and (c) revised; eff. 1-14-87 44899
1944.26 (a)(2)(ii), (b), and (c) introductory text revision confirmed
6393
(b) introductory text revised; interim 13453
(a)(5) added 27157
1944.30 (b)(8) added 41607
1944.33 (a) and (b) amendment confirmed 6393
1944.34 (f)(1) (i) and (ii), (i)(1) introductory text, (3) (i) and
(ii) revision and (f)(2), (g)(2)(i)(C), and (i)(1)(ii)(B) amendment
confirmed 6393
(h)(3)(i) and (ii) revised 27157
(f)(1)(iii) amended 41607
1944.40 Introductory text revised 41607
1944.45 (a), (b) introductory text, and (c)(2) revised 41607
(d), (h) and (k) amended 41608
(f)(3)(ii) and (5) revised; eff. 1-14-87 44899
1944.47 Added; interim 11299
1944.1 -- 1944.50 (Subpart A) Exhibit C removal and Exhibit D
amendment confirmed 6393
Exhibit A amended; Exhibit F added 41608
1944.153 (a) and (x) revised; (y), (z), (aa), and (bb) added 22926
1944.159 (b) revised 6734
1944.176(f)(2) amended 12308
1944.178 (b) through (e) and (g) revised 27670
1944.182 Amended 27670
1944.200 (a) (1) and (2) amended 27670
1944.151 -- 1944.200 (Subpart D) Exhibit A amended 27670
1944.205 (d) and (f)(5) revision confirmed 6393
(b), (c), (d) heading, (f), (i), and (j) revised; (cc) added 27670
(dd) through (gg) added 41610
1944.211 (c) added 27671
1944.214 (a) revised 6734
1944.215 (i)(1) amendment confirmed 6393
(i)(1) revised; (i)(4) amended 27671
1944.223 Added 41611
1944.232 (f) revised 41612
1944.235 (i) (1) and (3) revised 27671
1944.201 -- 1944.240 (Subpart E) Exhibits B and H amended 27671
Exhibit B amended 41612
1944.453 Revision confirmed 6393
1944.457 (a)(4) revised 12308
(a)(4) introductory text revised 33873
1944.458 (a)(4) revision confirmed 6393
1944.506 (d) revision confirmed 6393
1944.651 -- 1944.700 (Subpart N) Added 17447
1945 Authority citation revised 4137, 6734
Technical correction 17922
1945.21 (b)(2) and (c)(1) amended 43580
1945.135 Revised 4137
Correctly designated 9174
1945.151 -- 1945.200 (Subpart D) Sections revised; interim 13453
1945.155 (b) revised 43581
1945.161 (a) introductory text revised; interim 23513
Comment time extended 30835
1945.162 Introductory text added 40786
1945.167 (i) added; interim 23513
Comment time extended 30835
1945.168 (a) revised 6734
1945.169 (c)(3) revised 4137
1945.192 Revised 4137
1945.151 -- 1945.200 (Subpart D) Exhibit A revised; interim 13473
Exhibit D amended; interim 13474
Exhibit C removed 43581
07 CFR 1948.150 1987
7 CFR
52 FR
Page
Chapter XVIII
1940 Authority citation revised 8035
1940.305 (j) added 8035
1941.16 (m) added 26133
1941.19 (a)(7) added 26133
1942 Authority citation revised 43725
1942.1 (c) redesignated as (d); new (c) added 38908
(a) revised 43725
(a) corrected 47097
1942.17 (p)(4) and (5) and (r)(3)(i) and (ii) amended 8035
(f)(6) revised 41949
(d)(1)(i)(B)(1) removed; (d)(1)(i)(B) (2) through (8) redesignated
as (d)(1)(i)(B) (1) through (7); (c)(2)(iii)(D)(2)(i) and
(d)(1)(i)(C)(1) revised; (d)(2)(iv) amended 43726
Correctly designated 47097
1942.18 (n)(3), (o)(1), (3), (5) and (7)(ii) amended 8035
1942.101 -- 1942.150 (Subpart C) Added 43726
1942.114 (c)(1) corrected 47097
1942.126 (l)(2)(iii) introductory text and (B) and (3) corrected
47097
1942.127 (e)(1) corrected 47097
1942.358 (e) revised 41949
1942.360 (a)(11) removed; (a) (12) through (14) redesignated as (a)
(11) through (13); new (a)(13) and (b) revised 41949
1942.363 (b)(3) added; (c) (1), (2) and (d) revised 41950
1942.381 Added 41950
1942.451 -- 1942.500 (Subpart J) Added 41950
1943.1 -- 1943.50 (Subpart A) Exhibit A amended 8035
1943.32 (a) amended 8035
1943.82 (a) amended 8035
1943.132 (a) amended 8035
1944.2 (f) and (j) revised 11982
Policy guidelines 23543
1944.11 Heading and (c) revised; (d) redesignated as (e); new (d)
added 11982
(b) revised 19301
Policy guidelines 23543
1944.16 (a)(1)(i), (5), and (b) revised 8035
Revised 11983
Policy guidelines 23543
(e)(1) removed; (e) (2) through (8) redesignated as (e) (1) through
(7); interim 45808
1944.17 (e) added 246
1944.22 (a) revised 246
(a) correctly revised 6132
(e)(3) amended 8035
1944.24 (b) amended 19301
1944.26 (a)(2) introductory text and (f)(2) introductory text revised
11984
Policy guidelines 23543
1944.30 (a) amended 8036
1944.33 (f) revised 246, 29175
1944.34 (i)(3)(ii) revised 246
(h)(2) revised 11984
Policy guidelines 23543
(b)(1) revised 29175
(h)(3) introductory text revised 31027
1944.45 (f)(5), (h), (i)(2), and (k) amended 8036
(f)(3)(ii) revised 19301
1944.46 (d), (f), and (g) amended 8036
1944.47 Addition confirmed 9649
1944.1 -- 1944.50 (Subpart A) Exhibit A amended 8036
Exhibit D amended 9113
Exhibit F corrected 36565
1944.163 (e) revised 8036
1944.164 (j)(2) (i) and (ii) amended 19301
(p) revised 24288
1944.175 (a)(4) amended 8036
1944.176 (c)(3) revised 24288
1944.200 Removed 24288
1944.151 -- 1944.200 (Subpart D) Exhibit A-3 amended 8036, 19302
1944.212 (c)(2)(i) revised 8036
(p)(3) amended 19302
(p)(3) corrected 48391
1944.215 (a)(1) introductory text, (iii), and (iv) and (3)(v) revised
8036
1944.222 (c)(1) and (d)(1) introductory text amended 19302
(c)(1) and (d)(1) introductory text corrected 48391
1944.235 (c)(1)(v) and (vii) amended 8036
1944.237 (e) added 24288
1944.201 -- 1944.240 (Subpart E) Exhibit H amended 8037
1944.456 Introductory text amended 11985
(a) introductory text revised 19302
Policy guidelines 23543
1944.463 (a), (b), and (c)(4) amended 8037
1944.469 (f)(1)(i) and (ii) and (g)(1)(iii)(A)(l) amended 8037
1945.163 (b)(6) introductory text, (i)(B), and (ii) through (iv),
(7), and (8) revised and (b)(6)(v) added 20385
1945.151 -- 1945.200 (Subpart D) Exhibit A amended 8037
07 CFR 1948.150 1988
7 CFR
53 FR
Page
Chapter XVIII
1940 Authority citation revised 7332,
26229, 36240
1940.301 -- 1940.350 (Subpart G) Sections revised 36240
1940.304 (a)(1) revised 7332
1940.301 -- 1940.350 (Subpart G) Exhibit C amended; Exhibit M
revised 7333
Exhibit M corrected 14778
Exhibit C revised 36262
Exhibits D, H, and I amended; Exhibit G removed 36266
1940.551 (a) amended 26229
1940.552 (a) and (g) amended 26229
1940.557 (i) revised 26229
1940.559 (c) removed 26229
1940.575 Revised 26229
1940.576 Revised 26229
1940.577 (i) revised 26229
1940.578 Revised 26229
1940.589 Redesignated as 1940.590 and revised; new 1940.589 added
26230
1940.590 Redesignated from 1940.589 and revised 26230
1941 Authority citation revised 35684
1941.14 Added 8739
1941.33 (c) (1) and (3) removed; (c) (2) and (4) redesignated as (c)
(1) and (2) 26588
1941.35 (b) revised 26589
1941.1 -- 1941.50 (Subpart A) Sections revised; Exhibit B removed;
Exhibit C added; interim 35684
1941.54 (b) revised; interim 35691
1941.57 (a)(1) revised; interim 35691
1941.88 (a) through (d) redesignated as (b) through (e); new (a)
added; new (b) and (c) revised 35691
1941.94 Revised; interim 35692
1941.96 (b) revised; interim 35692
1942 Authority citation revised 30247
1942.1 (d) revised 6785
1942.2 (a)(1)(v) added; (a)(2) (iii) and (iv) and (d) revised 6786
(a)(5) removed; (a)(3) and (b) revised 36267
1942.3 Amended 6786
1942.5 (a)(1)(i), (b)(1)(ii) (F) and (G), (c) introductory text and
(2) and (d) (3) through (7) revised 6786
1942.6 (e)(3) revised 6787
(d)(1) removed; (d) (2) and (3) redesignated as (d) (1) and (2)
26589
1942.7 (f) removed; (g) redesignated as (f) 6787
1942.8 (b), (c) and (g) revised 6787
1942.9 (e) removed; (b) introductory text revised 6787
1942.12 (a) revised 6787, 26589
1942.17 (f)(7)(i) removed; (f)(7) (ii) and (iii) and (k) (2) through
(8) redesignated as (f)(7) (i) and (ii) and (k) (3) through (9);
(b)(3), (c)(2)(iii)(C), (e)(2), (f)(1), (2)(i), and new (7)(i)
introductory text, (g)(2)(i)(C) and (3)(i)(B), (j)(3) introductory text,
(k)(1), (m)(1), (p)(3)(i) and (4), (q)(2)(i)(B) and (3) through (5),
(r)(1)(i) and (ii)(C)(4), (D), (F) and (iii) and (2) revised; new
(k)(2) added 6787
1942.18 (g) introductory text, (j) introductory text and (2) and
(k)(4) introductory text revised; (k)(4)(vi) added 6791
1942.19 (h)(2) revised 6791
1942.20 (a) (27) and (28) added; (b) revised 6791
1942.301 Revised 30247
1942.302 Revised 30247
1942.304 (a) revised; (f), (g), and (h) added 30247
1942.305 (a)(1) and (b) revised 30247
1942.306 (a) and (b) revised 30248
1942.307 Revised 30248
1942.310 (b) and (d) revised; (e) removed; (f), (g), and (h)
redesignated as (e), (f), and (g); new (h) and (i) added 30248
1942.311 (a) revised; (b) removed; (c) redesignated as (b) 30249
1942.312 Removed 30249
1942.313 Removed 30249
1942.314 Added 30249
1942.315 (b) revised 30249
1942.316 Heading and (c) revised 30250
1942.317 Removed 30250
1942.318 Removed 30250
1942.319 Removed 30250
1942.320 Removed 30250
1942.322 Removed 30250
1942.350 Redesignated as 1942.349 and revised; new 1942.350 added
30250
1942.349 Redesignated from 1942.350 and revised 30250
1942.301 -- 1942.350 (Subpart G) Exhibits A and B removed 30251
1942.463 (b)(4) correctly revised 3861
1943 Authority citations revised; section authority citations
removed 35692
1943.1 -- 1943.50 (Subpart A) Sections revised; Exhibit B added;
interim 35692
1943.32 (a) corrected 2147
1943.33 (c) (1) and (3) removed; (c) (2) and (4) redesignated as (c)
(1) and (2) 26589
1943.35 (c)(1) revised; (e) amended 26589
1943.51 -- 1943.100 (Subpart B) Sections revised; interim 35706
1943.83 (c) (1) and (3) removed; (c) (2) and (4) redesignated as (c)
(1) and (2) 26589
1943.85 (c)(1) revised 26589
1943.101 -- 1943.150 (Subpart C) Removed; interim 35716
1943.132 (a) amended 17688
1943.133 (b)(2)(i) and (d)(1) amended; (c) revised 26589
1943.135 (a) introductory text and (c)(1) revised; (a)(2) amended
26589
(e) amended 26590
1944 Authority citation revised 35716
1944.3 (b)(9) revised 36267
1944.4 (c) amended 17688
1944.11 (a) and (e) revised 36267
1944.16 (e)(1) removal and (e) (2) through (8) redesignation as (e)
(1) through (7) confirmed 7178
(h)(5)(ii) revised; (h)(5)(iii) added 13244
1944.23 Revised; interim 35716
1944.26 (a)(2), (e) and (f)(2) amended 17688
1944.30 (a) amended 10241,
17688, 36267
1944.31 (e) removed 10241
(c) revised 36267
1944.32 (a)(1) and (c) revised 26590
1944.33 (f) revised 26590
(c) introductory text and (1) revised 44177
1944.34 (g)(2)(i)(C) amended; (i)(1)(ii) and (3)(i) revised 35068
1944.40 (b) revised 36267
1944.45 (f)(3)(ii) revised 36267
1944.170 (c) (3), (4), and (5) redesignated as (c) (5), (6), and (7);
new (c) (3) and (4) added 36267
1944.175 (e) revised 26590
1944.151 -- 1944.183 (Subpart D) Exhibits A-1 and A-2 amended 36268
1944.201 -- 1944.250 (Subpart E) Revised 2159
1944.205 (t) amended 7491
1944.211 (a)(4) amended 7491
1944.213 (a)(2) and (b)(11) amended 7491
1944.215 (l) amended 7492
1944.231 (a)(1), (9)(ii)(A)(3), (b)(4), and (5)(iii) revised;
(b)(3)(vi) and (c)(3)(vi) added 36268
1944.235 (f)(2) removed; (f)(3) redesignated as (f)(2); (f)(1)
revised 26590
1944.237 (c) (1) and (2) and (d)(2) revised 7492
(a), (b) and (e) amended; interim 13245
1944.245 (c)(2) (xxv) and (xxvi) added 36268
1944.201 -- 1944.240 (Subpart E) Exhibit A-6 amended 7492
Exhibits A-6 and A-8 amended 36268
1944.458 (a)(8) amended 17688
1944.467 (b) heading revised; (b)(1) introductory text amended 17688
(b)(1) introductory text corrected 36432
1944.468 (c) revised; (d) removed 10241
1944.469 (g)(1)(ii)(A) revised 26590
1944.672 (a) revised 36269
1944.676 (f) revised 36269
1944.681 (a) revised 36269
1945 Authority citation added; subpart and section authority
citations removed 30384, 35716
1945.2 -- 1945.45 (Subpart A) Revised 30384
1945.119 (a) revised; interim 35716
1945.126 (b)(3) revised 26591
1945.127 Amended 26591
1945.128 (b) revised 26591
1945.149 (b) revised; interim 35716
1945.151 -- 1945.200 (Subpart D) Sections revised 30392
1945.168 (c) revised; interim 35716
1945.169 (a)(3) revised; interim 35716
1945.185 (a) revised; (c) amended 26591
1945.151 -- 1945.200 (Subpart D) Exhibits B and B-1 removed; Exhibit
D amended 30412
1946 Added 32599
1948 Authority citation added 30647
1948.101 -- 1948.150 (Subpart C) Added 30647
07 CFR 1948.150 1989
7 CFR
54 FR
Page
Chapter XVIII
1941 Authority citation revised 11366, 47959
1941.14 Introductory text, (a) (2), (6), and (b) revised; (a)(7)
added 11366
1941.19 (g)(2) amended 47959
1941.33 (b)(1)(iv) and (c)(2) revised 11366
1941.35 (b) revised 39727
1941.57 Introductory text amended; (c) removed; (d) redesignated as
(c) 47959
1941.1 -- 1941.50 (Subpart A) Exhibit A amended 28019,
29330, 47959
1941.60 (d) amended 47959
1941.67 Introductory text amended; (c) removed; (d) redesignated as
(c) 47959
1941.96 (b) amended 47959
1942 Authority citation revised 39727, 47196
1942.1 (d)(4) amended 47196
1942.2 (c)(3) amended 47197
1942.5 (a)(1)(i) revised 29331
(a)(1)(ii), (b)(1)(ii)(C), (c) introductory text, (2), and (3)
amended 47196-47197
1942.12 (a) revised 39727
1942.17 (j)(3) revised 18882
1942.18 (j)(8) amended 14334
(d)(4) revised 18882
1942.19 (h)(10)(iii) revised 18883
1942.104 (c)(3) amended 47197
1942.108 (b) amended 47197
1942.412 (a)(2)(ii) amended 47197
1943 Authority citation revised 47959
1943.25 (a)(3) removed 47959
1943.32 (a) amended 28019
(a) table amended 29331, 47959
1943.34 (b) and (c) revised 47959
1943.35 (a) and (2) amended; (c)(1) revised 39727
1943.82 (a) amended 28019
(a) table amended 29331
Table amended 47959
1943.85 (a) and (2) amended; (c)(1) revised 39727
1944.17 (f) added 20521
1944.26 (a)(6) added 29331
1944.30 (a) amended 8523
(a) table amended 29332
1944.32 (a)(1) and (c) revised 39727
1944.33 (f) revised 39727
1944.1 -- 1944.50 (Subpart A) Exhibit F amended 14334
Exhibit D amended 46844
1944.171 (d) table amended 29332
1944.175 (e)(2) revised 39728
1944.205 (o) through (ee) redesignated as (q) through (gg); new (o)
and (p) added 14336
1944.211 (a)(6) revised 14336
1944.212 (j) revised 14336
1944.213 (b)(12) added 14337
1944.235 (a)(3) revised 14337
(f)(1) revised 39728
1944.237 (c)(2) amended 14337
1944.201 -- 1944.240 (Subpart E) Exhibit A-6 amended 14337
Exhibit A-8 amended 29332
1944.467 (a)(3) added 29332
1944.469 (g)(1) revised 39728
1944.451 -- 1944.500 (Subpart J) and Exhibit A revised; Exhibit C
added 14632
1945 Authority citation added; sectional authorities removed 29332
Authority citation revised 47959
1945.126 (b)(3) revised 39728
1945.128 (b) amended 39728, 47959
1945.167 (a) revised; interim 2085
Regulation at 54 FR 2085 confirmed 30883
(a) revised; interim 48228
1945.169 (n) introductory text revised; (n) (5) and (6) added;
interim 2085
Regulation at 54 FR 2085 confirmed 30883
(n)(5) introductory text, (ii), (iv), and (v) revised; interim 48229
1945.175 (c)(1) amended 8523
1945.185 (a) revised 39728
1945.151 -- 1945.200 (Subpart D) Exhibit A amended 29332, 47960
1948 Authority citation revised 47197
1948.1 -- 1948.47 (Subpart A) Removed 47197
07 CFR 1948.150 1990
7 CFR
55 FR
Page
Chapter XVIII
1940.551 -- 1940.591 (Subpart L) Exhibit B added 52835
1940.551 (c) revised; interim 29560
1940.590 (f) added; interim 12811
Regulation at 55 FR 12811 confirmed 33645
1940.591 Added; interim 11134
1940.901 -- 1940.950 (Subpart S) Added; interim 25075
1941.1 -- 1941.50 (Subpart A) Regulation at 53 FR 35684 confirmed
21524
1941.12 (a)(3) and (b)(5)(ii) revised 21524
1941.14 (b) revised 21524
1941.18 (b)(1) revised; (b)(2) amended 21527
1941.29 (b) introductory text, (1), (2), and (3) revised 21527
1941.1 -- 1941.50 (Subpart A) Exhibit A amended 21527
Exhibits B and C Regulation at 53 FR 35684 confirmed 21524
1941.54 Regulation at 53 FR 35691 confirmed 21524
1941.57 Regulation at 53 FR 35691 confirmed 21524
1941.88 Regulation at 53 FR 35691 confirmed 21524
1941.94 Regulation at 53 FR 35692 confirmed 21524
1941.96 Regulation at 53 FR 35692 confirmed 21524
1942 Authority citation revised 134
1942.2 (a)(1), (ii), (2) and (c)(2) nomenclature change 13503
(a)(1) amended 13504
1942.17 (m)(1) nomenclature change 13503
1942.104 (a) nomenclature change 13504
1942.305 (b)(2) revised; (b)(3)(iv)(C) added 134
1942.306 (a)(7) added 135
1942.307 (a)(1) revised 135
1942.310 (d) revised 135
1942.311 (a)(1) revised; (a)(2) removed; (a)(3) redesignated as
(a)(2) 135
1942.313 Added 135
1942.314 Revised 135
1942.348 Added 135
1942.350 Revised 135
1942.412 (a)(1)(i), (ii) nomenclature change 13503
1942.463 (a) nomenclature change 13503
1942.466 (a)(1) nomenclature change 13504
1942.501 -- 1942.550 (Subpart K) Added; interim 12812
Regulation at 55 FR 12812 confirmed 33645
1942.507 (d)(3)(i) corrected 25773
1942.521 (d) corrected 25773
1943.1 -- 1943.50 (Subpart A) Regulation at 53 FR 35692 confirmed
21524
1943.10 (b) revised 21527
1943.11 Revised 21528
1943.12 (a)(3) and (b)(4)(ii) revised 21528
1943.29 (b)(2) revised 21528
1943.32 (a) table and footnotes revised 21528
1943.38 (g)(3)(ii) revised 21529
1943.1 -- 1943.50 (Subpart A) Exhibit B Regulation at 53 FR 35692
confirmed 21524
1943.51 -- 1943.100 (Subpart B) Regulation at 53 FR 35706 confirmed
21524
1943.82 (a) revised 21529
1943.83 (b)(1)(iv) revised 31530
1944.16 (i) added 40376
1944.17 (d) revised 3942
1944.23 Regulation at 53 FR 35716 confirmed 21524
1944.26 (k) added; interim 25077
1944.34 (k)(2) amended; (k)(3) removed 35294
1944.153 (j)(5) revised; (cc) and (dd) added 6244
1944.164 (h) revised 6244
1944.170 (a) nomenclature change 13503
(d) added; interim 25077
1944.171 (a) and (d) nomenclature change 13503
1944.178 Revised 6244
1944.151 -- 1944.183 (Subpart D) Exhibits A-1, A-2, and F amended
6245
Exhibits A-1 and A-2 nomenclature change 13503, 13504
1944.205 Amended 6245, 26643
Amended; interim 29560
1944.212 (e)(3) amended 26644
(b)(6)(iv) amended; interim 29560
1944.213 (b)(5) removed; (b)(6) through (12) redesignated as (b)(5)
through (11) 26644
(c)(5), and (6) through (12) correctly amended 29558
(a) through (d) redesignated as (b) through (e); new (a) added; new
(b) heading revised; new (b)(3) and new (c)(7)(i) amended; interim
29561
1944.215 (b)(7) added; (h) introductory text and (i)(1)(iii) revised
6245
(v) added; inerim 25078
(b)(2) revised; (c) removed; (d) through (u) redesignated as (c)
through (t); new (b)(1) and (2) revised 26644
(d) revised; (k) amended; interim 29561
1944.222 (a) revised 6245
(d) revised 26644
(a) amended 35895
1944.223 (b) amended; interim 29561
1944.224 Added 26644
1944.231 Introductory text, (a)(1), (2), and (9)(ii)(A)(1)
nomenclature change 13503
(a)(3) and (4) redesignated as (a)(4) and (5); new (a)(2), new (5)
and (b)(2) revised; (a)(3), (9)(i)(D), and (iii) added; (a)(9)(i)(B)
and (b)(3)(iii) amended; interim 29561
1944.235 (a)(5) added; (c)(1)(iv) amended; interim 29561
1944.236 (b)(5) revised; (b)(6) added; interim 29561
1944.237 (a) revised 6246
(a) revised; interim 29562
1944.238 Added; interim 29562
1944.239 Revised 6246
1944.246 Added; interim 29562
1944.250 Revised; interim 29562
1944.201 -- 1944.250 (Subpart E) Exhibit A amended 6246
Exhibits A, A-6, and A-8 nomenclature change 13503
Exhibit A-6 amended 26647
Corrected 29558
Exhibit A-6 amended; interim 29562
Exhibit A-8 amended; interim 29563
Exhibit A-9 added; interim 29563
Exhibit C amended 6246
Exhibit E added 26647
1944.401 -- 1944.450 (Subpart I) Added 41833
1944.526 (a)(1), (b)(1) and (c)(3), (d)(1) and (2) nomenclature
change 13503
(a)(1) nomenclature change 13504
Designation corrected 50081
1944.531 (a), (b), (c) introductory text, (1), and (4) nomenclature
change 13503
(c)(7) and (9) nomenclature change 13504
1944.533 (c), (d), (f)(1), (2), (iv), (4) and (i) nomenclature change
13504
1944.536 Nomenclature change 13504
1944.550 Removed 41848
1944.501 -- 1944.550 (Subpart K) Exhibits B and C nomenclature change
13503, 13504
1944.676 (a) nomenclature change 13503
1944.681 (a) nomenclature change 13504
1945.119 Regulation at 53 FR 35716 confirmed 21524
1945.149 Regulation at 53 FR 35716 confirmed 21524
1945.154 (a)(31) revised 21530
1945.155 Revised 21530
1945.162 Introductory text and (g) revised 21530
1945.163 (a)(1)(iii), (iv), (2)(ii), (2)(v), (ix), (x)(i)(c)(1),
(xii), (xiv), (xvi), (xvii), (xviii), (xix) and (xx) revised 21530
1945.167 Regulation at 54 FR 48228 confirmed 7472
1945.168 Regulation at 53 FR 35716 confirmed; (b)(2) revised 21524,
21532
1945.169 Regulation at 54 FR 48229 confirmed 7472
Regulation at 53 FR 35716 confirmed; (a)(3) and (b)(2) revised
21524, 21532
1945.175 (b)(1) and (c)(5) amended 21532
1945.182 (a) and (b) revised; (d) amended 21532
1945.183 (a)(3) and (4)(ii) revised; (a)(4)(iii) amended 21532
1945.151 -- 1945.200 (Subpart D) Exhibit A removed 21533
1948.79 (c), (i), (k) introductory text, (1) and (4) nomenclature
change 13503
(j) and (d)(4) nomenclature change 13504
1948.84 (a), (d), and (i)(1) nomenclature change 13504
(a) and (b) nomenclature change 13503
1948.101 (b) amended 38532
1948.103 (c)(4) revised 38533
1948.110 (a)(7) and (9) revised 38533
1948.118 (b)(4)(iii) revised 38533
1948.122 (f) revised 38533
1948.123 (b) and (c) revised; (d) removed 38533
1948.124 (a) revised; (c) introductory text and (2) amended 38534
1948.126 (f) added 38534
1948.149 (d) added 38534
07 CFR 1948.150 1991
7 CFR
56 FR
Page
Chapter XVIII
1940.551 (c) amended; eff. 1-27-92 66960
1940.563 Added 10509
1940.564 Added 10509
1940.551 -- 1940.600 (Subpart L) Exhibit C added; interim 6792
Exhibit B amended 6961
1941.12 (a)(5) and (b)(5)(iv) revised 3971
1941.14 (a)(8) added; interim 6796
1941.19 (b) amended; eff. 1-30-92 67480
1941.1 -- 1941.50 (Subpart A) Exhibit A amended; eff. 1-30-92 67480
1941.84 (c) and (f) revised; eff. 1-30-92 67480
1942 Authority citation revised 31536
1942.17 (f)(7) introductory text and (ii) revised 29168
(j)(4)(i)(B) introductory text amended; eff. 1-30-92 67480
1942.19 (h)(5) revised 29168
(h)(10)(iv) amended 29169
1942.451 Revised; interim 31536
1942.453 Introductory text and (a) through (c) redesignated as (a)
introductory text and (a)(1) through (3); new (b) added; interim 31536
1942.454 Amended; paragraph designations removed; interim 31536
1942.455 Revised; interim 31536
1942.458 Introductory text, (a) introductory text and (a)(1) through
(4) redesignated as (a) introductory text, (a)(1) introductory text and
(a)(1)(i) through (iv); (b) introductory text and (b)(1) through (3)
redesignated as (a)(2) introductory text and (a)(2)(i) through (iii);
(c) through (e) redesignated as (a)(3) through (5); new (a)(5) revised;
new (b) added; interim 31536
1942.463 (a) and (b)(1) revised; (g) added; interim 31536
1942.464 Introductory text and (a) through (g) redesignated as (a)
introductory text and (a)(1) through (7); new (a) introductory text
revised; (b) added; interim 31537
1942.501 (a) revised; interim 58178
1942.504 Revised; interim 58178
1942.507 (d) introductory text, (1), (3) and (4) revised; interim
58178
1942.510 (a)(2) through (9) redesignated as (a)(3) through (10);
(a)(1) and new (a)(4) revised; new (a)(2) and (11) added; interim
58178
1942.511 (b) revised; interim 58178
1942.513 Revised; interim 58178
1943.12 (a)(5) and (b)(4)(iv) revised 3972
1943.19 (b)(3)(ii) and (5) introductory text amended; (b)(4)
revised; eff. 1-30-92 67481
1943.32 (a) amended; eff. 1-30-92 67481
1943.34 (a) revised; eff. 1-30-92 67481
1943.35 (c)(2) revised; eff. 1-30-92 67481
1943.38 (a) revised; eff. 1-30-92 67481
(f)(3) amended; eff. 1-30-92 67481
1943.1 -- 1943.50 (Subpart A) Exhibit A amended; eff. 1-30-92 67481
1943.62 Introductory text, (a)(4) and (b)(2) revised 3972
1943.69 (b)(3)(ii) and (5) introductory text amended; (b)(4)
revised; eff. 1-30-92 67481
1943.84 Amended; eff. 1-30-92 67481
1943.85 (c)(2) revised; eff. 1-30-92 67481
1943.88 (a) revised; eff. 1-30-92 67481
1944 Authority citation revised 2232
Authority citation revised 67481
1944.2 (j) revised 28310
1944.4 (c) amended 10147
1944.6 (a) introductory text revised 28310
1944.9 (f) revised 30313
1944.10 (a)(3) added 30494
1944.18 (a)(3), (b)(4) and (11) revised; eff. 1-30-92 67481
1944.24 (d)91) and (2) amended; eff. 1-30-92 67481
1944.30 (a) table amended; (b)(5) revised; eff. 1-30-92 67482
1944.31 (d)91) amended; eff. 1-30-92 67483
1944.32 (c) amended; eff. 1-30-92 67482
1944.33 (f) revised 6946
(c) introductory text revised; (d) amended; eff. 1-30-92 67482
1944.35 Added; interim 41765
1944.37 (c) revised; eff. 1-30-92 67482
1944.38 Amended; eff. 1-30-92 67482
1944.46 (d) amended; (i) revised; eff. 1-30-92 67483
1944.50 Removed; interim 41766
1944.1 -- 1944.50 (Subpart A) Exhibits E through E-2 removed; eff.
1-30-92 67482
1944.152 Revised 28472
1944.153 Revised 28472
1944.154 Redesignated as 1944.155; new 1944.154 added 28473
1944.155 Redesignated from 1944.154 28473
1944.157 (b)(1) amended 28474
1944.168 (b)(1) revised; (c) introductory text amended; eff.
1-30-92 67482
1944.169 (f) amended; eff. 1-30-92 67482
1944.175 (e)(3) revised; eff. 1-30-92 67482
1944.176 (a) amended; (c) introductory text, (d)(2) and (5) revised;
eff. 1-30-92 67482
1944.201 -- 1944.250 (Subpart E) Heading revised 2232
1944.201 Revised 2232
1944.202 Revised 2232
1944.205 Revised 2232
Corrected 47376
Amended; eff. 1-27-92 66960
1944.211 (a) introductory text, (2) introductory text, (5)(ii),
(v)(A), (D), (6) introductory text and (10)(i) introductory text
revised; (a)(11) and (12) redesignated as (a)(12) and (13); new
(a)(11) added 2235
1944.212 (k) through (o) redesignated as (l) through (p); new (k)
added; introductory text, (b)(6) introductory text, (iii), (7)(ii),
(iii), (d)(2), (e)(2), (g), (o) and (p) revised 2235
(n) amended; eff. 1-27-92 66960
1944.213 (a), (b) introductory text, (1) and (c)(2) revised 2236
(a) revised; (b)(1) amended; eff. 1-27-92 66960
1944.215 (g) through (u) redesignated as (j) through (x); (a)
introductory text, (8), (b)(1) introductory text, (ii), (2), (3)
introductory text, (ii), (6), (e), (f)(3), new (j)(2), (3) and (4), new
(l) introductory text, new (m), new (r), new (s)(3), new (s)(5)
introductory text, new (s)(6)(i), (iii) and (iv), new (u), new (w) and
new (x)(1) revised; new (g), (h) and (i) added 2236
1944.221 (a)(1) and (b) revised 2238
Correctly revised 47376, 65981
1944.222 (a), (b)(1), (d), (f), and (k)(1) revised 2238
1944.223 Heading, introductory text, (a) introductory text and (e)(2)
revised 2239
1944.231 Introductory text, (a)(5) introductory text, (9)(i)(C),
(b)(3) introductory text, (5)(i), (ii), (c)(2) and (c)(3)(i) revised
2239
(a)(9)(iii) redesignated as (a)(9)(ii)(C); (a)(9)(i)(D) and new
(a)(9)(ii)(C) revised; (a)(9)(ii)(A)(5) amended; eff. 1-27-92 66960
1944.232 Introductory text, (a)(2) introductory text, (i), and (b)
revised 2240
1944.235 (c)(1), (2), (h) introductory text, (1) and (3) revised 2240
(a)92) revised; (f)92) amended; eff. 1-30-92 67483
1944.236 (a), (b)(5), (6), (c)(3), (6) and (e)(1) revised 2240
(a) and (c)(2) amended; (b) introductory text and (c)(4) revised;
eff. 1-30-92 67483
1944.237 Heading and (a) revised 2241
1944.239 Heading, introductory text and (a) through (c) revised 2241
1944.240 Revised 2241
1944.250 Revised 2241
1944.201 -- 1944.250 (Subpart E) Exhibit A revised 2241
Exhibit A corrected 47376
Exhibit A-1 revised 2245
Exhibits A-4 through A-8 redesignated as Exhibits A-5 through A-9
2245
Exhibits A-4 through A-9 correctly designated as Exhibits A-5 through
A-10 65985
Exhibits A-5 through A-10 correctly designated 66960
Exhibit A-4 added 2245
Exhibit A-5 and A-7 amended 2246
Exhibit A-10 revised 2247
Exhibit A-10 revised; eff. 1-27-92 66961
Exhibit B amended 2247
Exhibit C revised 2247
Exhibit D amended 2248
Exhibits D-1, F, F-1, G, H, I and J added 2248
1944.407 (a) amended 19253
1944.408 Added; eff. 1-27-92 66961
1944.411 (d) and (f) amended 19253
1944.417 (b) introductory text amended 19253
1944.422 Introductory text amended 19253
1944.463 (e)(1) amended; (e)(2) revised; eff. 1-30-92 67483
1944.464 Introductory text revised 6946
1944.465 Added 6946
1944.466 Added; eff. 1-27-92 66961
1944.469 (b) revised; (d) amended; eff. 1-30-92 67483
1944.551 Revised 2256
1944.552 (c) through (h) redesignated as (d) through (i); (a), (b),
and new (h) revised; new (c) added 2256
1944.553 (b) revised 2256
1944.662 Added; eff. 1-27-92 66961
1945 Authority citation revised 67483
1945.129 (b)(1), (2)(i)(A) and (ii) introductory text revised;
(b)(2)(v) amended; eff. 1-30-92 67483
1945.154 (a)(13)(i) introductory text aended; (a)(13)(i)(D) through
(J) redesignated as (a)(13)(i)(E) through (K); new (a)(13)(i)(D) added;
(a)(13)(i)(A), (C), new (a)(13)(i)(E), (J) and (K) revised; interim
24682
1945.156 (b)(3) revised; interim 24682
1945.163 (a)(2)(iv) amended; interim 24682
1945.162 (h) revised 3972
1945.167 (a) revised; interim 1565
(j) amended 10147
Regulation at 56 FR 1565 confirmed 28310
(a) revised; interim 67152
1945.169 (n)(5) introductory text, (ii), (iv), (v) and (6) revised;
interim 1565
Regulation at 56 FR 1565 confirmed 28310
(n)(5) introductory text, (ii), (iv), (v) and (6) revised; interim
67152
(j)(4) introductory text revised; eff. 1-30-92 67483
1945.189 (a)(1), (2)(i), (3) introductory text and (6) revised; eff.
1-30-92 67483
1945.200 Revised; interim (OMB number) 24682
1948 CFR correction 13265
1948.90 (b)(4) amended 28038
1948.103 (b)(1) removed; (b)(2) and (3) redesignated as (b)(1) and
(2) 13068
1948.113 (a) and (b) revised 13068
1948.118 (a)(7)(v) and (8) added; (b)(7) revised 13069
1948.150 Revised 13069
7
Agriculture
PARTS 1940 TO 1949
Revised as of January 1, 1992
CONTAINING
A CODIFICATION OF DOCUMENTS
OF GENERAL APPLICABILITY
AND FUTURE EFFECT
AS OF JANUARY 1, 1992
With Ancillaries
Published by
the Office of the Federal Register
National Archives and Records
Administration
as a Special Edition of
the Federal Register
Washington, DC 20402-9328
07 CFR 1948.150 Table of Contents
Page
Explanation v
Title 7:
Subtitle B -- Regulations of the Department of Agriculture
(Continued):
Chapter XVIII -- Farmers Home Administration, Department of
Agriculture (Continued)
Finding Aids:
Table of CFR Titles and Chapters
Alphabetical List of Agencies Appearing in the CFR
List of CFR Sections Affected
07 CFR 1948.150 Explanation
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16 as of January 1
Title 17 through Title 27 as of April 1
Title 28 through Title 41 as of July 1
Title 42 through Title 50 as of October 1
The appropriate revision date is printed on the cover of each volume.
LEGAL STATUS
The contents of the Federal Register are required to be judicially
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
issues of the Federal Register. These two publications must be used
together to determine the latest version of any given rule.
To determine whether a Code volume has been amended since its
revision date (in this case, January 1, 1992), consult the ''List of CFR
Sections Affected (LSA),'' which is issued monthly, and the ''Cumulative
List of Parts Affected,'' which appears in the Reader Aids section of
the daily Federal Register. These two lists will identify the Federal
Register page number of the latest amendment of any given rule.
EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
Register since the last revision of that volume of the Code. Source
citations for the regulations are referred to by volume number and page
number of the Federal Register and date of publication. Publication
dates and effective dates are usually not the same and care must be
exercised by the user in determining the actual effective date. In
instances where the effective date is beyond the cut-off date for the
Code a note has been inserted to reflect the future effective date. In
those instances where a regulation published in the Federal Register
states a date certain for expiration, an appropriate note will be
inserted following the text.
OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires Federal
agencies to display an OMB control number with their information
collection request. Many agencies have begun publishing numerous OMB
control numbers as amendments to existing regulations in the CFR. These
OMB numbers are placed as close as possible to the applicable
recordkeeping or reporting requirements.
OBSOLETE PROVISIONS
Provisions that become obsolete before the revision date stated on
the cover of each volume are not carried. Code users may find the text
of provisions in effect on a given date in the past by using the
appropriate numerical list of sections affected. For the period before
January 1, 1986, consult either the List of CFR Sections Affected,
1949-1963, 1964-1972, or 1973-1985, published in seven separate volumes.
For the period beginning January 1, 1986, a ''List of CFR Sections
Affected'' is published at the end of each CFR volume.
CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Statutory
Authorities and Agency Rules (Table I), and Acts Requiring Publication
in the Federal Register (Table II). A list of CFR titles, chapters, and
parts and an alphabetical list of agencies publishing in the CFR are
also included in this volume.
An index to the text of ''Title 3 -- The President'' is carried
within that volume.
The Federal Register Index is issued monthly in cumulative form.
This index is based on a consolidation of the ''Contents'' entries in
the daily Federal Register.
A List of CFR Sections Affected (LSA) is published monthly, keyed to
the revision dates of the 50 CFR titles.
REPUBLICATION OF MATERIAL
There are no restrictions on the republication of material appearing
in the Code of Federal Regulations.
INQUIRIES AND SALES
For a summary, legal interpretation, or other explanation of any
regulation in this volume, contact the issuing agency. Inquiries
concerning editing procedures and reference assistance with respect to
the Code of Federal Regulations may be addressed to the Director, Office
of the Federal Register, National Archives and Records Administration,
Washington, DC 20408 (telephone 202-523-3517). All mail order sales are
handled exclusively by the Superintendent of Documents, Attn: New
Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. Charge orders may
be telephoned to the Government Printing Office order desk at
202-783-3238.
Martha L. Girard,
Director,
Office of the Federal Register.
January 1, 1992.
07 CFR 1948.150 THIS TITLE
Title 7 -- Agriculture is composed of nineteen volumes. The parts in
these volumes are arranged in the following order: parts 0-26, 27-45,
46-51, part 52, 53-209, 210-299, 300-399, 400-699, 700-899, 900-999,
1000-1059, 1060-1119, 1120-1199, 1200-1499, 1500-1899, 1900-1939,
1940-1949, 1950-1999, and part 2000 to end. The contents of these
volumes represent all current regulations codified under this title of
the CFR as of January 1, 1992.
An index of the alphabetical list of U.S. standards for grades of
processed fruits, vegetables and certain other products appears in the
Finding Aids section of the volume containing part 52.
The Food and Nutrition Service current regulations in the volume
containing parts 210-299, include the Child Nutrition Programs and the
Food Stamp Program. The regulations of the Federal Crop Insurance
Corporation are found in the volume containing parts 400-699.
All marketing agreements and orders for fruits, vegetables and nuts
appear in the one volume containing parts 900-999. All marketing
agreements and orders for milk appear in the three volumes containing
parts 1000-1199. Part 900 -- General Regulations is carried as a note
in each of the three volumes containing parts 1000-1199, and part 1000
-- General Provisions of Federal Milk Marketing Orders is carried as a
note in each of the two volumes containing parts 1060-1199, as a
convenience to the user.
Redesignation tables appear in the Finding Aids section of the
volumes containing parts 210 -- 299 and parts 1500 -- 1899.
For this volume Linda L. Jones was Chief Editor. The Code of
Federal Regulations publication program is under the direction of
Richard L. Claypoole, assisted by Alomha S. Morris.
07 CFR 0.0 7 CFR Ch. XVIII (1-1-92 Edition)
07 CFR 0.0 Farmers Home Administration, USDA
07 CFR 0.0 Title 7 -- Agriculture
07 CFR 0.0 (This book contains parts 1950 to 1999)
SUBTITLE B -- Regulations of the Department of Agriculture --
(Continued)
Part
chapter xviii -- Farmers Home Administration, Department of
Agriculture (Continued) 1950
07 CFR 0.0 Subtitle B -- Regulations of the Department of Agriculture (Continued)
07 CFR 0.0 7 CFR Ch. XVIII (1-1-92 Edition)
07 CFR 0.0 Farmers Home Administration, USDA
07 CFR 0.0 CHAPTER XVIII -- FARMERS HOME
07 CFR 0.0 ADMINISTRATION, DEPARTMENT
07 CFR 0.0 OF AGRICULTURE (Continued)
07 CFR 0.0
07 CFR 0.0 SUBCHAPTER H -- PROGRAM REGULATIONS -- Continued
Part
Page
1950 General
1951 Servicing and collections
1955 Property management
1956 Debt settlement
1957 Asset sales
1962 Personal property
1965 Real property
1980 General
Editorial Note: Chapter XVIII -- Farmers Home Administration,
Department of Agriculture, is continued in the volume containing 7 CFR
Part 2000 to End.
07 CFR 0.0 7 CFR Ch. XVIII (1-1-92 Edition)
07 CFR 0.0 Farmers Home Administration, USDA
07 CFR 0.0 SUBCHAPTER H -- PROGRAM REGULATIONS -- Continued
07 CFR 0.0 PART 1950 -- GENERAL
07 CFR 0.0 Subparts A-B -- (Reserved)
07 CFR 0.0 Subpart C -- Servicing Accounts of Borrowers Entering the
Armed Forces
Sec.
1950.101 Purpose.
1950.102 General.
1950.103 Borrower owing FmHA loans which are secured by chattels.
1950.104 Borrower owing FmHA loans which are secured by real estate.
1950.105 Interest rate.
07 CFR 0.0 Subparts A-B -- (Reserved)
07 CFR 0.0 Subpart C -- Servicing Accounts of Borrowers Entering the
Armed Forces
Authority: 7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR
2.23; 7 CFR 2.70.
07 CFR 1950.101 Purpose.
Borrowers with accounts serviced by the Farmers Home Administration
(FmHA) who have entered or who are entering military service will
require special treatment. This subpart prescribes the authorities,
policies, and routines for servicing such cases in addition to those
contained in other FmHA regulations.
(45 FR 43152, June 26, 1980)
07 CFR 1950.102 General.
(a) FmHA will do everything possible to assist borrowers entering the
armed forces to adjust their affairs in contemplation of military
service. It is not the policy FmHA to renew, postpone, or modify annual
installments due under a promissory note because of the borrower's entry
into the armed services. However, under the Soldiers' and Sailors'
Civil Relief Act of 1940, the property of a borrower in the armed forces
cannot validly be seized or sold by foreclosure or otherwise during the
borrower's tenure of service, or for three months thereafter, except (1)
pursuant to an agreement entered into by the borrower after having been
accepted for service, or (2) by order of the Court. Any person causing
an invalid sale to be made is guilty of a misdemeanor. Regardless of
the foregoing, the long-time interest of the borrower can best be served
by prompt and satisfactory arrangements for the use and protection, or
disposition, of the security property in accordance with the policies
expressed herein. Upon request, OGC will inform the State Director with
respect to relief which may be secured by a borrower under the Soldiers'
and Sailors' Civil Relief Act of 1940.
(b) In connection with Multiple Housing loans to individuals,
references to County Supervisor and County Office in this subpart will
be read as District Director and District Office.
(50 FR 45763, Nov. 1, 1985)
07 CFR 1950.103 Borrower owing FmHA loans which are secured by
chattels.
(a) Policy. (1) Borrowers who owe loans other than 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/or Rural Housing loans
for farm service buildings (RHF). When information is received that a
borrower is entering the armed forces, the County Supervisor will be
responsible for contacting the borrower immediately for the purpose of
reaching an understanding concerning the actions to take in connection
with the FmHA loan indebtedness. The borrower will be permitted to
retain the chattel security if arrangements can be worked out which are
satisfactory to the borrower and FmHA. However, because of the nature
of chattel security, the borrower will be informed of the usual
depreciation of such property and will be encouraged to sell the
property and apply the proceeds to the loan(s). In most cases, the
interests of both the borrower and the Government can best be served by
arranging for a voluntary sale of the security. A borrower retaining
security will be expected to make payments on the loan(s) equal to the
scheduled payments.
(2) Borrowers who owe FO, SW, RL, OL, EE, EM, SL, EO, and/or RHF
loans. If the borrower is delinquent in accordance with subpart S of
part 1951 of this chapter, or otherwise in default, the County
Supervisor will send exhibit A and the appropriate attachments, as
outlined in subpart S of part 1951 of this chapter. If the borrower is
not delinquent, the County Supervisor will explain the options set out
in paragraph (b) of this section.
(b) Methods of handling. In carrying out the above policy, the cases
of borrowers entering the armed forces will be handled in accordance
with one of the following methods:
(1) Voluntary sale of security. This will be accomplished in
accordance with 1962.41 of subpart A of part 1962 of this chapter. Any
necessary forms will be signed:
(i) Before being accepted for service in the armed forces, if the
sale is to be completed before the borrower is accepted for service, or
(ii) After being accepted for service, if the sale cannot be
completed before the borrower is so accepted. For this purpose, an
individual will be considered as accepted for service after being
ordered to report for induction, or, if in the enlisted reserve, after
being ordered to report for service in the armed forces.
(2) Assumption of indebtedness. This will be accomplished in
accordance with 1962.34 of subpart A of part 1962 of this chapter.
(3) Arrangements with third persons. When the borrower arranges with
a relative or other reliable person to maintain the security in a
satisfactory manner and to make scheduled payments, the State Director
is authorized to approve the arrangement. In such a case, the borrower
will be required to execute a power of attorney, prepared or approved by
OGC, authorizing an attorney-in-fact to act for the borrower during the
latter's absence.
(4) Possible legal actions. If the borrower fails or refuses to
cooperate in the servicing of the loan indebtedness secured by chattels
in accordance with one of the methods set forth in this section, the
borrower's case folder will be forwarded to the State Director for
referral to OGC for legal advice as to the steps to be taken in
protecting the Government's interest.
(c) Statements of accounts and transfers. Borrowers entering the
armed forces will be requested to designate mailing addresses for the
delivery of statements of account. Any changes in these addresses will
be processed on Form FmHA 450-10, ''Advice of Borrower's Change of
Address or Name,'' with appropriate explanations. Under this procedure,
a statement of account may be mailed to a location other than where the
account is maintained and serviced. This is a deviation from the
established procedure. These cases will not be transferred unless the
security, when retained by the borrower in accordance with paragraph
(b)(3) of this section, is moved into another County Office territory.
Then the transfer will be processed through the use of Form FmHA 450-5,
''Application to Move Security Property and Verification of Address,''
and Form FmHA 450-10 with appropriate explanations. In cases when
assumption agreements have been executed, statements of account will be
mailed to the assuming borrower. Cases involving assumption agreements
will be transferred when the assuming borrower moves from one County
Office territory to another.
(45 FR 43152, June 26, 1980, as amended at 50 FR 45763, Nov. 1, 1985;
52 FR 26133, July 13, 1987; 55 FR 40646, Oct. 4, 1990)
07 CFR 1950.104 Borrower owing FmHA loans which are secured by real
estate.
County Supervisors, to the greatest extent possible, should keep
themselves informed of the plans of borrowers with FmHA loans secured by
real estate who may enter the armed forces. They should encourage any
borrower who is definitely entering the armed forces to consult with
them before the borrower's military service begins concerning the most
advantageous arrangements that can be made regarding the security.
County Supervisors will assist these borrowers in working out mutually
satisfactory arrangements. Borrowers who owe FO, SW, RL, OL, EE, EM,
SL, EO, ST, and/or RHF loans and who are delinquent or otherwise in
default must be sent exhibit A and the appropriate attachments, as
outlined in subpart S of part 1951 of this chapter. The County
Supervisor will follow the directions in subpart A of part 1965 of this
chapter for liquidating real estate security. FO, SW, RL, OL, EE, EM,
SL, EO, ST and/or RHF borrowers who are not delinquent will have their
accounts handled as set out in the following paragraphs.
(a) Power of attorney. Borrowers entering the armed forces who
retain ownership of the security should be encouraged to execute a power
of attorney authorizing the person of their choice to take any actions
necessary to insure proper use and maintenance of the security, payment
of insurance and taxes, and repayment of the loan. No FmHA employee
will act as attorney-in-fact for a borrower. The State Director will
consult with OGC concerning any limitations upon the use of a power of
attorney under local law and the circumstances under which the power of
attorney should be exercised. In general, either spouse may act as
attorney-in-fact for the other spouse, but, in a few States, a spouse
cannot exercise the power of attorney in connection with a sale or
encumbrance of the homestead. In a majority of States, a power of
attorney is revoked by the death of a person granting the power, but, in
some States, the power of attorney executed by a person in the armed
services remains valid until actual notice is received of the death of
the person granting the power. A power of attorney should not be used
in conveying title to the farm except in those States where the power is
good until actual notice of death. The State Director will request OGC
to prepare a satisfactory form of power of attorney which may be
duplicated in the State Office and furnished to County Supervisors with
a State supplement concerning its use.
(b) Borrower retains ownership of the security. When a borrower
retains ownership of the security, FmHA will assist in making
arrangements for the use of the security which will protect the
interests of both the Government and the borrower.
(1) Leasing. It will be more satisfactory if the security is leased
under a written lease in accordance with equitable leasing policies and
applicable FmHA procedures. The borrower should make arrangements for
the rental income to be used for regular payments on the loan in order
to avoid the accumulation of unpaid interest. The borrower also should
make arrangements for the payment of taxes and insurance and maintenance
of the security to avoid having these charges paid by the Government and
then charged to the account. It would be desirable to provide that the
lease will continue for the duration of the borrower's military service
unless either party gives written notice of earlier cancellation of the
lease.
(2) Operation by family. When a borrower wishes to have the farm
occupied and operated by family members or relatives without a written
lease, the County Supervisor should advise the borrower as to whether or
not the proposed arrangements will be in the best interests of the
borrower and the Government. When the farm is to be operated by
relatives, the hazards and disadvantages to the borrower and the
Government which are inherent in unwritten contracts will be discussed,
and every effort will be made to induce the borrower to enter into
formal contractual arrangements whenever possible to do so.
(c) Borrower does not retain ownership of the security. The security
may be transferred to another approved applicant or sold in accordance
with applicable procedure.
(d) Borrower abandons the security or fails to make satisfactory
arrangements. This paragraph does not apply to borrowers with FO, SW,
RL, OL, EE, EM, SL, EO, ST and/or RHF loans. Those borrowers should be
sent exhibit A and the appropriate attachments as outlined in subpart S
of part 1951 of this chapter. When a borrower abandons the security or
fails to make satisfactory arrangements for maintenance of the security
and payment of taxes, insurance, and installments on the loan, the
County Supervisor will send a complete report on the case to the State
Director. The report will include all the information that can be
obtained regarding the borrower's plans for the security and any
evidence to indicate that abandonment has, in fact, taken place. In
these instances, it must be recognized that the borrower may have
entered into verbal arrangements for the care of the security without
properly advising the County Supervisor. Whether such cases may be
construed to be in violation of the provisions of the mortgage, so as to
support foreclosure by order of the Court under the provisions of the
Soldiers' and Sailors' Civil Relief Act of 1940, will need to be
determined on an individual case basis by the State Director and OGC.
Clear-cut abandonment cases or instances in which the borrower fails to
take action to transfer or sell the property, while evidencing no
interest in it or desire to retain it, will be processed in accordance
with applicable procedures.
(e) Statement of account. Borrowers entering the armed forces who
retain ownership of the security will be requested to designate mailing
addresses for the delivery of statements of account. Any changes in
addresses will be processed on Form FmHA 450-10 with appropriate
explanations.
(45 FR 43152, June 26, 1980, as amended at 50 FR 45764, Nov. 1, 1985;
52 FR 26134, July 13, 1987; 55 FR 40646, Oct. 4, 1990)
07 CFR 1950.105 Interest rate.
(a) The Soldiers and Sailors Relief Act requires that the effective
interest rate charged a borrower who enters active military duty after a
loan is closed will not exceed 6 percent. This applies only to
full-time active military duty and does not include military reserve
status or National Guard participation.
(b) As soon as the County Supervisor verifies that a borrower is on
active duty, the County Supervisor will send the borrower a letter which
states that the interest rate on the borrower's FmHA loans will not
exceed 6 percent. At the same time, the County Supervisor will send the
Finance Office a memorandum which states that the borrower is on active
duty and that interest of not more than 6 percent should accrue on the
borrower's loans, effective as of the date of the memorandum or as of
the date of the last payment, whichever is later, until further notice.
If a borrower's interest rate on any loan is less than 6 percent, the
loan will continue to accrue interest at the lower rate. The assistance
under this section may not be retroactively applied.
(c) As soon as the County Supervisor verifies that a borrower is no
longer on active duty, the County Supervisor will send the Finance
Office a memorandum advising them to terminate the 6 percent interest
rate. The rate will revert to the note rate (or the interest credit
rate), effective with the next scheduled payment. The 6 percent
interest rate will not be cancelled retroactively.
(d) Additional directions for handling Single Family Housing Loans
are contained in subpart G of part 1951 of this chapter.
(52 FR 26134, July 13, 1987)
07 CFR 1950.105 Pt. 1951
07 CFR 1950.105 PART 1951 -- SERVICING AND COLLECTIONS
07 CFR 1950.105 Subpart A -- Account Servicing Policies
Sec.
1951.1 Purpose.
1951.2 Policy.
1951.3 Authorities and responsibilities.
1951.4 -- 1951.5 (Reserved)
1951.6 Handling payments.
1951.7 Accounts of borrowers.
1951.8 Types of payments.
1951.9 Distribution of payments when a borrower owes more than one
type of FmHA loan.
1951.10 Application of payments on production type loan accounts.
1951.11 Application of payments on real estate accounts.
1951.12 Changes in the application of loan payments.
1951.13 Overpayments and refunds.
1951.14 Recoverable and nonrecoverable cost charges.
1951.15 Return of paid-in-full or satisfied notes to borrower.
1951.16 Other servicing actions on real estate type loan accounts.
1951.17 -- 1951.24 (Reserved)
1951.25 Review of limited resource FO and OL loans.
1951.26 -- 1951.49 (Reserved)
1951.50 OMB control number.
Exhibit A -- Notice to FmHA Borrowers
Exhibit B -- Notice of Change in Interest Rate
Exhibit C-1 -- Notice of the Availability of the Special Debt
Set-Aside (Note)
Exhibit C-2 -- Confirmation of Appointment to Discuss Special Debt
Set-Aside (Note)
Exhibit D -- Examples of a Farm Ownership (FO) and Limited Resource
Operating Loan (OL) Rescheduled With Set-Aside Approved on October 25,
1984 (Note)
Exhibit E -- (Reserved)
Exhibit F -- Agreement for Special Set-Aside of a Portion of a Farmer
Program Loan (Note)
Exhibit G -- Notice to Borrowers Who Received a Pretermination Notice
(Note)
07 CFR 1950.105 Subpart B -- Collections
1951.51 General.
1951.52 -- 1951.53 (Reserved)
1951.54 Authority.
1951.55 Receiving and processing collections.
07 CFR 1950.105 Subpart C -- Offsets of Federal Payments to FmHA
Borrowers
1951.101 General.
1951.102 Standards and procedures for administrative offset requests
received by FmHA.
1951.103 Procedures for FmHA-initiated administrative offset.
1951.104 Procedures for FmHA-initiated offset.
1951.105 Procedures for taking funds by administrative offset.
1951.106 -- 1951.110 (Reserved)
1951.111 Salary offset.
1951.112 -- 1951.120 (Reserved)
1951.121 Internal Revenue Service (IRS) offset.
1951.122 Finance Office screening.
1951.123 Field office screening.
1951.124 Notice to borrowers.
1951.125 Processing borrowers' requests not to exercise IRS offset.
1951.126 Final referral to IRS.
1951.127 Processing of amounts offset.
1951.128 Receipt of Finance Office/IRS offset reports and listings.
1951.129 Borrowers eligible for offset (prior to 60-day notice).
1951.130 Borrowers sent due process notices for IRS/Credit Bureau
referrals.
1951.131 Form FmHA 389-833, Borrower Accounts Submitted to IRS for
Offset Report, RC 865.
1951.132 Form FmHA 389-760, Annual Unprocessable Report IRS Offset,
RC 822-C.
1951.133 Form FmHA 389-761, Annual No Match Report IRS Offset, RC
822-D.
1951.134 Form FmHA 389-764, Weekly Offset Report (Cash Collections)
IRS Offset, RC 222-C.
1951.135 Form FmHA 389-763, Weekly Claims Report IRS Offset, RC
222-D.
1951.136 -- 1951.149 (Reserved)
1951.150 OMB control number.
07 CFR 1950.105 Subpart D -- (Reserved)
07 CFR 1950.105 Subpart E -- Servicing of Community and Insured
Business Programs Loans and Grants
1951.201 Purpose.
1951.202 Objectives.
1951.203 Definitions.
1951.204 Nondiscrimination.
1951.205 Redelegation of authority.
1951.206 Forms.
1951.207 State supplements.
1951.208 -- 1951.209 (Reserved)
1951.210 Environmental requirements.
1951.211 Refinancing requirements.
1951.212 Unauthorized financial assistance.
1951.213 Debt settlement.
1951.214 Care, management, and disposal of acquired property.
1951.215 Grants.
1951.216 Nonprogram (NP) loans.
1951.217 Public bodies.
1951.218 -- 1951.219 (Reserved)
1951.220 General servicing actions.
1951.221 Collections, payments, and refunds.
1951.222 Subordination of security.
1951.223 Reamortization.
1951.224 Third party agreements.
1951.225 Liquidation of security.
1951.226 Sale or exchange of security property.
1951.227 Protective advances.
1951.228 -- 1951.229 (Reserved)
1951.230 Transfer of security and assumption of loans.
1951.231 Special provisions applicable to Economic Opportunity (EO)
Cooperative Loans.
1951.232 Water and waste disposal systems which have become part of
an urban area.
1951.233 -- 1951.239 (Reserved)
1951.240 State Director's additional authorizations and guidance.
1951.241 Special provision for interest rate change.
1951.242 -- 1951.249 (Reserved)
1951.250 OMB control number.
Exhibit A -- Report on Servicing Action
Exhibit B -- Agreement for New Member (With or Without Withdrawing
Member)
Exhibit C -- Agreement for Withdrawal of Member (Without New Member)
Exhibit D -- Items to be Included in Transfer and Assumption Dockets
(if applicable)
Exhibit E -- Interest Rate Requirements and Effective Dates
Exhibit F -- Instruction to FmHA Personnel to Implement Public Law
100-233
Exhibit G -- Letter to Borrower Notifying of Choice of Interest Rate
Exhibit H -- Rescheduling Agreement -- Public Bodies
07 CFR 1950.105 Subpart F -- Analyzing Credit Needs and Graduation of
Borrowers
1951.251 Purpose.
1951.252 Definitions.
1951.253 Objectives.
1951.254 Responsibility.
1951.255 Nondiscrimination.
1951.256 -- 1951.260 (Reserved)
1951.261 Graduation of FmHA borrowers to other sources of credit.
1951.262 Action when borrower fails to cooperate, respond and/or
graduate.
1951.263 Application for subsequent loan, subordination, or consent
to additional indebtedness from a borrower who has been requested to
graduate.
1951.264 Special requirements for Multiple Housing borrowers.
1951.265 Documents for Office of General Counsel (OGC) review.
1951.266 State supplements and guides.
1951.267 -- 1951.299 (Reserved)
1951.300 OMB control number.
Exhibit A -- Suggested Outline for Seeking Information From Lenders
on Credit Criteria for Graduation of Agricultural Loans
Exhibit B -- Suggested Outline for Seeking Information From Lenders
on Credit Criteria for Graduation of Single Family Housing Loans
07 CFR 1950.105 Subpart G -- Borrower Supervision, Servicing and
Collection of Single Family Housing Loan Accounts
1951.301 Purpose.
1951.302 Authorities and responsibilties.
1951.303 (Reserved)
1951.304 Definitions.
1951.305 -- 1951.306 (Reserved)
1951.307 Supervision.
1951.308 Payment coupons and change in payment plan.
1951.309 Receiving and applying payments.
1951.310 Amortization of recoverable cost.
1951.311 Reporting responsibilities.
1951.312 Servicing monthly and annual payment borrowers.
1951.313 Moratoriums.
1951.314 Reamortizations.
1951.315 Refinancing.
1951.316 Servicing a note-only loan.
1951.317 Servicing the account of a borrower who enters active
military duty after a loan is closed.
1951.318 Reporting to credit bureaus.
1951.319 Pilot projects.
1951.320 (Reserved)
1951.321 FmHA instructions.
1951.322 -- 1951.329 (Reserved)
1951.330 Servicing loans with deferred mortgage payments.
1951.331 -- 1951.349 (Reserved)
1951.350 OMB control number.
07 CFR 1950.105 Subpart H -- (Reserved)
07 CFR 1950.105 Subpart I -- Recapture of section 502 Rural Housing
Subsidy
1951.401 Purpose.
1951.402 Policy.
1951.403 -- 1951.405 (Reserved)
1951.406 Recapture of subsidy.
1951.407 Determining amount of subsidy to be recaptured.
1951.408 (Reserved)
1951.409 Finance Office responsibility.
1951.410 Assumptions of loans with subsidy subject to recapture.
1951.411 Modification of security instruments for loans being
transferred.
1951.412 Servicing of loans approved after October 30, 1978, and
before October 1, 1979.
1951.413 Subsidy Repayment Fact Sheet.
Exhibit A -- Subsidy Repayment Agreement
Exhibit B -- Subsidy Repayment Fact Sheet
07 CFR 1950.105 Subpart J -- (Reserved)
07 CFR 1950.105 Subpart K -- Predetermined Amortization Schedule System
(PASS) Account Servicing
1951.501 General.
1951.502 (Reserved)
1951.503 Authorities and responsibilities.
1951.504 Definitions and statements of policy.
1951.505 (Reserved)
1951.506 Processing payments.
1951.507 Maintaining borrower accounts.
1951.508 (Reserved)
1951.509 Occupancy surcharges.
1951.510 Payment application.
1951.511 (Reserved)
1951.512 Changes in the application of loan payments.
1951.513 Overpayments and refunds to borrowers.
1951.514 Recoverable and nonrecoverable cost charges.
1951.515 Promissory notes for borrowers who convert to PASS.
1951.516 (Reserved)
1951.517 Conversion from DIAS to PASS.
1951.518 Determining current loan balances for transfer.
1951.519 -- 1951.547 (Reserved)
1951.548 Exception authority.
1951.549 (Reserved)
1951.550 OMB control number.
Exhibit A -- (Reserved)
Exhibit B -- Occupancy Surcharge Payments
07 CFR 1950.105 Subpart L -- Servicing Cases Where Unauthorized Loan or
Other Financial Assistance Was Received -- Farmer Programs
1951.551 Purpose.
1951.552 Definitions.
1951.553 Policy.
1951.554 -- 1951.555 (Reserved)
1951.556 Initial determination that unauthorized assistance was
received.
1951.557 Notification to borrower.
1951.558 Decision on servicing actions.
1951.559 -- 1951.560 (Reserved)
1951.561 Servicing options in lieu of liquidation or legal action.
1951.562 -- 1951.567 (Reserved)
1951.568 Account adjustments and reporting requirements.
1951.569 Exception authority.
1951.570 -- 1951.599 (Reserved)
1951.600 OMB control number.
07 CFR 1950.105 Subpart M -- Servicing Cases Where Unauthorized Loan or
Other Financial Assistance Was Received -- Single Family Housing
1951.601 Purpose.
1951.602 Definitions.
1951.603 Policy.
1951.604 Categories of unauthorized SFH assistance.
1951.605 (Reserved)
1951.606 Initial determination that unauthorized assistance was
received.
1951.607 Notification to recipient.
1951.608 Decision on servicing actions.
1951.609 -- 1951.611 (Reserved)
1951.612 Servicing options in lieu of liquidation or legal action to
collect.
1951.613 -- 1951.617 (Reserved)
1951.618 Account adjustments and reporting requirements.
1951.619 Exception authority.
1951.620 -- 1951.649 (Reserved)
1951.650 OMB control number.
07 CFR 1950.105 Subpart N -- Servicing Cases Where Unauthorized Loan or
Other Financial Assistance Was Received -- Multiple Family Housing
1951.651 Purpose.
1951.652 Definitions.
1951.653 Policy.
1951.654 Categories of unauthorized assistance.
1951.655 (Reserved)
1951.656 Initial determination that unauthorized assistance was
received.
1951.657 Notification to recipient.
1951.658 Decision on servicing actions.
1951.659 -- 1951.660 (Reserved)
1951.661 Servicing options in lieu of liquidation or legal action to
collect.
1951.662 -- 1951.667 (Reserved)
1951.668 Servicing unauthorized assistance accounts.
1951.669 Exception authority.
1951.670 -- 1951.699 (Reserved)
1951.700 OMB control number.
07 CFR 1950.105 Subpart O -- Servicing Cases Where Unauthorized Loan(s)
or Other Financial Assistance Was Received -- Community and Insured
Business Programs
1951.701 Purpose.
1951.702 Definitions.
1951.703 Policy.
1951.704 -- 1951.705 (Reserved)
1951.706 Initial determination that unauthorized assistance was
received.
1951.707 Notification to recipient.
1951.708 Decision on servicing actions.
1951.709 -- 1951.710 (Reserved)
1951.711 Servicing options in lieu of liquidation or legal action to
collect.
1951.712 -- 1951.714 (Reserved)
1951.715 Account adjustments and reporting requirements.
1951.716 Exception authority.
1951.717 -- 1951.749 (Reserved)
1951.750 OMB Control number.
07 CFR 1950.105 Subparts P-Q -- (Reserved)
07 CFR 1950.105 Subpart R -- Rural Development Loan Servicing
1951.851 Introduction.
1951.852 Definitions and abbreviations.
1951.853 Loan purposes for undisbursed RDLF loan funds from HHS.
1951.854 Ineligible assistance purposes.
1951.855 -- 1951.858 (Reserved)
1951.859 Terms of loans.
1951.860 Interest on loans.
1951.861 -- 1951.865 (Reserved)
1951.866 Security.
1951.867 Conflict of interest.
1951.868 -- 1951.870 (Reserved)
1951.871 Post award requirements.
1951.872 Other regulatory requirements.
1951.873 -- 1951.876 (Reserved)
1951.877 Loan agreements.
1951.878 -- 1951.880 (Reserved)
1951.881 Loan servicing.
1951.882 Field visits.
1951.883 Reporting requirements.
1951.884 Non-Federal funds.
1951.885 Loan classifications.
1951.886 -- 1951.888 (Reserved)
1951.889 Transfer and assumption.
1951.890 Office of Inspector General and Office of General Counsel
referrals.
1951.891 Liquidation; default.
1951.892 -- 1951.893 (Reserved)
1951.894 Debt settlement.
1951.895 (Reserved)
1951.896 Appeals.
1951.897 Exception authority.
1951.898 -- 1951.899 (Reserved)
1951.900 OMB control number.
07 CFR 1950.105 Subpart S -- Farmer Program Account Servicing Policies
1951.901 Purpose.
1951.902 Policy.
1951.903 Authorities and responsibilities.
1951.904 -- 1951.905 (Reserved)
1951.906 Definitions.
1951.907 Notice of Loan Service Programs.
1951.908 (Reserved)
1951.909 Processing Primary Loan Service Programs Requests.
1951.910 (Reserved)
1951.911 Preservations loan service programs.
1951.912 Mediation.
1951.913 Servicing Net Recovery Buyout Recapture Agreements.
1951.914 Servicing of Accounts Restructured Under Primary Loan
Service Programs.
1951.915 (Reserved)
1951.916 Exception authority.
1951.917 FmHA Debt Restructuring Support Teams (DRST).
1951.918 FmHA Debt Restructuring Assessment Teams (DRAT).
1951.919 -- 1951.949 (Reserved)
1951.950 OMB control number.
Exhibit A -- Notice of the Availability of Loan Service Programs for
Delinquent Farm Borrowers
Exhibit B -- Noncash Credit for Farmer Program Loan When Establishing
Recapture Receivable
Exhibit C -- Net Recovery Buy Out Recapture Agreement
Exhibit D -- Shared Appreciation Agreement
Exhibit E -- Notification of Request of Mediation or Meeting of
Creditors
Exhibit F -- Notification of Offer to Restructure Debt
Exhibit G -- Deferral, Reamortization, and Reclassification of
Distressed Farmer Program (FP) Loans for Softwood Timber Production (ST)
Loans
Exhibit H -- Primary Loan Service Programs (Farm Debt Restructure and
Conservation Easements)
Exhibit I -- Guidelines for Determining Adjustments for Net Recovery
Value of Collateral
Exhibit J -- The Debt and Loan Restructuring System (DALR$)
Exhibit K -- Notification of Consideration for Preservation Loan
Service Programs
Exhibit L -- Homestead Protection Program Agreement
Exhibit M -- Homestead Protection Program Letter
Exhibit N -- Leaseback/Buyback Agreement
Exhibit O -- Notice of Availability of Leaseback/Buyback
Exhibit P -- Notice of Availability of Leaseback/Buyback
Exhibit Q -- Waiver of Leaseback/Buyback Rights
Authority: 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR 2.23; 7 CFR 2.70.
Editorial Note: Some of the exhibits referenced in this Part 1951
are not published in the Code of Federal Regulations. Exhibits are
available in any FmHA office.
07 CFR 1950.105 Subpart A -- Account Servicing Policies
Source: 50 FR 45764, Nov. 1. 1985, unless otherwise noted.
07 CFR 1951.1 Purpose.
This subpart sets forth the policies and procedures to use in
servicing Farmer Program loans (FP) which include Softwood Timber (ST),
Operating Loan (OL), Farm Ownership (FO), Soil and Water (SW),
Recreation Loan (RL), Emergency Loan (EM), Economic Emergency Loan (EE),
Special Livestock Loan (SL), Economic Opportunity Loan (EO), and Rural
Housing Loan for farm service buildings (RHF) accounts. 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 subpart K of part 1951 of this chapter. 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.
(52 FR 26134, July 13, 1987)
07 CFR 1951.2 Policy.
Borrowers are expected to pay their debts to the Farmers Home
Administration (FmHA) 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).
07 CFR 1951.3 Authorities and responsibilities.
County Supervisors and District Directors are responsible for
servicing all FmHA 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.
1951.4 -- 1951.5 (Reserved)
07 CFR 1951.6 Handling payments.
(a) Payments on Rural Housing (RH) loans. Payments on RH loans will
be handled in accordance with subparts B and G of this part.
(b) Payments for other than RH, FO and SW loans. These payments will
be handled in accordance with part 1951, subpart B.
(c) Payments for FO and SW loans. (1) Payments made through the
County Office without direct payment coupons for FO and SW loans will be
handled in accordance with part 1951, subpart B.
(2) Payments for FO and SW individual loans made through the County
Office with Form FmHA 370-46A, Expanded Direct Payment Coupon, will be
handled as follows:
(i) County Supervisors may put FO and SW individual borrowers on the
Expanded Direct Payment Coupon system if the borrower only needs limited
credit counseling or only makes one annual installment payment per year
on the loan.
(ii) For new loans, the County Supervisor will indicate by checking
the appropriate block on Form FmHA 1940-1, ''Request For Obligation of
Funds,'' that for selected borrowers Expanded Direct Payment Coupons are
to be mailed to the County Office.
(iii) An existing loan borrower may be put on or taken off this
Expanded Direct Payment Coupon system by filling out Form FmHA 1951-34,
''Direct Payment Plan Change,'' in accordance with the Forms Manual
Insert (FMI) and entering it via the field office terminal system.
(iv) Payments must be made by check or money order payable to the
Farmer Home Administration. If a field office is on concentration
banking, the checks and/or money orders are deposited in the
concentrator bank. The coupons are forwarded directly to the Finance
Office in accordance with concentration banking procedures. If a field
office is not on concentration banking, the coupons and checks and/or
money orders are placed in one envelope and mailed to the Finance Office
with any other items being mailed that day.
(v) The Finance Office, upon receipt of the payment coupon and check
or money order, will credit the borrower's account with payment as of
the date the payment is received in the field office.
(vi) When the Finance Office received payment coupon number 10, a new
supply of coupons will be mailed to the County Office. All 12 payment
coupons should be used before using the new supply.
(3) Direct payment for FO and SW loans mailed directly to the Finance
Office by the borrower are handled as follows:
(i) The County Supervisor will select the FO and SW borrowers who, in
the Supervisor's opinion, are capable of making direct payments to the
Financing Office. The County Supervisor will not select borrowers who
(A) will need frequent credit counseling, (B) because of the lack of
education or other reasons, are not capable of assuming responsibility
for making payments directly to the Finance Office, or (C) have payments
directly assigned to FmHA, such as milk assignments. The fact that a
borrower does not maintain a checking account will not, however, prevent
selection for direct payments.
(ii) For new loans the County Supervisor will indicate on Form FmHA
1940-1 the selected borrowers by checking the appropriate box. The
payment coupon packet will be forwarded to the County Office at the time
the loan is obligated. It will be delivered to the borrower at loan
closing, at which time the use of the payment coupons will be explained
to the borrower.
(iii) For Assumption Agreements, the packet will be mailed to the
borrower at the time the Assumption Agreement is processed in the
Finance Office.
(iv) The payment coupons and pre-addressed envelopes, together with
instructions on how to use the coupons and a record keeping card, will
be asembled into an envelope in which the borrower may retain the
records. The Form FmHA 370-46, ''Direct Payment Coupon,'' will be
numbered 1-12, even though the borrower may have less or more than 12
payments scheduled during the year.
(v) The Finance Office, upon receipt of Form FmHA 370-46 and a check
or money order, will credit the borrower's account with payment as of
the date the payment is received by the Finance Office.
(vi) When the Finance Office receives Form FmHA 370-46 for payment
number 10, a new supply of Forms FmHA 370-46 will be prepared and mailed
to the borrower. All 12 copies of Form FmHA 370-46 should be used
before using the new supply.
(vii) If a borrower is on direct payment and receives a subsequent FO
or SW loan, the Finance Office will send a set of Form FmHA 370-46 with
''FO'' or ''SW'' in the loan number block. This indicates the borrower
has more than one loan of the particular type. The borrower will be
instructed by the County Office to send a Form FmHA 370-46 showing the
amount and a check or money order for the total payment.
(d) County Office handling of direct payment accounts. Form FmHA
1905-1, ''Management System Card -- Individual,'' and Form FmHA 1905-1,
''Management System Card -- Individual (Rural Housing only),'' will be
used in the County Office Management System Box. These forms and the
transaction records will be maintained as prescribed in FmHA Instruction
1905-A (available in any FmHA office). In addition, an orange signal
will be placed to the left of Position A on Form FmHA 1905-1 to denote
that the borrower is on the direct payment system. If a borrower fails
to make payments as agreed, or becomes delinquent in taxes or insurance
so that it is necessary for FmHA to pay taxes or insurance by voucher,
the County Supervisor may request the Finance Office to remove the
borrower from the direct payment method. If this decision is made, the
County Supervisor will contact the borrower and collect the remaining
supply of Forms FmHA 370-46 which will be destroyed. The borrower will
be informed that payments after that date should be made to the County
Office. If at a later date the borrower is making payments on schedule,
the County Supervisor may request the Finance Office to put the borrower
back on the direct payment method and provided a new set of Forms FmHA
370-46. These changes are made by filling out Form FmHA 1951-34 in
accordance with the FMI and entering it via the field office terminal
system.
(e) Account servicing actions retained by the County Office. For
those borrowers who make direct payments to the Finance Office, the
County Supervisor will continue to handle the following servicing
actions:
(1) Any regular payments a borrower is to make prior to receiving the
packet of payment coupons will be made through the County Office in the
usual manner.
(2) All payments other than regular payments will be made through the
County Office in the usual manner.
(3) The County Supervisor will counsel with borrowers concerning
questions they have about their account. If assistance is needed, the
County Supervisor will contact the State or Finance Office as
appropriate.
(4) If an uncollectible item is received, the Finance Office will
reverse the amount from the borrower's account. The uncollectible item
with a transmittal memorandum will be sent to the County Office. The
County Office will return the uncollectible check to the borrower after
it is fully redeemed. The borrower will make payment by sending a new
check and a new payment coupon to the Finance Office. There will also
be a noninterest accruing administrative cost charged to the borrower's
account for uncollectible items due to insufficient funds. (The amounts
of any such administrative charges are available from any FmHA office.)
Therefore, the borrower's payment for the uncollectible item should be
for the regular payment amount plus the administrative cost.
(f) Borrowers receiving other type loans. If a borrower is on direct
payment and subsequently receives another type loan, the original loan
may remain on the direct payment system.
(g) Borrowers with RRH, RCH, or LH, loans on a Predetermined
Amortization Schedule System (PASS). Loans or PASS will be administered
under Subpart K of this part.
(h) Borrowers with RRH, RCH, LH, RHS and SO loans administered under
this subpart. RRH, RCH, LH, RHS and SO loans on a daily interest
accrual system (DIAS) for applying payments administered under this
subpart are subject to the direct billing and payment requirements in
1951.506 of Subpart K of this part. All payments are due on the first
day of the months following the date shown on the promissory note,
except loans with principal and interest bonds issued before May 1,
1985. All payments are considered delinquent for reporting purposes on
the 15th day of the month following the payment due date if the unpaid
portion of the payment exceeds $15.00.
(50 FR 45764, Nov. 1, 1985, as amended at 52 FR 29175, Aug. 6, 1987;
54 FR 46844, Nov. 8, 1989)
07 CFR 1951.7 Accounts of borrowers.
(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 FmHA 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 FmHA 451-27, ''Review of Collection-Only Accounts.''
(ii) District Directors will establish with County Supervisors a
systematic plan for collecting the accounts or initiating appropriate
debt settlement actions during the year.
(iii) County Supervisors will include in their monthly calendars
plans for servicing these accounts.
(iv) On visits to County Offices, District Directors will review the
progress being made by County Supervisors to insure that goals will be
reached.
(v) For collection-only accounts in District Offices, the State
Director will review the accounts as required in paragraphs (b)(4)(i)
through (b)(4)(iv) of this section and the District Director will
service the account.
(c) Notifying borrowers of payments. County Supervisors will notify
borrowers of the dates and amounts of payments that have been agreed on
for all types of accounts. Form FmHA 451-3, ''Reminder of Payment to be
Made,'' or similar form approved by the State Director, will be used.
The form will not contain any language indicating that an account is
delinquent. These notices will be timed to reach borrowers immediately
before the receipt of the income from which the payments should be made
or before the installment due date on the note, as appropriate, and may
include other pertinent information such as a reference to agreements
reached during the year and sources of income from which the payment was
planned. Such notices need not be sent when frequent payments are
scheduled and the borrower customarily makes the payments when due.
(d) Subsequent servicing. (1) When a Farmer Program borrower fails
to make a payment as agreed, the County Supervisor will notify the
borrower in accordance with subpart S of part 1951 of this chapter.
(2) When a borrower other than a Farmer Program borrower fails to
make a payment as agreed, the County Supervisor will contact the
borrower to discuss the reasons why the payment was not made and to
develop specific plans, for making the payment. Form FmHA 451-32,
''Notice of Payment Due,'' may be used to notify borrowers who make
payments directly to the Finance Office that their payment has not been
received. Form FmHA 450-13, ''Request for Assignment of Income From
Trust Property,'' may be used when other methods of loan collection fail
and debt repayment is possible from trust income. In the event the
borrower refuses to make the payment when income is available, or if it
is determined that income will not be available to make the payment
within a reasonable length of time and will not be available to make
future payments, action will be taken to protect the Government's
interest in accordance with applicable regulations. Followup actions of
subsequent servicing will be noted on appropriate Management System
Cards.
(e) Maintaining records of accounts in County Offices. Records of
the accounts of FmHA borrowers will be maintained in the County Office
on Forms FmHA 1905-1, FmHA 1905-5, FmHA 1905-10, ''Management System
Card-Association,'' as provided in FmHA Instruction 1905-A (available in
any FmHA office).
(f) Inquiry for Multiple Family Housing (MFH) loans. Inquiry for all
RRH, RCH, LH, RHS and SO loans and grants will be made through field
terminals using procedures in the ''MFH Users Procedures'' manual or by
contacting the MFH Unit in the Finance Office.
(g) Inquiry for other than Multiple Family Housing (MFH) loans.
Inquiry for these loan programs will be made through field terminals
using procedures in the ''Automated Discrepancy Processing System
(ADPS)'' manuals.
(h) Loan Summary Statements. Upon request of a borrower, FmHA issues
a loan summary statement that shows the account activity for each loan
made or insured under the Consolidated Farm and Rural Development Act.
The field office will post on the bulletin board a notice informing the
borrower of the availability of the loan summary statement. See Exhibit
A for a sample of the required notice.
(1) The loan summary statement period is from January 1 through
December 31. The Finance Office forwards a copy of Form FmHA 1951-9,
''Annual Statement of Loan Account,'' to field offices to be retained in
borrower files as a permanent record of borrower activity for the year.
(2) Quarterly Forms FmHA 1951-9 are retained in the Finance Office on
microfiche. These quarterly statements reflect cumulative data from the
beginning of the current year through the end of the most recent
quarter. If a borrower requests a loan summary statement with data
through the most recent quarter, county supervisors may request copies
of these quarterly or annual statements by sending Form FmHA 1951-57,
''Request for Loan Summary Statement,'' to the Finance Office.
(3) When a loan summary statement is requested by the borrower, the
field office will copy the applicable annual or quarterly Forms FmHA
1951-9. A copy(ies) of Form FmHA 1951-9; a copy of Form FmHA 1951-58,
''Basis for Loan Account Payment Application for Farmer Program Loans;''
and a copy of the promissory note showing borrower installments will
constitute the loan summary statement provided to the borrower.
(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)
07 CFR 1951.8 Types of payments.
(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(j) 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 (d) 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 (FmHA 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.
(50 FR 45764, Nov. 1. 1985, as amended at 51 FR 4137, Feb. 3, 1986;
53 FR 35717, Sept. 14, 1988)
07 CFR 1951.9 Distribution of payments when a borrower owes more than
one type of FmHA loan.
''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
FmHA 431-2, ''Farm and Home Plan'') and Form FmHA 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 FmHA 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 FmHA 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 FmHA 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 FmHA 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 FmHA 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 will be available for payment on FmHA debts will
be sufficient to pay the installments scheduled for the year under the
first and second priorities, collections may be distributed so as to
avoid unnecessary delinquencies, and regular payments derived from
rental or lease of real estate security after approval of foreclosure or
voluntary conveyance will be distributed to the real estate lien of the
highest priority.
(3) Payments will be distributed differently than the priorities
provided in this section if accounts are out of balance or a different
distribution is needed to protect the government's interest.
(4) Any income received from the sale of softwood timber on marginal
land converted to the production of softwood timber must be applied on
the ST loan(s).
(b) Distribution of extra payments. Extra payments will be
distributed first to the FmHA loan having highest priority of lien on
the security from which the payment was derived. When the payment is in
excess of the unpaid balance of the FmHA lien having the highest
priority, the balance of such payment will be distributed to the FmHA
loan having the next highest priority.
(c) Application of payments. After the decision is reached as to the
amount of each payment that is to be distributed to the different loan
types, application of the payment will be governed by 1951.10 or
1951.11 of this subpart as appropriate.
(50 FR 45764, Nov. 1, 1985, as amended at 52 FR 26134, July 13, 1987;
53 FR 35717, Sept. 14, 1988)
07 CFR 1951.10 Application of payments on production type loan
accounts.
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 FmHA 431-2) and Form
FmHA 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 installments on loans previously made fall due before the
installment on the loan for the current year's operations or when such
loans are delinquent and it is anticipated that sufficient income will
be received to meet the installment on the current year's operations
when due, collections may be applied first to installments on loans made
in previous years.
(ii) To accounts having the oldest delinquencies, or if no
delinquencies, to the oldest unpaid account, except that the amount
available for payment on OL and EM loan accounts will be prorated
between the two accounts on the basis of:
(A) The delinquent amount owed on each, or
(B) The total amount owed on each if there are no delinquencies.
(2) Non-farm income and payments derived from the sale of real estate
security, will be applied to the earliest account secured by the
earliest lien covering such security. The amount to be applied to
principal will be applied to the final unpaid installment(s).
(3) On partial refunds of loan advances, the amount to be applied to
the principal will be applied to the final unpaid installment on the
note which evidences such advance; however, a refund of an advance for
current farm and home expenses repayable within the year may be applied
to the principal on the first unpaid installment on such note as a
regular payment.
(4) Total refunds of loan advances will be applied to the notes which
evidence such advances.
(5) When nonfarm assets have been sold, the payments will be applied
as set out in 1945.156(b)(3) of subpart D of part 1945 of this chapter
if they were sold as a condition for EM loan assistance.
(6) In applying payments from sources other than those in paragraphs
(a)(2), (3), and (4) of this section the borrower has the right to
select the loan account or accounts on which such payments will be
applied. In the absence of the borrower's selection, such payments
generally will be applied in the following order:
(i) To accounts with small balances, including recoverable costs.
(ii) To accounts with the oldest unsecured note(s).
(iii) To accounts with the oldest delinquencies.
(iv) To accounts with the oldest secured note or notes.
(7) Employees receiving collections are authorized to make exceptions
to paragraphs (a)(1), (2), and (6) of this section when it is necessary
to apply a part of a payment to delinquent accounts to prevent the
Federal Statute of Limitations from being asserted as a defense in suits
on FmHA claims.
(b) Payments in full. Errors of a significant amount in computation
or collection will be called to the attention of the collection official
by the Finance Office. The borrower's note will not be returned until
the balance on the loan account is paid in full. Claims by or on behalf
of the borrowers that the amounts owed have been computed incorrectly
will be referred to the Finance Office.
(50 FR 45764, Nov. 1, 1985, as amended at 53 FR 35717, Sept. 14,
1988; 54 FR 46844, Nov. 8, 1989)
07 CFR 1951.11 Application of payments on real estate accounts.
(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 FmHA 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 FmHA 451-2, ''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 FmHA office.)
(ii) Amounts paid on direct loan accounts will be credited to the
borrower's account as of the date of Form FmHA 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 FmHA 451-2 or for direct
payments the date payment is received in the Finance Office, and will be
applied in the following order:
(A) Advances from the insurance funds as shown on the latest Form
FmHA 389-404, ''Analysis of Accounts Maturing.'' (If the collection is
intended for final payment of the loan, or to pay the insurance account
in connection with an assumption agreement, the collection will be
applied first to the interest accrued on the advance to the date of the
payment.)
(B) Principal advanced from the insurance fund.
(C) Unamortized costs.
(D) Amount due for amortized costs for taxes and insurance.
(E) Unpaid loan insurance charges, including the current year's
charge, when applicable.
(F) First to a portion of any interest which accrues during the
deferral period, second to accrued interest to the date of the payment
on the note account and then to the principal balance of the note
account in accordance with the terms of the note.
(2) Extra payments and refunds will be credited to the borrower's
note account as of the date of Form FmHA 451-2 and will be applied first
to a portion of any interest which accures during the deferral period,
second to interest accrued to the date of the receipt and third to
principal in accordance with the terms of the note. The amount to be
applied to principal will be applied to the final unpaid installment(s).
Extra payments and refunds will not affect the schedule status of a
borrower except indirectly in connection with the amortization of a
direct loan.
(3) The Finance Office will remit final payments promptly to lenders.
Other collections (regular, extra, and refunds) applied to a borrower's
insured note will be accumulated until the annual installment due date,
and will be remitted along with any advances from the insurance fund to
the lender within 30 days after the installment due date. All payments
to a lender will be credited first to interest to the date of the
Treasury check and then to principal. Since the application of a
payment to a borrower's account with the Government and the Government's
account with a lender is of a different effective date, the balance owed
by a borrower to the government and by the Government to a lender
ordinarily will not be the same.
(50 FR 45764, Nov. 1, 1985, as amended at 54 FR 46845, Nov. 8, 1989)
07 CFR 1951.12 Changes in the application of loan payments.
(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 FmHA
loan and the canceled note or notes have been returned to the borrower.
(b) Form FmHA 1951-7, ''Request for Change in Application.'' Requests
for changes in application of payments will be made on Form FmHA 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 FmHA 1951-7 and forward it to
the Finance Office. The Finance Office will send Form FmHA 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 FmHA
451-8, ''Journal Voucher for Loan Account Adjustments,'' will be
prepared. Form FmHA 451-26 will be forwarded to the County Office to
show the reapplication.
(2) When necessary, the Finance Office will correct Form FmHA 451-2
as prepared by the County Office.
(50 FR 45764, Nov. 1, 1985, as amended at 54 FR 18883, May 3, 1989)
07 CFR 1951.13 Overpayments and refunds.
(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.
07 CFR 1951.14 Recoverable and nonrecoverable cost charges.
(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 FmHA 451-26, to the County
Office when the recoverable cost charge is processed.
07 CFR 1951.15 Return of paid-in-full or satisfied notes to borrower.
(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 withdrawn and returned to the borrower even after satisfaction
of the judgment. Therefore, no effort will be made to obtain and return
such notes except on the written request of the judgment debtor or
debtor's attorney. Such requests will be referred to the Office of the
General Counsel (OGC).
(e) Debt settlement case. See subparts B or C of part 1956 of this
chapter for the handling of notes in debt settlement cases.
(f) Lost notes. (1) All promissory notes dated on or after 11-1-73
are held in the County Office. A few notes (with the exception of OL
notes) are still held by investors. If a note dated prior to 11-1-73
cannot be located in the County Office and it is needed for servicing
the case, the County Supervisor will write a memorandum to the Finance
Office explaining why the note is needed. The request should give the
name and case number of the borrower, date and original amount of the
loan, type of loan and loan code.
(2) If a promissory note is lost in the County Office and it is
needed for servicing a case, the State Director may authorize the County
Supervisor to execute an appropriate affidavit regarding the lost note.
The form of such an affidavit will be provided by OGC.
(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)
07 CFR 1951.16 Other servicing actions on real estate type loan
accounts.
(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 installments on the
note and other charges due through the same date. Such a borrower will
be ahead of schedule or behind schedule when the sum of such regular
payments is larger or smaller, respectively, than the sum of such
installments on the note and other charges.
(c) Real estate payments. A borrower may make regular payments ahead
of schedule at any time and use them later to forego payments or to
supplement the amount available during any year for payment on the
annual installment on the note and other charges. Refunds and extra
payments will not be used in this way.
1951.17 -- 1951.24 (Reserved)
07 CFR 1951.25 Review of limited resource FO and OL loans.
(a) Frequency of reviews. OL and FO 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 FmHA, 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 or FO 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 borrower that the interest rate will be increased unless the
unplanned purchases cease or unless the borrower provides information in
a timely manner. Whenever it appears that the borrower has a
substantial increase in income and repayment ability or ceases farming,
either the interest rate may be increased to the current rate for FO or
LO loans, as applicable, or the borrower will be graduated from the
program as provided in Subpart F of this part.
(4) The County Office will be responsible for scheduling and
completing the reviews.
(5) Borrowers who have received a deferral under Subpart S of this
part will not have the interest rate increased on their limited resource
loans during the deferral period.
(c) Processing. (1) If, after the review, the interest rate is to
remain the same, no further action needs to be taken.
(2) When the interest rate is increased to the current rate, the loan
will be recorded as a regular loan and will no longer be considered a
limited resource loan. The borrower must be notified in writing at
least 30 days prior to the date of the change. Exhibit B of this
subpart may be used as a guide. The effective date of the change in
interest rate will be the effective date on Exhibit B. The borrower
must be informed of the following for each loan:
(i) The authorization for the change,
(ii) Reason for change (repayment ability, etc.)
(iii) The effective date and rate of the increase in interest,
(iv) Amount of the new installments and dates due,
(v) Right to appeal.
(3) It is not necessary to obtain a new promissory note for this
change in interest rate.
(50 FR 45764, Nov. 1, 1985, as amended at 53 FR 35717, Sept. 14,
1988; 56 FR 3395, Jan. 30, 1991)
1951.26 -- 1951.49 (Reserved)
07 CFR 1951.50 OMB control number.
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.
(52 FR 26137, July 13, 1987)
07 CFR 1951.50 Exhibits to Subpart A
Editorial Note: Exhibit E is reserved and Exhibits C-1, C-2, D, F,
and G are not published in the Code of Federal Regulations.
07 CFR 1951.50 Pt. 1951, Subpt. A, Exh. A
07 CFR 1951.50 Exhibit A -- Notice to FmHA Borrowers
FmHA borrowers with farmer program and community program loan types
made under the Consolidated Farm and Rural Development Act may request a
loan summary statement which shows the calendar year account activity
for each loan. Interested borrowers may request these statements
through their local FmHA office.
(54 FR 10270, Mar. 13, 1989)
07 CFR 1951.50 Pt. 1951, Subpt. A, Exh. B
07 CFR 1951.50 Exhibit B -- Notice of Change in Interest Rate
--
(insert borrower's address)
Re:
Fund code
Loan number
Kind code
Dear (insert borrower's name and case number): Your promissory note
dated ------ , for the original amount of ------ dollars ($ ------ )
provides for a change in interest rate for a limited resource loan in
accordance with the Farmers Home Administration regulations.
Effective (insert date) the interest rate on this loan will be ----
percent ( %) on the unpaid principal balance. Your installment due
January 1, 19 , will be ------ dollars ($ ------ ). This change in
interest rate is for the reason indicated below.
Increase in repayment ability as per Farm and Home Plan dated ------
.
(insert reason if other than above for increase in interest rate).
You may appeal this action by writing to (hearing officer),
(address), within 30 calendar days of the date of this letter, giving
the reason why you believe this matter should be decided differently.
This time may be extended if you cannot notify the hearing officer
within 30 days for reasons beyond your control.
(56 FR 3396, Jan. 30, 1991)
07 CFR 1951.50 Exhibit C-1 -- Notice of the Availability of the Special Debt Set-Aside
07 CFR 1951.50 Exhibit C-2 -- Confirmation of Appointment to Discuss Special Debt Set-Aside
07 CFR 1951.50 Exhibit D -- Examples of a Farm Ownership (FO) and Limited Resource Operating Loan (OL) Rescheduled With Set-Aside Approved on October 25, 1984
07 CFR 1951.50 Exhibit E -- (Reserved)
07 CFR 1951.50 Exhibit F -- Agreement for Special Set-Aside of a Portion of a Farmer Program Loan
07 CFR 1951.50 Exhibit G -- Notice to Borrowers Who Received a Pretermination Notice
07 CFR 1951.50 Subpart B -- Collections
Source: 53 FR 26591, July 14, 1988, unless otherwise noted.
07 CFR 1951.51 General.
This subpart prescribes the policies and procedures of the Farmers
Home Administration (FmHA) for collection of loan payments and
depositing payments through the Concentration Banking System (CBS).
Under CBA, FmHA field offices select a local financial institution to
maintain a Treasury Limited Account (TLA) for depositing FmHA loan
collections. Deposits to these accounts are withdrawn daily by the
concentrator bank for transfer to the Treasury. Under these procedures,
the local FmHA office will deposit the daily office collections in a
participating local financial institution and report the amount
deposited to a data service facility that is under contract to the
concentrator bank. The data service facility will inform the
concentrator bank of the amount available in each local financial
institution and the concentrator bank will use this information to
transfer the funds to the concentrator bank and then to the Treasury.
1951.52 -- 1951.53 (Reserved)
07 CFR 1951.54 Authority.
The provisions of this subpart are applicable to FmHA employees who
are authorized to receive collections. Employees listed in Exhibit B of
this subpart (available in any FmHA office) are hereby authorized to
receive, receipt for, exchange for money orders or bank drafts, and
transmit collections or deposit collections in a TLA.
07 CFR 1951.55 Receiving and processing collections.
FmHA offices receive borrower payments either through the mail or in
person in the form of checks, money orders, and cash. Payments are
recorded on the appropriate accounting forms which are Form FmHA 451-2,
Form FmHA 1944-9, Form FmHA 1951-55, or a payment coupon. Forms FmHA
451-2 and FmHA 1944-9 are used to transmit accounting information to the
Finance Office. Form FmHA 1951-55 is used to assemble payment
information which the District Offices use to transmit MFH account
information through field office terminals. In addition, the FmHA
office records payments on a management system card, a servicing card,
or a payment tracking form, as appropriate.
(56 FR 28038, June 19, 1991)
07 CFR 1951.55 Subpart C -- Offsets of Federal Payments to FmHA Borrowers
07 CFR 1951.101 General.
The Federal Claims Collection Act of 1966 as amended by the Debt
Collection Act of 1982 and the Deficit Reduction Act of 1984 provides
for the use of administrative, salary, and Internal Revenue Service
(IRS) offsets by government agencies, including Farmers Home
Administration (FmHA), to collect delinquent debts. Any money that is
or may become payable from the United States to an FmHA borrower or
other individual or entity indebted to the Agency may be subject to
offset for the collection of a debt owed to FmHA. In addition, money
may be collected from the debtor's retirement payments for delinquent
amounts owed to FmHA if the debtor is an employee or retiree of a
Federal agency, the U.S. Postal Service, the Postal Rate Commission, or
a member of the U.S. Armed Forces or the Reserve. Amounts collected
will be processed as regular payments and credited to the borrower's
account. FmHA will process requests by other Federal agencies to offset
amounts otherwise payable to FmHA in accordance with 1951.102 of this
subpart.
(55 FR 11005, Mar. 26, 1990)
07 CFR 1951.102 Standards and procedures for administrative offset
requests received by FmHA.
(a) Requests made by other Federal agencies to FmHA to offset moneys
to be paid to FmHA's debtors, including borrowers, contractors and
grantees, must contain a written statement of the debt (including, where
applicable, a separate statement of principal owed and overdue interest
owed as of a given date, and the amount of interest currently running)
owed by the debtor to the requesting agency, the due date of the debt, a
description of the basis for the debt, and a certification that all of
the applicable requirements of 31 U.S.C. 3716 and 4 CFR Part 102 have
been met. Requests for offset will be sent to the appropriate FmHA
State Director.
(b) Upon receipt of a request satisfying the requirements of
paragraph (a) of this section, FmHA will effect an administrative offset
from moneys payable to the debtor, giving written notice to the debtor,
unless the offset might result in substantial interference with, or
defeat the purpose of FmHA's programs. For example, where the payment
sought to be offset is a loan, offset will not be made since the debtor
would not be able to use the loan funds for the intended purpose.
Similarly, where the payment sought to be offset is an advance payment
under a contract to purchase goods, FmHA will not make the requested
offset because the debtor would in all likelihood refuse to furnish the
goods. However, where the payment is being made to compensate for past
performance, the offset will be effected. For example, where the
payment sought to be offset is for goods already furnished, the offset
could be made without conflict with the purpose of the payment.
(c) If FmHA determines not to effect an offset, a written statement,
including the reasons for the refusal, will be sent to the requesting
agency and a copy of that statement will be sent to the debtor.
(55 FR 11005, Mar. 26, 1990)
07 CFR 1951.103 Procedures for FmHA-initiated administrative offset.
(a) This section explains the procedures to be followed to use
administrative offset to collect amounts owed by a debtor to FmHA from
payments to be made to the debtor by another Federal agency or from
retirement payments to be made to a Federal or military retiree.
(b) Before another Federal agency can be asked to offset any amount,
the debtor must have been given at least 30 days notice on FmHA Form
Letter 1951-C-1, must have been afforded the rights set out in this
section and, if the debtor is an FmHA borrower, the borrower's account
must have been accelerated. A delinquent amount does not have to be
reduced to judgment or be undisputed before offset can be used, and the
payment does not have to be covered by an FmHA security instrument.
(c) Offset will not be used if, according to State law, the receipt
of payments by use of administrative offset after acceleration has the
effect of reinstating the debtor's account. A State supplement will be
issued with the advice of the Office of General Counsel (OGC),
explaining whether offset can be used in each State. Sums received
through the use of administrative offset are not considered ''payments''
as that term is used in 7 CFR 1955.15(d)(3).
(d) Administrative offset will be used only where it is feasible.
Administrative offset is not feasible where, for example, the cost to
the Government of collecting by offset will exceed the amount
collectible.
(e) Administrative offset will be used only where it is in the best
interests of the Government. It will not be used where it would
substantially interfere with, or defeat, the purpose of the paying
Agency's program. Examples of this situation are listed in 1951.102(b)
of this subpart. As another example, FmHA will not offset the initial
payment for planting expenses under the Conservation Reserve Program
(CRP) since an offset would possibly result in the land not being
planted for conservation purposes; conversely, it will offset
subsequent CRP payments which represent rental income to the debtor. In
general, income supplementation and enhancement program payments by the
Agricultural Stabilization and Conservation Service (ASCS) will be
subject to offset. The National Office will provide guidance to FmHA
County Supervisors as needed on the kinds of payments under other major
Federal programs that will not be subject to offset.
(f) The use of administrative offset is limited when debtors have
filed for bankruptcy. Before administrative offset in sought for a
debtor who is subject to a pending bankruptcy, guidance with respect to
each particular case will be sought from the OGC. The Agency will not
request administrative offset for debts which have been discharged in
bankruptcy.
(g) FmHA will not use offset to collect a debt more than 6 years
after the Government's right to collect the debt first accrued, unless
facts material to FmHA's right to collect were not known and could not
reasonably have been known by the FmHA official(s) charged with the
responsibility of servicing the debtor's account. Offset may then be
pursued. In no event, however, may administrative offset under this
subpart be used against a claim which has been accrued for more than 10
years. Prior to collecting a claim by administrative offset after the 6
year period for bringing a civil action on the claim has expired, the
loan servicing official will obtain the concurrence of the OGC to pursue
the offset.
(h) FmHA will not use administrative offset with respect to debts
owed by any State or local government; nor with respect to payments
made under the Social Security Act, the Internal Revenue Code of 1954
(IRS debts may be offset under the IRS offset procedure in
1951.121-1951.127 of this subpart), or the tariff laws of the United
States.
(55 FR 11005, Mar. 26, 1990, as amended at 55 FR 25820, June 25,
1990)
07 CFR 1951.104 Procedures for FmHA-initiated offset.
(a) The use of administrative offset will be initiated by giving
notice to the debtor of the intention to use administrative offset.
Such notice shall advise the debtors of their rights to:
(1) Inspect and copy their records subject to the copying costs and
hours set forth in FmHA Instruction 2018-E (available in any FmHA
office);
(2) Avoid offset by paying the debt in full within 30 days;
(3) Present any reasons why administrative offset should not be used,
including that the amount claimed to be owed is in error, that the use
of administrative offset would create an extreme hardship, or that it
would be unfair to the debtor for some other reason;
(4) Have a meeting with the decision-making official; and
(5) Obtain administrative appeal of the decision to use
administrative offset.
(b) The debtor will be given 15 calendar days after receipt of the
Notice to ask to inspect and/or copy his or her records, and 30 calendar
days after receipt of the notice in which to:
(1) Make a written submission pursuant to paragraph (a)(3) of this
section, or
(2) Request a meeting at which the borrower can make such a
submission and/or orally raise any matters relevant to the proposed use
of administrative offset to collect the amount owed, or
(3) Request immediate administrative appeal of the decision to use
administrative offset.
(c) When a debtor cannot, for a good reason, meet the time limits set
out in this section, FmHA can, in its discretion, extend the time.
(d) FmHA Form Letter 1951-C-1 will be used to give the notice
required by this section. Notice will be sent to the debtor, by
certified mail, return receipt requested, at the debtor's last known
address. A duplicate copy will be mailed to the debtor, on the same
day, by ordinary mail. The date of signing of the certified mail
receipt will be used to compute the periods for response or, if the
certified mail receipt in not signed and returned, the timeframe will
commence with the tenth day after the date on which the duplicate was
sent.
(e) If the debtor responds by asking for a meeting, it will be
scheduled as set forth in subpart B of part 1900 of this chapter, and
the debtor will be promptly advised in writing of the date, time, and
place. If the response also asks to inspect and/or copy records, the
response will give the debtor an opportunity, within 10 working days
after receipt of the request, to inspect and/or copy those records. The
letter will explain where the records are and when the debtor can
inspect and/or copy them. The meeting will be scheduled not less than
10 working days after the date on which the debtor is allowed to inspect
and/or copy his or her records. At the meeting the debtor will be given
an opportunity to present any evidence or arguments as to why
administrative offset should not be used.
(f) If the debtor asks to inspect and/or copy records, but does not
ask for a meeting, the debtor should, at the time of record inspection
and/or copying, again be offered a meeting so that he or she will have
an opportunity to discuss the contents of those records, or any other
relevant matter, before FmHA actually begins to use administrative
offset. This offer may be made orally and will be documented in the
debtor's case file.
(g) Extreme hardship or unfairness to the debtor in using
administrative offset are matters that are within the discretion of the
FmHA County Supervisor or other decision-making official. The reasons
for decisions on claims of extreme hardship or unfairness will be
documented in the debtor's case file. Substantial medical expenses, or
the lack of funds (other than those to be offset) for essential family
living expenses, especially when the debtor's family includes dependent
minor children, are examples of situations in which a decision not to
use administrative offset may be justified. Extreme hardship exemptions
are intended to be limited to providing food, shelter and medical care
for the borrower's immediate family. In its discretion, FmHA may, as a
condition to declining to use administrative offset because of extreme
hardship or unfairness, require the debtor to enter into a written
agreement concerning payment of the indebtedness and can require
adequate security for such agreement.
(h) FmHA will respond promptly to all written or oral requests or
presentations made by debtors under this section. Decisions to be made
after a meeting with a debtor will be made promptly, and will be
promptly communicated in writing to the debtor. If a request not to use
offset is denied, either in response to a written submission or to
matters raised at a meeting, the letter communicating that decision will
also advise the debtor of his or her rights to administrative appeal.
Other Federal agencies will not be requested to offset amounts before
FmHA has mailed or hand delivered a letter to the debtor communicating
its decision in response to any matters raised at a meeting or in
response to a submission in writing.
(i) Decisions to use administrative offset are appealable under
subpart B of part 1900 of this chapter. If the debtor is an FmHA
borrower who has not had another opportunity to appeal FmHA's
determinations on the indebtedness itself, the appeal will include
consideration of any issues concerning the debt that the debtor wishes
to raise.
(j) Any borrower who had funds offset prior to December 1987, or who
on the effective date of this subsection is still subject to an
outstanding notice of offset (i.e., FmHA Form Letter 1951-3 has been
sent and not retracted as of the effective date of this regulation) will
be notified that he or she will be permitted to request an
administrative hearing in accordance with the provisions of this
regulation. The borrower may request a hearing if the borrower believes
the previous offset actions by FmHA is contrary to this Administrative
offset regulation.
(55 FR 11006, Mar. 26, 1990, as amended at 55 FR 25820, June 25,
1990)
07 CFR 1951.105 Procedures for taking funds by administrative offset.
(a) Requesting administrative offsets. Administrative offset
requests to other Federal agencies will be initiated by completing FmHA
Form Letter 1951-C-3 and sending it to any Federal agency likely to have
money scheduled for payment to the debtor. The debtor and the FmHA
State Director, will be sent a copy of this form letter when it is sent
to the other Federal agency.
(b) Application of payments, refunds and overpayments for
administrative offsets. (1) Only amounts that are delinquent can be
collected by offset. Therefore, if an FmHA Form Letter 1951-C-3 is
submitted to another Federal agency which owes a debtor an amount in
excess of the FmHA delinquency, the excess will be remitted to the
debtor by the other Federal agency.
(2) Administrative offset payments will be processed in accordance
with Subpart B of this part, including depositing the payments in the
Concentration Banking System or sending the payments to a wholesale
lockbox bank. The offset payments will be applied to the debtor
accounts as regular payments. Under no circumstances will funds
collected under administrative offset be held in an escrow account.
(3) Refunds of amounts offset, plus interest, will be made within 45
days, pursuant to the provisions of 7 CFR 1951.13(b), if FmHA determines
that an amount should not have been offset or that the debtor has won an
administrative appeal. The ninety-day Treasury bill rate, as published
in Exhibit B to FmHA Instruction 440.1 (available in any FmHA office),
in effect on the date the amounts were offset by the creditor agency,
will be used to calculate interest payable to the debtor.
(4) The County Supervisor will record all borrowers referred for
and/or collected through administrative offset on Form FmHA 1951-16,
''Detail Report of Administrative Offset.'' The unpaid interest and
unpaid principal amounts referred for offset should be reported only one
time when first referred and obtained from FmHA Form Letter 1951-C-3.
Form FmHA 1951-16 will be filed in operational file B. At the close of
each quarter, the County Supervisor will consolidate the information
reported on Form FmHA 1951-16 into Form FmHA 1951-17, ''Consolidated
Report of Administrative Offset.'' The consolidated county report will
be forwarded to the State Administrative Officer within 5 days after the
end of each quarter (e.g., October 5, January 5, April 5, and July 5).
If there is no activity for the quarter, a negative report is required.
Using Form FmHA 1951-17, the State Administrative Officer will
consolidate the reports received from the County Offices. The
consolidated state report will be forwarded to the Finance Office, mail
code FC-360A, within 10 calendar days after the end of each quarter
(e.g., October 10, January 10, April 10, and July 10). If there is no
activity for the quarter, a negative report is required.
(c) Cancellation of administrative offset. FmHA will promptly cancel
administrative offset requests by written notification to every other
Federal agency from which administrative offset was requested if,
because of debtor payments or any other reason, FmHA is no longer
entitled to administrative offset from payments to be made to a debtor.
(55 FR 11007, Mar. 26, 1990, as amended at 55 FR 25820, June 25,
1990)
1951.106 -- 1951.110 (Reserved)
07 CFR 1951.111 Salary offset.
Salary offset may be used to collect debts arising from delinquent
FmHA loans and other debts which arise through such activities as theft,
embezzlement, fraud, salary overpayments, underwithholding of amounts
payable for life and health insurance, and any amount owed by former
employees from loss of federal funds through negligence and other
matters. Salary offset may also be used by other Federal agencies to
collect delinquencies or debts owed to them by employees of FmHA,
excluding County Committee members. Administrative offset, rather than
salary offset, will be used to collect money from retirement benefits.
Salary offset will not be initiated until after other servicing options
available to the borrower have been utilized. In addition, for farmer
program loans, salary offset will not be instituted if the federal
salary has been considered on the farm and home plan, and it was
determined the funds were to be used for another purpose other than
payment of the FmHA loan. When salary offset is used, payment for the
debt will be deducted from the employee's pay and sent directly to the
creditor agency. Not more than 15 percent of the employee's disposable
pay can be offset per pay period, unless the employee agrees to a larger
amount. The debt does not have to be reduced to judgment or be
undisputed, and the payment does not have to be covered by a security
instrument. This section describes the procedures which must be
followed before FmHA can ask a Federal agency to offset any amount.
Decisions made under the following section are not appealable under
subpart B of part 1900 of this chapter.
(a) Authorities. The following authorities are granted to FmHA
employees in order that they may initiate and implement salary offset:
(1) Certifying Officials are authorized to certify to the debtor's
employing agency that the debt exists, the amount of the delinquency or
debt, that the procedures in FmHA's and United States Department of
Agriculture's (USDA's) regulations regarding salary offsets have been
followed, that the actions required by the Debt Collection Act have been
taken; and to request that salary offset be initiated by the debtor's
employing agency. This authority may not be redelegated.
(2) Certifying Officials are authorized to advise the Finance Office
to establish employee defalcation accounts and non-cash credits to
borrower accounts in cases involving other debts, such as those arising
from theft, fraud, embezzlement, loss of funds through negligence, and
similar actions involving FmHA employees.
(3) The Finance Office is authorized to establish defalcation
accounts and non-cash credits to borrower accounts upon receipt of
requests from the Certifying Officials.
(b) Definitions -- (1) Certifying Officials. State Directors; the
Assistant Administrator, Finance Office; and the Deputy Administrator
for Management, National Office.
(2) Debt or debts. A term that refers to one or both of the
following:
(i) Delinquent debts. A past due amount owed to the United States
from sources which include, but are not limited to, insured or
guaranteed loans, fees, leases, rents, royalties, services, sales of
real or personal property, overpayments, penalties, damages, interest,
fines and forfeitures (except those arising under the Uniform Code of
Military Justice).
(ii) Other debts. An amount owed to the United States by an employee
for pecuniary losses where the employee has been determined to be liable
due to the employee's negligent, willful, unauthorized or illegal acts,
including but not limited to:
(A) Theft, misuse, or loss of Government funds;
(B) False claims for services and travel;
(C) Illegal, unauthorized obligations and expenditures of Government
appropriations;
(D) Using or authorizing the use of Government owned or leased
equipment, facilities supplies, and services for other than official or
approved purposes;
(E) Lost, stolen, damaged, or destroyed Government property;
(F) Erroneous entries on accounting record or reports; and,
(G) Deliberate failure to provide physical security and control
procedures for accountable officers, if such failure is determined to be
the proximate cause for a loss of Government funds.
(3) Defalcation account. An account established in the Finance
Office for other debts owed the Federal government in the amount missing
due to the action of an employee or former employee.
(4) Disposable pay. Pay due an employee that remains after required
deductions for Federal, State and local income taxes; Social Security
taxes, including Medicare taxes; Federal retirement programs; premiums
for life and health insurance benefits, and such other deductions
required by law to be withheld.
(5) Hearing Officer. An Administrative Law Judge of the USDA or
another individual not under the supervision or control of the USDA,
designated by the Certifying Official to review the determination of the
alleged debt.
(6) Non-cash credit. The accounting action taken by the Finance
Office to credit and make a borrower's account whole for funds paid by
the borrower but missing due to an employee's or former employee's
actions.
(7) Salary Offset. The collection of a debt due to the U.S. by
deducting a portion of the disposable pay of a Federal employee without
the employee's consent.
(c) Feasibility of salary offset. The first step the Certifying
Official must take to use this offset procedure is to decide, on a case
by case basis, whether offset is feasible. If an offset is feasible,
the directions in the following paragraphs of this section will be used
to collect by salary offset. If the official making this determination
decides that salary offset is not feasible, the reasons supporting this
decision will be documented in the borrower's running case record in the
case of delinquent debts, or the ''For Official Use Only'' file in cases
of other debts. Ordinarily, and where possible, debts should be
collected in one lump-sum; but payments may be made in installments.
Installment deductions can be made over a period not greater than the
anticipated period of employment. However, the amount deducted for a
pay period will not exceed 15 percent of the disposable pay from which
the deduction is made. If possible, the installment payment will be
sufficient in size and frequency to liquidate the debt in approximately
3 years. Based on the Comptroller General's decisions, other debts by
employees cannot be forgiven. If the employee retires or resigns, or if
employment ends before collection of the debt is completed, final salary
payment, lump-sum leave, etc. may be offset to the extent necessary to
liquidate the debt. Salary offset is feasible if:
(1) The cost to the Government of collecting salary offset does not
exceed the amount of the debt. County Committee members are exempt from
salary offset because the amount collected by salary offset would be so
small as to be impractical.
(2) There are not any legal restrictions to the debt, such as the
debtor being under the jurisdiction of a bankruptcy court, or the
statute of limitations having expired. The Debt Collection Act of 1982
permits offset of claims that have not been outstanding for more than 10
years.
(d) Notice to debtor. (1) After the Certifying Official determines
that collection by salary offset is feasible, FmHA Guide Letter 1951-C-4
should be sent within 15 calendar days after that determination. This
Guide Letter will notify the debtor of intended salary offset at least
30 days before the salary offset begins. FmHA Guide Letter 1951-C-4
will be personally delivered to the debtor or sent certified mail,
Return Receipt Requested, with a copy sent by regular mail on the same
day. If the certified mail receipt is returned, the date the debtor
received the letter will be established and the time limits set out in
FmHA Guide Letter 1951-C-4 will run from that date. If delivery by
certified mail is not accomplished, FmHA will assume that the debtor
received the letter by regular mail on the day the certified mail was
refused or was unable to be delivered.
(2) The Debt Collection Act of 1982 requires that the hearing officer
issue a written decision not later than 60 days after the filing of the
petition requesting the hearing; thus, the evidence upon which the
decision to notify the debtor is based, to the extent possible, should
be sufficient for FmHA to proceed at a hearing, should the debtor
request a hearing under paragraph (f) of this section.
(e) Notice requirement before salary offset. Salary offset will not
be made unless the employee receives 30 calendar days written notice.
This Notice of Intent (FmHA Guide Letter 1951-C-4) will be addressed to
the debtor or the debtor's representative. The Notice of Intent must be
modified if it is addressed to the debtor's representative. In either
case, the Notice of Intent will state:
(1) It has been determined that the debt is owed, the amount of the
debt, and the facts giving rise to the debt;
(2) The cost to the Government of collecting salary offset does not
exceed the amount of the debt;
(3) There are not any legal restrictions that would bar collecting
the debt;
(4) The debt will be collected by means of deduction of not more than
15 percent from the employee's current disposable pay until the debt and
all accumulated interest are paid in full;
(5) The amount, frequency, approximate beginning date, and duration
of the intended deductions;
(6) An explanation of the requirements concerning interest, penalties
and administrative costs, unless such payments are waived;
(7) The employee's right to inspect and request a copy of records
relating to the debt;
(8) The employee's right to voluntarily enter into a written
agreement for a repayment schedule with the agency different from that
proposed by FmHA, if the terms of the repayment proposed by the employee
are agreeable with the agency;
(9) That the employee has a right to a hearing conducted by an
Administrative Law Judge of USDA or a hearing official not under the
supervision or control of the Secretary of Agriculture, concerning the
agency's determination of the existence or amount of the debt and the
percentage of disposable pay to be deducted each pay period, if a
petition for a hearing is filed by the employee as prescribed by FmHA;
(10) The timely filing of a petition for hearing will stay the
collection proceedings;
(11) That a final decision will be issued at the earliest practical
date, but not later than 60 calendar days after the filing of petition
requesting the hearing;
(12) That any knowingly false or frivolous statements may subject the
employee to disciplinary procedures, or penalties, under the applicable
statutory authority;
(13) Any other rights and remedies available to the employee under
statutes or regulations governing the program for which the collection
is being made;
(14) That amounts paid on or deducted for the debt which are later
waived or found not owed to the United States will be promptly refunded
to the employee unless there are provisions to the contrary;
(15) The method and time period for requesting a hearing; and
(16) The name and address of an official of USDA to whom
communications should be directed.
(f) Debtor's request for records, offer to repay, request for a
hearing or request for information concerning debt settlement.
(1) If a debtor responds to FmHA Guide Letter 1951-C-4 by asking to
review and copy FmHA's records relating to the debt, the Certifying
Official will promptly respond by sending a letter which tells the
debtor the location of the debtor's FmHA files and that the files may be
reviewed and copied within the next 30 days. Copying costs (see subpart
F of part 2018 of this Chapter) will be set out in the letter, as well
as the hours the files will be available each day. If a debtor asks to
have FmHA copy the records, a copy will be made within 30 days of the
request.
(2) If a debtor responds to FmHA Guide Letter 1951-C-4 by offering to
repay the debt, the offer may be accepted by the Certifying Official, if
it would be in the best interest of the government. FmHA Form Letter
1951-8 will be used if a repayment offer for an FmHA loan or grant is
accepted. Upon receipt of an offer to repay, the Certifying Official
will delay institution of a hearing until a decision is made on the
repayment offer. Within 60 days after the initial offer to repay was
made, the Certifying Official must decide whether to accept or reject
the offer. This decision will be documented in the running case record
or the ''For Official Use Only'' file, as appropriate, and the debtor
will be sent a letter which sets out the decision to accept or reject
the offer to repay. The decision to accept or reject a repayment offer
should be based upon a realistic budget or farm and home plan and
according to the servicing regulations for the type of loan(s) involved.
(3) If a debtor responds to FmHA Guide Letter 1951-C-4 by asking for
a hearing on FmHA's determination that a debt exists and/or is due, or
on the percentage of net pay to be deducted each pay period, the
Certifying Official will notify the debtor in accordance with paragraph
(g)(3) of this section and request the debtor's case file or the ''For
Official Use Only'' file.
(4) If a debtor is willing to have more than 15 percent of the
disposable pay sent to FmHA, a letter prepared and signed by the debtor
clearly stating this must be placed in the debtor's case file or the
''For Official Use Only'' file.
(5) If a debtor who is an FmHA borrower requests debt settlement, the
account must be in collection-only status or be an inactive account for
which there is no security. The Certifying Official must inform the
borrower of how to apply for debt settlement. Any application will be
considered independently of the salary offset. A salary offset should
not be delayed because the borrower applied for debt settlement.
(6) The time limits set in FmHA Guide Letter 1951-C-4 and in
paragraphs (f) (1), (2), and (3) of this section run concurrently. In
other words, if a debtor asks to review the FmHA file and offers to
repay the debt, the debtor cannot take 30 days to ask to review the file
and then take another 30 days to offer to repay. The request to review
the file and the offer to repay must both be made within 30 days of the
date the debtor receives the notification letter.
(7) If an employee is included in a bargaining unit which has a
negotiated grievance procedure that does not specifically exclude salary
offset proceedings, the employee must grieve the matter in accordance
with the negotiated procedure. Employees who are not covered by a
negotiated procedure must utilize the salary offset proceedings as
outlined in FmHA Guide Letter 1951-C-4. The employee must be informed,
in writing, which procedure to follow and, as appropriate, reference
should be made to the appropriate sections of the negotiated agreement.
(g) Hearings. (1) A hearing officer must be a USDA Administrative
Law Judge or a person who is not a USDA employee. In order to ensure
that a hearing officer will be available promptly when needed,
Certifying Officials need to make appropriate arrangements with
officials of nearby federal agencies for the use of each other's
employees as hearing officers.
(2) Not later than 30 days from the date the debtor receives the
Notice of Intent (FmHA Guide Letter 1951-C-4), the employee must file
with the Certifying Official issuing the notice, a written petition
establishing his/her desire for a hearing on the existence and amount of
the debt or the proposed offset schedule. The employee's petition must
fully identify and explain all the information and evidence that
supports his/her position. In addition, the petition must bear the
employee's original signature and be dated upon receipt by the
Certifying Official.
(3) Certifying Officials are responsible for determining if the
employee's petition for a hearing has been submitted in a timely
fashion. Petitions received from employees after the 30-day time
limitation expires will be accepted only if the employee can show the
delay was because of circumstances beyond his/her control or because of
failure to receive notice of the time limitation. Certifying Officials
are required to provide written notification to the employee of the
acceptance or non-acceptance of the employee's petition for hearing.
(4) For those petitions accepted, FmHA will arrange for a hearing
officer and notify the employee of the time and place of the hearing.
The hearing location should be convenient to all parties involved. The
employee will also be notified that the acceptance of the petition for
hearing will stay the commencement of collection proceedings. Any
payments collected in error due to untimely or delayed filing beyond the
employee's control will be refunded unless there are applicable
contractual or statutory provisions to the contrary.
(5) The hearing will be based on written submissions and
documentation provided by the debtor and FmHA unless:
(i) A statute authorizes or requires consideration of waiving the
debt, the debtor requests waiver of the debt, and the waiver
determination turns on an issue of credibility or truth.
(ii) The debtor requests reconsideration of the debt and the hearing
officer determines that the question of the indebtedness cannot be
resolved by a review of the documentary evidence; for example, when the
validity of the debt turns on an issue of credibility or truth.
(iii) The hearing officer determines that an oral hearing is
appropriate.
(6) Oral hearings may be conducted by conference call at the request
of the debtor or at the discretion of the hearing officer. The hearing
officer's determination that the offset hearing is on the written record
is final and is not subject to review.
(7) The hearing officer will issue a written decision not later than
60 days after the filing of the petition requesting the hearing, unless
the employee requests and the Certifying Official grants a delay in the
proceedings. The written decision will state the facts supporting the
nature and origin of the debt, the hearing officer's analysis, findings
and conclusions as to the amount and validity of the debt, and repayment
schedule. Both the employee and FmHA will be provided with a copy of
the hearing officer's written decision on the debt.
(h) Processing delinquent debts. (1) Form AD-343, ''Payroll Action
Request,'' and FmHA Form Letter 1951-6 will be prepared and submitted by
the Certifying Official to the National Office, FMAS, for coordination
and forwarding to the debtor's employing agency if:
(i) The borrower does not respond to FmHA Guide Letter 1951-C-4
within 30 days.
(ii) The borrower responds to FmHA Guide Letter 1951-C-4 within 30
days and
(A) Has had an opportunity to review the file, if requested,
(B) Has received a hearing, if requested, and
(C) A decision has been made by the hearing officer to uphold the
offset.
(2) A copy of Form AD-343 and the Form letter 1951-6 will be sent to
the Finance Office, St. Louis, MO 63103, Attn: Account Settlement
Unit.
(3) If the debtor is an FmHA employee, Form AD-343 will be sent to
the National Office, FMAS, and a copy to the Finance Office, St. Louis,
MO, Attn: Account Settlement Unit. This form can be signed for the
Certifying Official by an employment officer, an Administrative Officer,
or a personnel management specialist, or signed by the Certifying
Official.
(4) If the debtor has agreed to have more or less than 15 per cent of
the disposable pay sent to FmHA, a copy of the debtor's letter (FmHA
Form Letter 1951-8) authorizing this must be attached to Form AD-343.
(5) Field offices will be notified of payments received from salary
offset by receipt of a transaction record from the Finance Office.
(i) Deduction percentage. (1) Generally, installment deductions will
be made over a period not greater than the anticipated period of
employment. If possible, the installment payment will be sufficient in
size and frequency to liquidate the debt in approximately 3 years. The
size and frequency of installment deductions will bear a reasonable
relation to the size of the debt and the employee's ability to pay.
Certifying Officials are responsible for determining the size and
frequency of the deductions. However, the amount deducted for any
period will not exceed 15 percent of the disposable pay from which the
deduction is made, unless the employee has agreed in writing to the
deduction of a greater amount. Installment payments of less than $25
per pay period or $50 a month will be accepted only in the most unusual
circumstances.
(2) Deductions will be made only from basic pay, incentive pay,
retainer pay, or, in the case of an employee not entitled to basic pay,
other authorized pay. If there is more than one salary offset, the
maximum deduction for all salary offsets against an employee's
disposable pay is 15 percent unless the employee has agreed in writing
to a greater amount.
(j) Agency/NFC responsibility for other debts. (1) FmHA will inform
NFC about other indebtedness by transmitting to NFC an AD-343. NFC will
process the documents through the Payroll/Personnel System, calculate
the net amount of the adjustment and generate a salary offset notice.
This notice will be sent to the employee's employing office along with a
duplicate copy for the FmHA's records. FmHA is responsible for
completing the necessary information and forwarding the employee's
notice to the employee.
(2) Other indebtedness falls into two categories:
(i) An agency-initiated indebtedness (i.e. personal telephone calls,
property damages, etc.).
(ii) An NFC-initiated indebtedness (i.e. duplicate salary payments,
etc.). NFC will send the salary offset notice to the employing office.
(k) Establishing employees or former employees defalcation accounts
and non-cash credits to borrower accounts. In cases where a borrower
made a payment on an FmHA account(s) and, due to theft, embezzlement,
fraud, negligence, or some other action on the part of an FmHA employee
or employees, the payment is not transmitted to the Finance Office for
application to the borrower's account(s), certain accounting actions
must be taken by the Finance Office to establish non-cash credits to the
borrower's account and an employee defalcation account.
(1) The Certifying Official will advise the Assistant Administrator,
Finance Office by memorandum to establish a defalcation account. The
memorandum must state the following information:
(i) Employee's name (or former),
(ii) Social Security Number,
(iii) Present or last known address,
(iv) Date of Payment, and
(v) Amount of the defalcation account.
(2) If a non-cash credit to a borrower's account(s) is required, the
letter to the Finance Office will include:
(i) Borrower's name and case number,
(ii) Fund Code and Loan Code,
(iii) Date and amount of missing payment,
(iv) Copy of receipt issued for the missing payment, and
(v) Name of employee who last had custody of the missing funds.
(3) To assist and assure proper accounting for defalcation accounts
and non-cash credits, the request should be made at the same time.
Should requests be made separately, be sure to identify appropriately.
(4) The Certifying Official shall furnish a copy of the memorandum
and supporting documentation for paragraphs (k) (1) and (2) of this
section to the Deputy Administrator for Management for distribution to
the Financial and Management Analysis Staff (FMAS) and Employee
Relations Branch, Personnel Division.
(l) Application of payments, refunds and overpayments. (1) If a
debtor is delinquent or indebted on more than one FmHA loan or debt,
amounts collected by offset will be applied as specified on Form AD-343,
based on the advantage to agency or debtor. The check date will be used
as the date of credit in applying payments to the borrower's accounts.
(2) If a court or agency orders FmHA to refund the amount obtained by
salary offset, a refund will be requested promptly by the Certifying
Official in accordance with the order by sending FmHA Form Letter 1951-5
to the Finance Office. Processing FmHA Form Letter 1951-5 in the
Finance Office will cause a refund to be sent to the debtor through the
county office or other appropriate FmHA office. The debtor is not
entitled to any payment of interest, on the refunded amount.
(3) If a debtor does not request a hearing within the required time
and it is later determined that the delay was due to circumstances
beyond the debtor's control, any amount collected before the hearing
decision is made will be refunded promptly by the Certifying Official in
accordance with paragraphs (l) (1) and (2) of this section.
(4) If FmHA receives money through an offset but the debtor is not
delinquent or indebted at the time or the amount received is in excess
of the delinquency or indebtedness, the entire amount or the amount in
excess of the delinquency or indebtedness will be refunded promptly to
the debtor by the Certifying Official in accordance with paragraphs (l)
(1) and (2) of this section.
(m) Cancellation of offset. If a debtor's name has been submitted to
another agency for offset and the debtor's account is brought current or
otherwise satisfied, the Certifying Official will complete Form AD-343
and send it to the National Office, FMAS. FMAS will notify the paying
agency with Form AD-343 that the debtor is no longer delinquent or
indebted and to cancel the offset. A copy of the cancellation document
will be sent to the debtor and the Finance Office, Attn: Account
Settlement Unit.
(n) Intra-departmental transfer. When an FmHA employee who is
indebted to one agency in USDA transfers to another agency within USDA,
a copy of the repayment schedule should be forwarded by the agency
personnel office to the new employing agency. The NFC will continue to
make deductions until full recovery is effected.
(o) Liquidation from final checks. Upon the determination that an
employee owing a debt to FmHA is to retire, resign, or employment
otherwise ends, the Certifying Official should forward a telegram with
the appropriate employee identification and amount of the debt to the
NFC. The telegram should request that the debt be collected from final
salary/lump sum leave or other funds due the employee, and, if
necessary, to put a hold on the retirement funds. The telegram
information should be confirmed by completion of Form AD-343.
Collection from retirement funds will be in accordance with Departmental
Administrative Offset procedures (7 CFR Part 3, Subpart B, 3.32).
(p) Coordination with other agencies. (1) If FmHA is the creditor
agency but not the paying agency, the Certifying Official will submit
Form AD-343 to the National Office, FMAS, to begin salary offset against
an indebted employee. The request will include a certification as to
the determination of indebtedness, and that FmHA has complied with
applicable regulations and instruction for submitting the funds to the
Finance Office. (See FmHA Form Letter 1951-6).
(2) When an employee of FmHA owes a debt to another Federal agency,
salary offset may be used only when the Federal agency certifies that
the person owes the debt and that the Federal agency has complied with
its regulations. The request must include the creditor agency's
certification as to the indebtedness, including the amount, and that the
employee has been given the due process entitlements guaranteed by the
Debt Collection Act of 1982. When a request for offset is received,
FmHA will notify the employee and NFC and arrange for offset. (See FmHA
Form Letter 1951-7).
(q) Deductions by the National Finance Center (NFC). The NFC will
automatically deduct the full amount of the delinquency or indebtedness
if less than 15 percent of disposable pay or 15 percent of disposable
pay if the delinquency or indebtedness exceeds 15 percent, unless the
creditor agency advises otherwise. Deductions will begin the second pay
period after the 30-day notification period has expired unless FmHA
issues the notice. If FmHA issues the notice, the NFC will begin
deductions on the first pay period after receipt of the Form AD-343.
(r) Interest, penalties and administrative costs. Interest and
administrative costs will normally be assessed on outstanding claims
being collected by salary offset. However, penalties should not be
charged routinely on debts being collected in installments by salary
offsets, since it is not to be construed as a failure to pay within a
given time period. Additional interest, penalties, and administrative
costs will not be assessed on delinquent loans until FmHA publishes
regulations permitting such charges.
(s) Adjustment in rate of repayment. (1) When an employee who is
indebted receives a reduction in basic pay that would cause the current
deductions to exceed 15 percent of disposable pay, and the employee has
not consented in writing to a greater amount, FmHA must take action to
reduce the amount of the deductions to 15 percent of the new amount of
disposable pay. Upon an increase in basic pay which results in the
current deductions to be less than the specified percentage, FmHA may
increase the amount of the deductions accordingly. In either case, when
a change is made the employee will be notified in writing.
(2) When an employee has an existing reduced repayment schedule
because of financial hardship, the creditor agency may arrange for a new
repayment schedule.
(52 FR 18544, May 18, 1987, as amended at 53 FR 44178, Nov. 2, 1988;
54 FR 26945, June 27, 1989)
1951.112 -- 1951.120 (Reserved)
07 CFR 1951.121 Internal Revenue Service (IRS) offset.
The IRS can reduce a taxpayer's overpayment of tax by the amount of
any legally enforceable debt owed to a Federal agency. This subpart
establishes procedures to implement IRS offsets. Borrowers referred to
IRS for offset will continue to be serviced as required by 1951.312 of
subpart G of part 1951 of this chapter.
(54 FR 966, Jan. 11, 1989)
07 CFR 1951.122 Finance Office screening.
The FmHA Finance Office will screen the accounts of all borrowers
potentially eligible for IRS Offset. FmHA field offices will further
screen these accounts based on the following ineligibility criteria.
The Finance Office will determine the appropriate date for this
screening based on IRS deadlines.
(a) General. All past due single family housing (SFH) and farmer
program (FP) accounts are eligible for IRS Offset unless they meet one
or more of the following criteria:
(1) Account has been referred to OGC for foreclosure and, based on
the legal opinion required by 1951.103(c), a collection by offset would
jeopardize the litigation under State law. Existence of a foreclosure
action pending flag is not a determining factor.
(2) Account has been discharged in bankruptcy or is under the
jurisdiction of a bankruptcy court and the debt has not been reaffirmed.
Existence of a bankruptcy action pending flag is not a determining
factor.
(3) Account has a suspend code.
(4) Account has been assigned to a collection agency.
(5) Account is past due by less than $25, or if the borrower has
multiple loans, the net amount past due is less than $25.
(6) Borrower is a Federal employee and collection is feasible under
salary offset.
(7) Borrower was indebted to FmHA prior to entering full time active
duty military service and the account is being serviced in accordance
with FmHA Instruction 1950-C.
(8) Account is current under a subject to approved adjustment (SAA).
(b) Single Family Housing Borrowers. In addition to the criteria set
forth in 1951.122(a), the following criteria are for delinquent SFH
borrowers:
(1) Borrower has one loan and it is less than 3 monthly payments
delinquent (or, if annual borrower, the equivalent of less than 3
monthly payments for annual payments past due) or more than 9 years
delinquent.
(2) Borrower has multiple loans, and the net amount past due is less
than 3 monthly payments on the delinquent loans (or the equivalent of 3
monthly payments for annual payment borrowers).
(3) Account is under a moratorium.
(4) Account has an Additional Payment Agreement (APA) in effect and
payments under the APA are less than 3 months past due.
(c) Farmer Program Borrowers. In addition to the criteria set forth
in 1951.122(a), the following criteria are for delinquent FP borrowers:
(1) Borrower is a partnership or corporation and/or is identified in
the accounting system by an employer Identification Number (EIN rather
than a Social Security Number (SSN).
(2) Account is less than 90 days past due.
(d) Servicing Condition Requirements for Farmer Program Borrowers.
The FP accounts remaining after screening from 1951.122 (a) and (c) are
eligible for IRS offset only if either of the following servicing
conditions takes place, whichever comes first:
(1) Borrower has received any combination of Attachments 3 through 10
of Exhibit A of subpart S of this part; and the borrower did not
request an appeal of the decision; any appeal has been concluded; or
(2) Borrower's account(s) has been accelerated.
(55 FR 38035, Sept. 17, 1990, as amended at 55 FR 52037, Dec. 19,
1990)
07 CFR 1951.123 Field office screening.
Accounts determined by computer screening in the Finance Office to be
potentially eligible will be referred to the IRS and to the appropriate
FmHA County Office for review. If the County Office is aware that any
account should be removed for any of the reasons set forth in 1951.122,
the County Office will remove the account in accordance with the
instructions accompanying the list, ''Borrowers Eligible for Offset
(prior to 60-day notice).'' Borrowers who are removed by the County
Office will not receive an offset letter, and no further action is
necessary concerning borrowers removed. The Finance Office will remove
those accounts identified as ineligible by County Offices and provide
this information to IRS in accordance with IRS deadlines and procedures.
(54 FR 967, Jan. 11, 1989, as amended at 55 FR 38036, Sept. 17, 1990)
07 CFR 1951.124 Notice to borrowers.
The Finance Office will send FmHA Form Letter 1951-6 to each borrower
who still appears to be eligible for IRS offset after County Office
screening and a computer screening using the latest account information
that is available. This letter must be mailed to ensure that borrowers
receive their letters no later than October 15. Borrowers will have 60
days from the date of receipt to provide evidence in writing to the
County Supervisor that their debt is less than 3 months delinquent or
that the debt is not legally enforceable. Borrowers who reduce their
debt to less than 3 months past due during this 60-day period will not
be offset.
(54 FR 967, Jan. 11, 1989, as amended at 55 FR 38036, Sept. 17, 1990)
07 CFR 1951.125 Processing borrowers' requests not to exercise IRS
offset.
If a borrower responds to FmHA Form Letter 1951-C-6 within 60 days
from the date of receipt, the County Supervisor will review the
borrower's reasons for believing that the debt is either less than 3
months delinquent or is not legally enforceable. After such
determination, the County Supervisor will send the borrower FmHA Form
Letter 1951-C-9 advising the borrower if offset will be exercised.
(55 FR 38036, Sept. 17, 1990, as amended at 55 FR 52037, Dec. 19,
1990)
07 CFR 1951.126 Final referral to IRS.
All accounts not eliminated will be sent to IRS for offset and Report
Code 865, Borrower Accounts Submitted to IRS for Offset Report, sent to
each appropriate County Office. Each County Office will review the list
on Report Code 865 upon receipt, and each week thereafter. This weekly
review will continue until September 1 for the previous year's
submission, or until action has been taken on each account (offset or
removal). If any of the events listed under 1951.122 of this subpart
occurs, immediately submit Form FmHA 1951-43, ''Adjustment of Accounts
Referred for IRS Offset,'' in accordance with the FMI for that form.
All accounts referred to the IRS for offset will be reported to a credit
bureau by the Finance Office.
(55 FR 38036, Sept. 17, 1990, as amended at 55 FR 52037, Dec. 19,
1990)
07 CFR 1951.127 Processing of amounts offset.
After IRS effects an offset, IRS will notify the Finance Office. The
Finance Office may deduct an amount equal to IRS' processing costs from
the amount offset to reimburse the Agency for the cost of processing the
offset, will credit the borrower's account for the amount required and
will notify the appropriate County Office. The County Supervisor will
review Report Code 222-C, Weekly Offset Report (Cash Collections IRS
Offset), to ensure that any borrower who would have been eliminated from
offset due to the provisions of 1951.122 of this subpart was not
subjected to an offset. If the offset was not correct, the County
Supervisor will immediately notify the Finance Office of any such
offsets using FmHA Form Letter 1951-5. This Form Letter will be
processed by the Finance Office and a refund, including the processing
fee, will be sent to the borrower. If the offset is correct, Finance
and County Office records will be adjusted accordingly.
(54 FR 967, Jan. 11, 1989, as amended at 55 FR 38036, Sept. 17, 1990)
07 CFR 1951.128 Receipt of Finance Office/IRS offset reports and
listings.
The Finance Office will provide a copy of the reports or listings in
1951.129 through 1951.135 of this subpart to each servicing county.
County Supervisors are responsible for ensuring the field offices review
each report and respond to the timeframes as indicated.
(55 FR 38036, Sept. 17, 1990)
07 CFR 1951.129 Borrowers eligible for offset (prior to 60-day notice).
This listing includes borrowers eligible for offset after Finance
Office screening. The field office will screen all borrowers in
accordance with 1951.122 of this subpart. Borrowers meeting any of the
ineligibility criteria must be eliminated by drawing a line through the
borrower's name. When all borrowers have been reviewed for offset
eligibility, the original list must be sent to the Chief, Computer
Resources Branch, mail code FC-353, in the Finance Office. These lists
must be received no later than 1 month after the date of receipt, since
the Finance Office will use the information provided to generate letters
to borrowers informing them of potential IRS offset. No borrowers may
be added to this list by the field office. A copy of this list should
be retained by each field office. If a borrower is ineligible for IRS
offset due to any of the exclusion criteria in 1951.122 and that
borrower's account does not reflect that exclusion criteria in the
accounting system, the field offices must ensure that the account be
updated immediately.
(55 FR 38036, Sept. 17, 1990)
07 CFR 1951.130 Borrowers sent due process notices for IRS/Credit
Bureau referrals.
This listing includes those borrowers remaining eligible for offset
after field office screening and who were sent notices of the intent to
offset their tax refund. The notice advises the borrower that they have
60 days from the date of receipt of the letter in which to provide
written information to their FmHA County Supervisor to show that offset
should not be exercised. A borrower who has provided written
notification and it has been determined the he/she meets the criteria
under 1951.122 of this subpart must be eliminated by drawing a line
through the borrower's name on the listing. When all borrowers have
been reviewed for offset eligibility, the original must be sent to the
Chief, Computer Resources Branch, mail code FC-353, in the Finance
Office. These lists must be received no later than 2 months after the
date of receipt, since the Finance Office will use the information
provided on these lists to create the IRS annual certification tape. No
borrowers may be added to this list by the field office. A copy of this
list should be retained by each field office. If a borrower is
ineligible for IRS offset due to any of the exclusion criteria in
1951.122 and that borrower's account does not reflect that exclusion
criteria in the accounting system, the field offices must ensure that
the account be updated immediately.
(55 FR 38037, Sept. 17, 1990)
07 CFR 1951.131 Form FmHA 389-833, Borrower Accounts Submitted to IRS
for Offset Report, RC 865.
This report lists borrowers remaining eligible for offset after the
60-day notice period and who were referred to IRS for offset. This
report should be retained by the field office and referred to when
decreasing an amount referred for offset or deleting a borrower from IRS
offset using Form FmHA 1951-43.
(55 FR 38037, Sept. 17, 1990)
07 CFR 1951.132 Form FmHA 389-760, Annual Unprocessable Report IRS
Offset, RC 822-C.
This report lists those borrowers who were referred to IRS for
offset, but were returned by IRS as evidenced by the applicable error
code. These borrowers will not be offset by IRS. This report should be
retained by each field office. It is not necessary to complete Form
FmHA 1951-43 for borrowers listed on this report.
(55 FR 38037, Sept. 17, 1990)
07 CFR 1951.133 Form FmHA 389-761, Annual No Match Report IRS Offset,
RC 822-D.
This report lists those borrowers who were referred to IRS for
offset, but were returned by IRS as evidenced by the applicable error
code. These borrowers will not be offset by IRS. This report should be
retained by each field office. It is not necessary to complete Form
FmHA 1951-43 for borrowers listed on this report.
(55 FR 38037, Sept. 17, 1990)
07 CFR 1951.134 Form FmHA 389-764, Weekly Offset Report (Cash
Collections) IRS Offset, RC 222-C.
This report lists those borrowers whose income tax refund was offset
by IRS and the amount offset. Except for a minimal processing fee that
may be deducted, all monies collected from an offset will be applied
toward the borrower's delinquent loan(s). If an offset does not repay
all of the delinquent amount, the borrower is subject to additional
offsets if more than one tax year return is filed.
This report should be retained by each field office and referred to
if it has been determined a borrower has been erroneously offset. The
field office should use the amount offset from this report when
following the instructions outlined in 1951.127 for refunding the
offset to the borrower.
(55 FR 38037, Sept. 17, 1990)
07 CFR 1951.135 Form FmHA 389-763, Weekly Claims Report IRS Offset, RC
222-D.
This report lists those borrowers whose spouses were issued a refund
by IRS. These borrowers filed a joint tax return and incurred the debt
separately from their spouses who had no legal responsibility for the
debt and who had income and withholding and/or estimated tax payments.
The report shows the actual amount offset for the borrower only. The
spouses' portion of the income tax refund was not offset. It is not
necessary to prepare FmHA Form Letter 1951-5 for these borrowers since
the borrower's spouse has already received a refund from IRS. Upon
receipt of this report, field offices should annotate on RC 222-C (
1951-134) the actual amount offset for those borrowers listed in this
report. This report should be retained by each field office.
(55 FR 38037, Sept. 17, 1990)
1951.136 -- 1951.149 (Reserved)
07 CFR 1951.150 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0119.
(51 FR 42821, Nov. 26, 1986)
07 CFR 1951.150 Subpart D -- (Reserved)
07 CFR 1951.150 Subpart E -- Servicing of Community and Insured
Business Programs Loans and Grants
Source: 55 FR 4399, Feb. 8, 1990, unless otherwise noted.
07 CFR 1951.201 Purpose.
This subpart prescribes the Farmers Home Administration's (FmHA)
policies, authorizations, and procedures for servicing Water and Waste
Disposal System loans and grants; Community Facility loans; Industrial
Development grants; loans for Grazing and other shift-in-land-use
projects; Association Recreation loans; Association Irrigation and
Drainage loans; Watershed loans and advances; Resource Conservation
and Development loans; Insured Business loans; Economic Opportunity
Cooperative loans; loans to Indian Tribes and Tribal Corporations;
Rural Renewal loans; Energy Impacted Area Development Assistance
Program grants; National Nonprofit Corporation grants; and Water and
Waste Disposal Technical Assistance and Training grants. Loans sold
without insurance by FmHA 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.
07 CFR 1951.202 Objectives.
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 FmHA's financial interest.
Supervision by FmHA 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.
07 CFR 1951.203 Definitions.
(a) Approval official. An official who has been delegated loan
and/or grant approval authorities within applicable programs, subject to
the dollar limitations of exhibits A, B, and C of subpart A of part 1901
of this chapter (available in any FmHA office).
(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 FmHA services rendered in the processing of
a transfer and assumption.
07 CFR 1951.204 Nondiscrimination.
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.
07 CFR 1951.205 Redelegation of authority.
Servicing functions under this subpart which are specifically
assigned to the State Director may be redelegated in writing to an
appropriate sufficiently trained designee.
07 CFR 1951.206 Forms.
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.
07 CFR 1951.207 State supplements.
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 FmHA 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).
1951.208 -- 1951.209 (Reserved)
07 CFR 1951.210 Environmental requirements.
Servicing activities such as transfers, assumptions, subordinations,
sale or exchange of security property, and leasing of security will be
reviewed for compliance with subpart G of part 1940 of this chapter.
The appropriate environmental review will be completed prior to approval
of the servicing action. When National Office approval is required, the
completed environmental review will be included with other information
submitted.
07 CFR 1951.211 Refinancing requirements.
In accordance with the CONACT, FmHA 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.
07 CFR 1951.212 Unauthorized financial assistance.
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.
07 CFR 1951.213 Debt settlement.
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.
07 CFR 1951.214 Care, management, and disposal of acquired property.
Property acquired by FmHA will be handled according to subparts B and
C of part 1955 of this chapter.
07 CFR 1951.215 Grants.
No monitoring action by FmHA 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 FmHA 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
FmHA grants are governed by the provisions of this subpart, the terms of
the Grant Agreement and, if applicable, the provisions of 7 CFR parts
3015, 3016, and 3017.
(1) Servicing actions will be carried out in accordance with the
terms of Form FmHA 442-31 or 1942-31, ''Association Water or Sewer
System Grant Agreement.'' Grant agreements with a revision date on or
after January 29, 1979, require that the grantee request disposition
instructions from FmHA before disposing of property which is no longer
needed for original grant purposes.
(2) When facilities financed in part by FmHA 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.
(3) 7 CFR 3015 first became effective on November 10, 1981; 7 CFR
parts 3016 on October 1, 1988; and 7 CFR 3017 on March 18, 1989.
Grants made on or after those dates are subject to the provisions of
those regulations except to the extent of the express provisions 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 assume
all terms of the grant agreement.
(2) All other grants will be serviced in accordance with the Grant
Agreement and this subpart. Prior approval of the Administrator is
required except for actions covered in the preceding paragraph.
07 CFR 1951.216 Nonprogram (NP) loans.
Borrowers with NP loans are not eligible for any program benefits,
including appeal rights. However, FmHA 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.
07 CFR 1951.217 Public bodies.
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).
1951.218 -- 1951.219 (Reserved)
07 CFR 1951.220 General servicing actions.
(a) Payment in full. Payment in full of a loan is handled according
to part 1866 of this chapter (FmHA Instruction 451.4). 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 FmHA's interest in insurance policies according to
applicable provisions of subpart A of part 1806 (FmHA Instruction
426.1).
(3) Release FmHA's interest in any other security as appropriate,
consulting with OGC if necessary.
(b) Loan summary statements. Upon request of a borrower, FmHA 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 FmHA 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 Forms FmHA 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 FmHA 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 FmHA
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.
(c) Insurance. FmHA borrowers shall maintain insurance coverage as
follows:
(1) Community and Insured Business Programs borrowers shall
continuously maintain adequate insurance coverage as required by the
loan agreement and 1942.17(j)(3) of subpart A of part 1942 of this
chapter. Insurance coverage must be monitored in accordance with the
above-referenced section to determine that adequate policies and bonds
are in force.
(2) For all other types of loans covered by this subpart, property
insurance will be serviced according to subpart A of part 1806 of this
chapter (FmHA Instruction 426.1) in real estate mortgage cases, and
according to the loan agreement in other cases.
(d) Property taxes. Real property taxes are serviced according to
part 1863 of this chapter (FmHA Instruction 425.1). If State statutes
permit a personal property tax lien to have priority over FmHA's lien,
such taxes are serviced according to 1863.3 and 1863.4 (paragraphs III
and IV) of FmHA Instruction 425.1.
(e) Changes in borrower's legal organization. (1) The State Director
may approve, with OGC's concurrence, changes in a recipient's legal
organization, including revisions of articles of incorporation or
charter and bylaws, when:
(i) The change does not provide for a sole member type of
organization;
(ii) The borrower retains control over its assets and the operation,
management, and maintenance of the facility, and continues to carry out
its responsibilities as set forth in 1942.17(b)(3) of subpart A of part
1942 of this chapter; and
(iii) The borrower retains significant local ties with the rural
community.
(2) The State Director may approve, with prior concurrence of the
Administrator, changes in a recipient's legal organization which result
in a sole member type of organization, or any other change which results
in a recipient's loss of control over its assets and/or the operation,
management and maintenance of the facility, provided all of the
following have been or will be met:
(i) The change is in the best interest of the Government;
(ii) The State Director determines and documents that other servicing
options under this subpart, such as sale or transfer and assumption,
have been explored and are not feasible;
(iii) The loan is classified as a nonprogram loan;
(iv) The borrower is notified that it is no longer eligible for any
program benefits, but will remain responsible under the loan agreement;
and
(v) Prior concurrence of the Administrator is obtained. Requests
will be forwarded to the Administrator: Attention (appropriate program
division), and will include the case file; Exhibit A of this subpart
(available in any FmHA office), appropriately completed; the proposed
changes; OGC comments; and any other necessary supporting information.
(f) Membership liability. As a loan approval requirement, some
borrowers may have special agreements with members of the purchase of
shares of stock or for payment of a pro rata share of the loan in the
event of default, or they may have authority in their corporate
instruments to make special assessments in that event. Such agreements
may be referred to as individual liability agreements and may be
assigned to and held by FmHA as additional security. In other cases the
borrower's note may be endorsed by individuals. The liability
instruments will be serviced in a manner indicated by their contents and
the advice of OGC to adequately protect FmHA's interest. Servicing
actions necessary due to such provisions will be noted on Form FmHA
1905-10, ''Management System Card -- Association.''
(g) Other security. Other security such as collateral assignments,
water stock certificates, notices of lienholder interest (Bureau of Land
Management grazing permits) and waivers of grazing privileges (Forest
Service grazing permits) will be serviced to protect the interest of
FmHA, and in compliance with any special servicing actions developed by
the State Director with OGC assistance. Evidence of the security will
be filed in the servicing office case file. Necessary servicing actions
will be noted on Form FmHA 1905-10.
(h) Correcting errors in security instruments. Land, buildings, or
chattels included in a mortgage through mutual mistake may be released
from the mortgage by the State Director when substantiated by the
factual situation. The release is contingent on the State Director
determining, with OGC advice, that the property was included due to
mutual error.
(i) Present market value determination. For purposes of this
subpart, the value of security is determined by the approval official as
follows:
(1) Security representing a relatively small portion of the total
value of the security property. The approval official will determine
that the real estate and chattels are disposed of at a reasonable price.
A current appraisal report may be required.
(2) Security representing a relatively large portion of the total
value of the security property. The approval official will require a
current appraisal report, and the sale prices of the real estate and
chattels disposed of will at least equal the present market value as
determined by this appraisal.
(3) Appraisal report. If required, a current appraisal report will
be completed in accordance with 1942.3 of subpart A of part 1942 of
this chapter. The appraisal will be completed by a qualified FmHA
employee or an independent appraiser as determined appropriate by the
approval official.
07 CFR 1951.221 Collections, payments and refunds.
Collections are processed in accordance with subpart B of part 1951
of this chapter. 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 FmHA's security.
(i) Distribution of such payments is made as follows:
(A) First, to the FmHA 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 FmHA 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 FmHA 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 FmHA Instruction 426.1); and similar actions which
reduce the value of basic security. At the option of the borrower,
regular facility revenue may also be used as extra payments when regular
payments are current. Unless otherwise established in the note or bond,
extra payments will be distributed and applied as follows:
(i) First to the account secured by the lowest priority of lien on
the property from which the extra payment was obtained. Any balance
will be applied to other FmHA loans in ascending order of priority.
(ii) For amortized loans, first to interest accrued to the date
payment is received, and then to principal. For debt instruments with
installments of principal plus interest, such payments will be applied
to the final unpaid principal installment.
(b) Grazing Association Loans, Irrigation, Drainage and other Soil
and Water Conservation Loans, and Indian Tribes and Tribal Corporation
Loans. (1) Regular payments for such loans are defined in 1951.8(a) of
subpart A of part 1951 of this chapter, and are distributed according to
1951.9(a) of that subpart unless otherwise established by the note or
bond.
(2) Extra payments are defined in 1951.8(b) of subpart A of part
1951 of this chapter, and are distributed according to 1951.9(b) of
that subpart.
07 CFR 1951.222 Subordination of security.
When a borrower requests FmHA 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 FmHA 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
FmHA indebtedness, and the amount must be within the approval official's
authority as set forth in exhibits A, B, and C of subpart A of part 1901
of this chapter (available in any FmHA office).
(2) It must be determined that the borrower cannot refinance its FmHA
debt in accordance with subpart F of part 1951 of this chapter.
(3) The transaction will further the purposes for which the FmHA loan
was made, not adversely affect the borrower's debt-paying ability, and
result in the FmHA 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 FmHA 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
activities so as to make it ineligible for FmHA loan assistance.
(10) Necessary consent and subordination of all other outstanding
security interests must be obtained.
(11) For Indian Tribes and Tribal Corporations, loan funds will not
be used for any purpose that will contribute to excessive erosion of
highly erodible land or to the conversion of wetlands to produce an
agricultural commodity as further explained in exhibit M of subpart G of
part 1940 of this chapter. This requirement will be monitored
throughout the term of the loan.
(b) Authorities. Proposals not meeting one or more of the above
requirements will be submitted to the Administrator, Attention
(appropriate program division) for prior concurrence. All other
proposals may be approved by the official with loan approval authority
under subpart A of part 1901 of this chapter.
(c) Processing. The case file is to include:
(1) The borrower's written request on Form FmHA 465-1, ''Application
for Partial Release, Subordination, or Consent,'' if appropriate, or in
other acceptable format. The request must contain the purpose of the
subordination; exact amount of money or property involved; description
of security property involved; type of security instrument; name,
address, line of business and other general information pertaining to
the party in favor of which the request is made; and other pertinent
information to evaluate the need for the request;
(2) Current balance sheet;
(3) If development work is involved, an operating budget on Form FmHA
442-7, ''Operating Budget,'' or similar form which projects income and
expenses through the first full year of operation following completion
of planned improvements; or if no development work is involved, an
income statement and budget on Form FmHA 442-2, ''Statement of Budget,
Income, and Equity,'' schedules 1 and 2, or similar form;
(4) Copy of proposed security instrument;
(5) Appraisal report, when applicable;
(6) OGC opinion on the request;
(7) Exhibit A of this subpart (available in any FmHA office),
appropriately completed;
(8) Appropriate environmental review; and
(9) Any other necessary supporting information.
(d) Closing. All requests for subordination will be closed according
to instructions from OGC except those which affect only chattel liens
other than pledges of revenue. FmHA's consent on Form FmHA 465-1 will
be signed concurrently with Form FmHA 460-2, ''Subordination by the
Government,'' when applicable.
07 CFR 1951.223 Reamortization.
(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 Form FmHA 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 FmHA 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 FmHA's security position. The FmHA
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 evidence of debt unless OGC
recommends that the terms of the existing document be modified. Form
FmHA 1951-33 may be used to effect such modifications, if legally
adequate, or other forms may be used if acceptable to FmHA. The
original of a new note or any endorsement required by OGC is to be
attached to the existing note, filed in the servicing office, and
retained until the account is paid in full or otherwise satisfied. A
copy will be forwarded to the Finance Office.
(4) Bonds and notes with other than real or chattel security pledged
to FmHA. Loans evidenced by bonds, or by notes with other than real or
chattel security pledged to FmHA, may be reamortized using procedures
acceptable to the State Director and legally permissible under State
statutes in the opinion of the borrower's counsel and the OGC.
(i) The procedure may consist of a new debt instrument or agreement
for the total FmHA indebtedness, including the delinquency, or a new
instrument or agreement whereby the borrower agrees to repay the
delinquency plus interest. If a new instrument or agreement for only
the delinquent amount is used, a new loan number will be assigned to the
delinquent amount, and the borrower will be required to pay the amounts
due under both the original and the new instruments.
(ii) When a delinquent or problem loan cannot be reamortized by
issuing a new debt instrument due to State statutes, or the cost of
preparation and closing is prohibitive, the rescheduling agreement
provided as Exhibit H of this subpart (available in any FmHA office),
may be used.
(iii) Section 1942.19 of subpart A of part 1942 of this chapter
applies to any new bonds issued unless precluded by State statutes or an
exception is approved by the National Office.
(iv) If State statutes do not require the release of existing bonds,
they will be retained with the new bond instrument or agreement in the
FmHA office authorized to store such documents. If State statutes
require release of existing bonds, the exchange will be accomplished by
the District Director, and the new bond and/or agreement will be
retained in the appropriate office.
(5) New debt instruments or agreements. (i) A copy will be sent to
the Finance Office after execution, except that if serial bonds are
used, the original bond(s) will be submitted to the Finance Office.
(ii) Any agreement used will contain:
(A) The amount delinquent, which must equal the total delinquency on
the account and net advances (the unpaid principal on any advance and
the accrued interest on any advance through the date of reamortization,
less interest payments credited on the advance account);
(B) The effective date of the reamortization;
(C) The number of years over which the delinquency will be amortized;
(D) The repayment schedule; and
(E) The interest rate.
(iii) A payment will be due on the next scheduled due date.
Deferment of interest and/or principal payments is not authorized.
(iv) A separate new instrument will be required for each loan being
reamortized.
(v) If amortized payments are not used, the schedule of principal
installments developed will be such that combined payments of principal
and interest closely approximate an amortized payment.
(55 FR 4399, Feb. 8, 1990, as amended at 56 FR 25351, June 4, 1991)
07 CFR 1951.224 Third party agreements.
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)(3) 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)(3) 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 FmHA;
(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 FmHA is a
lienholder on the subject facility and, as such, the lease is
subordinate to the rights and claims of FmHA 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 necessary until liquidation can be
accomplished;
(iii) Leasing is not an alternative to, or means of delaying,
liquidation action;
(iv) The lease and use of any proceeds from the lease will further
the objective of the loan;
(v) Rental income is assigned to FmHA in an amount sufficient to make
regular payments on the loan and operate and maintain the facility
unless such payments are otherwise adequately secured;
(vi) The lease is advantageous to the borrower and is not
disadvantageous to the Government;
(vii) If foreclosure action has been approved and the case has been
submitted to OGC, consent to lease and use of proceeds will be granted
only with OGC's concurrence; and
(viii) The lease does not exceed a one-year period. The property may
not be under lease more than two consecutive years without authorization
from the National Office. Long-term leases may be approved, with prior
authorization from the National Office, if necessary to ensure the
continuation of services for which the loan was made and if other
servicing options contained in this subpart have been determined
inappropriate for servicing the loan.
(b) Mineral leases. Unless liquidation is pending, the State
Director is authorized to approve mineral leases when:
(1) The lessee agrees, or is liable without any agreement, to pay
adequate compensation for any damage to the real estate surface and
improvements. Damage compensation will be assigned to FmHA or the prior
lienholder by the use of Form FmHA 443-16, ''Assignment of Income from
Real Estate Security,'' or other appropriate instrument;
(2) Royalty payments are adequate and are assigned to FmHA on Form
FmHA 443-16 in an amount determined by the State Director to be adequate
to protect the Government's interest;
(3) All or a portion of delay rentals and bonus payments may be
assigned on Form FmHA 443-16 if needed for protection of the
Government's interest;
(4) The lease, subordination, or consent form is acceptable to OGC;
(5) The lease will not interfere with the purpose for which the loan
or grant was made; and
(6) When FmHA consent is required, the borrower submits a completed
Form FmHA 465-1. The form will include the terms of the proposed
agreement and specify the use of all proceeds, including any to be
released to the borrower.
(c) Management agreements. Management agreements should contain the
minimum suggested contents contained in Guide 24 of part 1942, subpart A
of this chapter (available in any FmHA office).
(d) Affiliation agreements. An affiliation agreement between the
borrower and a third party may be approved by the State Director, with
OGC concurrence, if it provides for shared services between the parties
and does not result in changes to the borrower's legal organizational
structure which would result in its loss of control over its assets
and/or over the operation, management, and maintenance of the facility
to the extent that it cannot carry out its responsibilities as set forth
in 1942.17(b)(3) of subpart A of part 1942 of this chapter. However,
affiliation agreements which result in a loss of borrower control may be
approved with prior concurrence of the Administrator if the loan is
reclassified as a nonprogram loan and the borrower is notified that it
is no longer eligible for any program benefit. Requests forwarded to
the Administrator will contain the case file, the proposed affiliation
agreement, and necessary supporting information.
(e) Processing. The consent of other lienholders will be obtained
when required. When National Office approval is required, or if the
State Director wishes to have a transaction reviewed prior to approval,
the case file will be forwarded to the National Office and will include:
(1) A copy of the proposed agreement;
(2) Exhibit A of this subpart (available in any FmHA office),
appropriately completed;
(3) Any other necessary supporting information.
07 CFR 1951.225 Liquidation of security.
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 FmHA 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 FmHA 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.
07 CFR 1951.226 Sale or exchange of security property.
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
FmHA 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 FmHA'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 FmHA 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 FmHA a written agreement assuming all rights and
obligations of the original grantee if grant funds were provided. See
1951.215 below for additional guidance on grant agreements.
(5) The proceeds remaining after paying any reasonable and necessary
selling expenses are used for one or more of the following purposes:
(i) To pay on FmHA debts according to 1951.221 of this subpart; on
debts secured by a prior lien; and on debts secured by a subsequent
lien if it is to FmHA's advantage.
(ii) To purchase or acquire through exchange property more suited to
the borrower's needs, if the FmHA debt will be as well secured after the
transaction as before.
(iii) To develop or enlarge the facility if necessary to improve the
borrower's debt-paying ability; place the operation on a sounder basis;
or otherwise further the loan objectives and purposes.
(6) Disposition of property acquired in whole or part with FmHA grant
funds will be handled in accordance with the grant agreement.
(c) Processing. (1) The case file will contain the following:
(i) Except for actions approved by the District Director, Exhibit A
of this subpart (available in any FmHA office), appropriately completed;
(ii) The appraisal report, if appropriate;
(iii) Name of purchaser, anticipated sales price, and proposed terms
and conditions;
(iv) Form FmHA 1965-8, ''Release from Personal Liability,'' including
the County Committee memorandum and the State Director's
recommendations;
(v) An executed Form FmHA 400-4, if applicable;
(vi) An executed Form FmHA 465-1, if applicable;
(vii) Form FmHA 460-4, ''Satisfaction,'' if a debt has been paid in
full or satisfied by debt settlement action. For cases involving real
estate, a similar form may be used if approved by OGC; and
(viii) Written approval of the Administrator when required under
1951.226(a)(3) of this subpart;
(2) Releasing security. (i) The District Director is authorized to
satisfy or terminate chattel security instruments when 1951.226(b) of
this subpart and 1962.17 and 1962.27 of subpart A of part 1962 of this
chapter have been complied with. Partial release may be made by using
Form FmHA 460-1, ''Partial Release,'' or Form FmHA 462-12, ''Statements
of Continuation, Partial Release, Assignment, Etc.''
(ii) Subject to 1951.226(b) of this subpart, the State Director is
authorized to release part or all of an interest in real estate security
by approving Form FmHA 465-1. Partial release of real estate security
may be made by use of Form FmHA 460-1 or other form approved by OGC.
(3) FmHA liens will not be released until the sale proceeds are
received for application on the Government's claim. In states where it
is necessary to obtain the insured note from the lender to present to
the recorder before releasing a portion of the land from the mortgage,
the borrower must pay any cost for postage and insurance of the note
while in transit. The District Director will advise the borrower when
it requests a partial release that it must pay these costs. If the
borrower is unable to pay the costs from its own funds, the amounts
shown on the statement of actual costs furnished by the insured lender
may be deducted from the sale proceeds.
(d) Release from liability. (1) When an FmHA debt is paid in full
from the proceeds of a sale, the borrower will be released from
liability by use of Form FmHA 1965-8.
(2) When sale proceeds are not sufficient to pay the FmHA debt in
full, any balance remaining will be handled in accordance with
procedures for debt settlement actions set forth in subpart C of part
1956 of this chapter.
(i) In determining whether a borrower should be released from
liability, the State Director will consider the borrower's debt-paying
ability based on its assets and income at the time of the sale.
(ii) Release from liability will be accomplished by using Form FmHA
1965-8 and obtaining from the County Committee a memorandum recommending
the release which contains the following statement:
XXXXXXXX in our opinion does not have reasonable debt-paying ability
to pay the balance of the debt after considering its assets and income
at the time of the sale. The borrower has cooperated in good faith,
used due diligence to maintain the security against loss, and otherwise
fulfilled the covenants incident to the loan to the best of its ability.
Therefore, we recommend that the borrower be released from liabilty
upon the completion of the sale.
07 CFR 1951.227 Protective advances.
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 FmHA if the debt instrument provides that FmHA 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 FmHA Instructions 2024-A and 2024-P (available in any FmHA
office).
1951.228 -- 1951.229 (Reserved)
07 CFR 1951.230
07 CFR Transfer of security and assumption of loans.
(a) General. It is FmHA 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 FmHA's security position or the FmHA program in
the area.
(3) Transfers to eligible applicants will receive preference over
transfers to ineligible applicants if recovery to FmHA is not less than
it would be if the transfer were to an ineligible applicant.
(4) If the FmHA 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) FmHA 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 FmHA 400-4 to continue nondiscrimination covenants and
provide to FmHA 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 FmHA debt is assumed.
However, equity payments will not be made on more favorable terms than
those on which the balance of the FmHA debt will be paid.
(9) Transferees must have the ability to pay the FmHA debt as
provided in the assumption agreement and the legal capacity to enter
into the contract. The applicant will submit a current balanced sheet
using Form FmHA 442-3, ''Balance Sheet,'' and budget and cash flow
information using Form FmHA 442-2, or similar forms. For ineligible
applicants, such information may be supplemented by a credit report from
an independent source or verified by an independent certified public
accountant.
(10) For purposes of this subpart, transfers to eligible applicants
will include mergers and consolidations. Mergers occur when two or more
corporations combine in such a manner that only one remains in
existence. In a consolidation, two or more corporations combine to form
a new, consolidated corporation, with all of the original corporations
ceasing to exist. In both mergers and consolidations, the surviving or
emerging corporation takes the assets and assumes the liabilities of the
corporation(s) which ceased to exist. Such transactions must be
distinguished from transfers and assumptions, in which a transferor will
not necessarily go out of existence and the transferee will not always
take all assets or assume all liabilities of the transferor.
(11) A current appraisal report to establish the present market value
of the security will be completed in accordance with 1951.220(i) of
this subpart when the full debt is not being assumed.
(12) There must be no lien, judgment, or similar claims of other
parties against the FmHA security being transferred unless the
transferee is willing to accept such claims and the FmHA approval
official determines that they will not prevent the transferee from
repaying the FmHA debt, meeting all operating and maintenance costs, and
maintaining required reserves. The written consent of any other
lienholder will be obtained where required.
(b) Authorities. The State Director is authorized to approve
transfers and assumptions of FmHA loans in accordance with the
provisions of paragraphs (c) and (d) of this section, except for the
following, which require prior approval of the Administrator:
(1) Proposals which will involve a loss to the Government;
(2) Proposals involving a transfer to one or more members of the
present borrower's organization;
(3) Proposals involving rates and terms which are more liberal than
those set forth in 1951.230(c) of this subpart;
(4) Proposals involving a cash payment to the present borrower which
exceeds the actual sales expenses;
(5) The transferee refuses to assume all terms of the Grant Agreement
for a project financed in part with FmHA grant funds;
(6) Proposed transfers to ineligible applicants when there is no
significant downpayment and/or the repayment period is to exceed 25
years; and
(7) For Indian Tribes and Tribal Corporations, the requirements found
in exhibit M of subpart G of part 1940 of this chapter are not met.
(c) Eligible applicants. Except as noted in 1951.230(b) of this
subpart, the State Director is authorized to approve transfers of
security property to and assumptions of FmHA debts by transferees who
would be eligible for financial assistance under the loan program
involved for the type of loan being transferred. The State Director
must determine and document that eligibility requirements have been
satisfied.
(1) If a loan is evidenced and secured by a note and lien on real or
chattel property, Form FmHA 1951-15, ''Community Programs Assumption
Agreement,'' will be executed by the transferee. When the terms of the
loan are changed, the new repayment period may not exceed the lesser of
the repayment period for a new loan of the type involved or the expected
life of the facility. Interest will accrue at the rate currently
reflected in Finance Office records.
(2) If the loan is evidenced and secured by a bond, procedures will
be followed which are acceptable to the State Director and legally
permissible under State law in the opinion of the borrower's counsel and
OGC. The interest rate will be the rate currently reflected in Finance
Office records. Any new repayment period provided may not exceed the
lesser of the repayment period for a new loan of the type involved or
the expected life of the facility.
(3) Loans being transferred and assumed may be combined when the
security is the same, new terms are being provided, a new debt
instrument will be issued, and the loans have the same interest rate and
are for the same purpose. If applicable, 1942.19(h)(11) will govern
the preparation of any new debt instruments required.
(4) A loan may be made in connection with a transfer if the
transferee meets all eligibility and other requirements for the kind of
loan being made. Such a loan will be considered as a separate loan, and
must be evidenced by a separate debt instrument. However, it is
permissible to have one authorizing loan resolution or ordinance if
permitted by State statutes.
(5) Any development funds remaining in a supervised bank account
which are not to be refunded to FmHA will be transferred to a supervised
bank account for the transferee simultaneously with the closing of the
transfer for use in completing planned development.
(d) Ineligible applicants. Except as noted in 1951.230(b) of this
subpart, the State Director is authorized to approve transfer and
assumptions to transferees who would not be eligible for financial
assistance under the loan program involved for the type of loan being
transferred. However, the State Director is authorized to approve all
transfers of incorporated Economic Opportunity Cooperative loans to
ineligible applicants without regard to the requirements set forth in
1951.230(b). Such transfers are considered only when an eligible
transferee is not available or when the recovery to FmHA from a transfer
to an available eligible transferee would be less. Transfers are not to
be considered as a means by which members of the transferor's governing
body can obtain an equity or as a method of providing a source of easy
credit for purchasers.
(1) Ineligible applicants must pay a one-time nonrefundable transfer
fee when they submit an application or proposal.
(i) The National Office will issue a directive annually advising the
field of the amount of the fee. Any cost for appraisals performed by
non-FmHA personnel will be handled in accordance with FmHA Instruction
2024-P (available in any FmHA office), and will be added to the basic
fee.
(ii) Transfer fees will be deposited in accordance with current
instructions governing the handling of collections. The fees will be
identified as transfer fees on Form FmHA 451-2, ''Schedule of
Remittances,'' and will be included on the Daily Activity Report. The
amount will be credited to the Rural Development Insurance Fund.
(iii) If the State Director determines waiver of the transfer fee is
in the best interest of the government, he or she will request prior
approval by submitting the transfer case file established in accordance
with processing requirements set forth below to the National Office,
Attention (appropriate program division).
(2) Any funds remaining in a supervised bank account will be refunded
to FmHA and applied to the debt as a condition of transfer.
(3) The interest rate will be the greater of the rate specified for
the note in current Finance Office records or the market rate for
Community Programs as of the transfer closing date.
(4) The transferred loan will be identified as an NP loan and
serviced in accordance with 1951.216 of this subpart.
(5) Form FmHA 465-5, ''Transfer of Real Estate Security,'' will be
used, and will be modified as appropriate before execution.
(6) Consideration will be given to obtaining individual liability
agreements from members of the transferee organization.
(e) Release from liability. Except when nonprogram loans or Economic
Opportunity Cooperative loans are involved, transferors may be released
from liability in accordance with the following:
(1) If the full amount of the debt is assumed, the State Director may
approve the release from liability by use of Form FmHA 1965-8.
(2) If less than the full amount of the debt is assumed, any balance
remaining will be handled in accordance with procedures for debt
settlement actions set forth in subpart C of part 1956 of this chapter.
(i) In determining whether a borrower should be released from
liability, the State Director will consider the borrower's debt-paying
ability based on its assets and income at the time of the sale.
(ii) Release from liability will be accomplished by using Form FmHA
1965-8 and obtaining from the County Committee a memorandum recommending
the release which contains the statement set forth in
1951.226(d)(2)(ii) of this subpart.
(f) Processing. Transfers and assumptions will be processed in
accordance with the following:
(1) A transfer case file organized in accordance with FmHA
Instruction 2033-A (available in any FmHA office) will be established,
and will contain all documents and correspondence relating to the
transfer. The forms utilized for transfers and assumptions are listed
in Exhibit D (available in any FmHA office). All forms listed must be
completed and included in the case file unless inappropriate for the
particular situation.
(2) A letter of conditions establishing requirements to be met in
connection with the transfer and assumption will be issued, and the
transferee will be required to execute Form FmHA 442-46, ''Letter of
Intent to Meet Conditions,'' prior to the closing of the transfer.
(3) Both the transferee and transferor are responsible for obtaining
the legal services necessary to accomplish the transfer.
(4) Transfers will be closed in accordance with instructions provided
by OGC.
(5) When the transferee is a public body and Form FmHA 1951-15 is not
suitable, the transferee's attorney will prepare the documents necessary
to effect the transfer and assumption and submit them for approval by
FmHA and OGC.
(6) Accrued interest to be entered in either Table 1 of Form FmHA
1951-15 or other appropriate assumption agreement is to be obtained
using the status screen option in ADPS.
(7) The following forms, if utilized, will be sent immediately to the
Finance Office:
(i) Form FmHA 1951-15 or other appropriate assumption agreement;
(ii) A conformed copy of Form FmHA 1965-8.
(8) If an FmHA grant was made in conjunction with the loan being
transferred, the transferee must agree in writing to assume all rights
and obligations of the original grantee. See 1951.215 for additional
guidance on grant agreements.
(9) The transferee will obtain insurance according to requirements
for the loan(s) being transferred unless the approval official requires
additional insurance. When the entire FmHA debt is being assumed and an
amount has been advanced for insurance premiums or any other purposes,
the transfer will not be completed until the Finance Office has charged
the advance to the transferor's account.
(10) Rates and terms. (i) If the transfer will be closed at the same
rates and terms, the transferee will be informed of the amount needed to
be on schedule by the next installment due date.
(ii) If the transfer will be closed at new rates and terms, the
transferee will be informed of the amount of principal and interest owed
based on information obtained using the ADPS status screen option.
(11) The effective date of a transfer is the actual date the transfer
is closed, which is the same date Form FmHA 1951-15 or other appropriate
assumption agreement is signed.
(12) Title to all assets will be conveyed from the transferor to the
transferee unless other arrangements are agreed upon by all parties
concerned, including FmHA. All instruments of conveyance will contain
the covenant referenced in 1951.204 of this subpart.
(13) If an insured loan being held by an investor is involved, the
Finance Office will have to repurchase the note prior to processing the
assumption agreement.
(14) When National Office approval is required, the transfer case
file will be submitted to the Administrator, Attention: (appropriate
program division), with Exhibit A of this subpart (available in any FmHA
office), appropriately completed, and a cover memorandum which denotes
any unusual circumstances.
(15) The District Director must review Form FmHA 1910-11, ''Applicant
Certification, Federal Collection Policies for Consumer or Commercial
Debts,'' with the applicant, and the form must be signed by the
applicant and included in the file.
07 CFR 1951.231 Special provisions applicable to Economic Opportunity
(EO) Cooperative Loans.
(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 FmHA 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 FmHA 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 FmHA office), executed
by the remaining members of the association, the proposed new member,
and the withdrawing member; and
(vii) Form FmHA 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 FmHA 1951-15.
(3) Upon completion of the above actions, the State Director may
release the outgoing member from personal liability using Form FmHA
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 FmHA 1951-15 and, if applicable, Form FmHA 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.
(b) Withdrawal of members from Unincorporated Cooperatives when new
member not available. Withdrawal of a member who no longer utilizes the
services of an association may be permitted even though a new member is
not available, provided:
(1) The State Director determines that the remaining members have
sufficient need for the property, and that the withdrawal of the member
will not adversely affect collection of the loan; and
(2) The remaining members obtain from the outgoing member an
agreement conveying his or her interest in the cooperative property to
them. They may also wish to agree to protect the outgoing member
against liability on the debt owed to FmHA as well as any other debts.
Exhibit C of this subpart, ''Agreement for Withdrawal of Member (Without
New Member),'' (available in any FmHA office), may be used by the
cooperative. FmHA will not be a party to the agreement.
(c) Addition of new members (no withdrawing member or transfer
involved) for both Incorporated and Unincorporated Cooperatives. (1) A
new member may be admitted to the association even though there is no
withdrawing member, if:
(i) The members of the association agree to accept the proposed new
member, and
(ii) The State Director determines that the association owns adequate
facilities to provide service to the new member.
(2) The servicing office will submit to the State Office the case
file and items (i) through (vi) of 1951.231(a)(1).
(3) If the State Director determines after the review of the above
information that the proposed new member is eligible and the transaction
is justified, the State Director may approve the transaction by
executing Form FmHA 1951-15.
(4) Form FmHA 1951-15 will be forwarded immediatly to the Finance
Office with a memorandum indicating that the form is intended only to
establish liability for a new member.
(d) Deceased members of Unincorporated Cooperatives. Form FmHA
442-24, ''Operating Agreement,'' (now obsolete) was executed by
recipients of these loans. Paragraph 10 of that form provides that in
case of the death of any member, the heirs or personal representative of
the deceased member shall take the deceased member's place in the
association. This provision also covers sale of the decedent's interest
in the association if the sale is necessary to pay debts of the estate.
(1) If the heirs or personal representative do not wish to continue
membership in the association, the remaining members may be permitted to
continue to operate the property if FmHA's financial interest will not
be jeopardized. The remaining members should obtain from the deceased
member's estate an agreement conveying the estate's interest in the
cooperative property to them. The remaining members may wish to agree
to protect the estate against liability on the debt to FmHA as well as
any other debts of the cooperative.
(2) The requirement of 1962.46(h) of subpart A of part 1962 will
also be followed.
(e) Action which affects individual members of Unincorporated EO
Cooperative security. The borrower will be expected to protect its own
interest in condemnation, trespass, quiet title, and other cases
affecting the security. The servicing office will immediately furnish
the complete facts concerning any action taken against individual
members of Unincorporated Cooperatives to the State Director together
with the case file.
(f) Debt Settlement. Debt settlement actions for Economic
Opportunity Cooperative loans must be handled under the Federal Claims
Collection Act; proposals will be submitted to the National Office for
review and approval.
07 CFR 1951.232 Water and waste disposal systems which have become part
of an urban area.
A water and/or waste disposal system serving an area which was
formerly a rural area as defined in 1942.17(b) 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 FmHA debt in full; or
(2) The urban community or another entity may accept a transfer of
the FmHA 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 FmHA borrower will:
(i) Meet its debt service and reserve account requirements to FmHA;
(ii) Retain its corporate existence until FmHA has been paid in full;
and
(iii) If agreed upon by both parties, convey title to the facility to
the urban community when the FmHA 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) Transfer and assumption of a borrower's assets and indebtedness
will be handled in accordance with 1951.230 of this subpart.
(3) Lease-operation-to-purchase arrangements are not permitted.
(4) When a lease-purchase arrangement is proposed, the State Director
will obtain a proposed agreement drafted by either the borrower or the
urban community. The following will be forwarded to the Administrator,
Attention: Water and Waste Disposal Division, for review and approval
authorization:
(i) A copy of the proposed agreement;
(ii) Exhibit A of this subpart (available in any FmHA office),
appropriately completed;
(iii) OGC comments;
(iv) The case file, including all documentation appropriate for the
type of servicing action involved.
1951.233 -- 1951.239 (Reserved)
07 CFR 1951.240 State Director's additional authorizations and
guidance.
(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 FmHA 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 FmHA, 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 FmHA indebtedness. Defeasance is the use of
invested proceeds from a new bond issue to repay outstanding bonds in
accordance with the repayment schedule of the outstanding bonds. The
new issue supersedes the contractual agreements the borrower agreed to
in the prior issue. Defeasance, or amending outstanding loan
instruments and agreements to permit defeasance, of FmHA debt
instruments is not authorized, since defeasance limits, or eliminates
entirely, the borrower's ability to comply with statutory refinancing
requirements implemented by subpart F of part 1951 of this chapter.
07 CFR 1951.241 Special provision for interest rate change.
(a) General. Effective October 1, 1981, and thereafter, upon request
of the borrower, the interest rate charged by FmHA 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 FmHA 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 FmHA based upon requirements in effect at the date of
loan closing. Exhibit E of this subpart (available in any FmHA office)
contains a summary of interest rate requirements for specific time
periods. Exhibit C of Subpart O of this part (available in any FmHA
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 FmHA 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 FmHA 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 to borrower and borrower selection of interest rate.
(1) FmHA servicing officials will notify each borrower meeting the
provisions of this section of the availability of a choice of interest
rate. The notification will be made in writing at the earliest possible
date, utilizing Exhibit G of this subpart (available in any FmHA
office), and sent by certified mail, return receipt requested.
Borrowers will be advised at the time of notification that if a change
of interest rate is requested, the change will be accomplished
administratively by FmHA. The effect of the change on the loan account
will also be fully explained to the borrower.
(2) Borrowers must notify FmHA within 90 calendar days of the date of
FmHA notification indicating their election to retain the rate in effect
at loan approval or to change the rate to the rate in effect at the time
of loan closing. If the borrower does not respond within the 90-day
period, FmHA will not consider a future request for a lower interest
rate under the provisions of this subpart.
(3) The borrower is responsible for assuring that the official
executing the letter requesting the change of interest rate is duly
authorized and any action(s) necessary for this authorization have been
taken as required. Any costs associated with a change of interest rate
will be the responsibility of the borrower.
(c) Processing loan interest rate change. The State Director is
authorized to approve loan interest rate changes which meet the
requirements of this section. Loan interest rate changes will be
accomplished as follows:
(1) All loan payments already applied to the account(s) will be
reversed and reapplied by FmHA utilizing the changed interest rate. The
balance remaining after the completion of the reversal and reapplication
procedures will be applied first to any delinquency on the account and
then to principal.
(2) For paid-in-full accounts which meet the criteria of 1951.241(a)
of this subpart, the balance of loan payments after completion of the
reversal and reapplication procedures will be returned to the borrower
unless the borrower is delinquent on another FmHA loan of the same type.
In those cases the amount will be applied to the delinquent amount
owed, with any balance refunded to the borrower.
(3) The Finance Office will administratively change the interest rate
on a borrower's account in accordance with notification from the
servicing official. The installment schedule set forth in each
borrower's debt instrument will not change. The original principal
schedule for principal-plus-interest accounts where principal only is
stipulated will continue to be used for payment calculation by the
Finance Office. Amortized accounts will adhere to the original payment
schedule and amount. The last scheduled principal installment will be
reduced by the amount of the balance previously generated by the
reversal and reapplication of payments.
(4) When FmHA has processed a change of interest rate for an
amortized loan and a reduction in installment amounts is needed to
provide for a sound operation, the borrower may request reamortization
in accordance with 1951.223 of this subpart.
(5) The borrower will be notified in writing of the new interest rate
as changed.
1951.242 -- 1951.249 (Reserved)
07 CFR 1951.250 OMB control number.
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. Send comments regarding this burden estimate or any other
aspect of this collection of information, including suggestions for
reducing this burden, to Department of Agriculture, Clearance Officer,
OIRM, Room 404-W, Washington, DC 20250; and to the Office of Management
and Budget, Washington, DC 20503.
07 CFR 1951.250 Exhibits to Subpart E
Editorial Note: Exhibits A through H are not published in the Code
of Federal Regulations.
07 CFR 1951.250 Exhibit A -- Report on Servicing Action
07 CFR 1951.250 Exhibit B -- Agreement for New Member (With or Without Withdrawing Member)
07 CFR 1951.250 Exhibit C -- Agreement for Withdrawal of Member (Without New Member)
07 CFR 1951.250 Exhibit D -- Items to be Included in Transfer and Assumption Dockets (if applicable)
07 CFR 1951.250 Exhibit E -- Interest Rate Requirements and Effective Dates
07 CFR 1951.250 Exhibit F -- Instruction to FmHA Personnel to Implement Public Law 100-233
07 CFR 1951.250 Exhibit G -- Letter to Borrower Notifying of Choice of Interest Rate
07 CFR 1951.250 Exhibit H -- Rescheduling Agreement -- Public Bodies
07 CFR 1951.250 Subpart F -- Analyzing Credit Needs and Graduation of
Borrowers
Source: 48 FR 40203, Sept. 6, 1983, unless otherwise noted.
07 CFR 1951.251 Purpose.
This subpart prescribes the policies to be followed when analyzing a
borrower's needs for continued Farmers Home Administration (FmHA)
supervision, further credit and graduation. All borrowers' loan
account(s) will be reviewed for graduation in accordance with this
subpart, except Guaranteed, Watershed, Resource Conservation and
Development, Rural Development Loan Funds, Rural Rental Housing loans
made pursuant to contracts entered into on or after December 15, 1989,
and Intermediary Relending Program loans.
(55 FR 29563, July 20, 1990)
07 CFR 1951.252 Definitions.
(a) Farmer program loans means 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/or Rural Housing loans for farm service buildings (RHF).
(b) Graduation, Farmer Programs. The payment in full of all Farmer
Programs (FP) loans or all FP 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. 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 funds were expended.
Borrowers must continue with their farming operations to be considered
as graduated.
(c) Graduation, Other Programs. The payment in full of all FmHA
insured loans, before maturity, by refinancing with other credit
sources. Graduated housing borrowers must continue to hold title to the
property.
(d) Reasonable rates and terms. Those commercial rates and terms
which borrowers are expected to meet when borrowing for similar purposes
and similar periods of time. The ''similar periods of time'' of
available commercial loans will be measured against, but need not be the
same as, the remaining or original term of the FmHA loan.
(e) Servicing official. The District or County Office official
responsible for the immediate servicing functions of the borrower.
(f) Trial referral. A program whereby lenders voluntarily
participate in reviewing selected financial information supplied by
servicing officials on FmHA borrowers who have been selected for
graduation.
(g) Graduation does not include credit which is guaranteed by the
United States.
(48 FR 40203, Sept. 6, 1983, as amended at 50 FR 45777, Nov. 11,
1985; 52 FR 26137, July 13, 1987; 56 FR 12442, Mar. 26, 1991)
07 CFR 1951.253 Objectives.
(a) The FmHA credit programs will be administered in a manner that
will assure they do not supplant or compete with credit available to
rural families and groups from other reliable credit sources.
(b) Borrowers should graduate to other credit on reasonable rates and
terms when they are able to do so.
(c) If FmHA cannot accomplish graduation voluntarily, liquidation
will be enforced when the following conditions exist:
(1) The borrower has both the legal capacity and financial ability to
accept other credit.
(2) Other credit appears to be available from a cooperative or
private credit source 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 cancelled when the FmHA loan is paid in full. The
District Director will do a comparative analysis of rents and incomes of
tenants living the FmHA project(s) eligible for graduation and
conventionally financed projects of the local area.
(d) The FmHA has the legal ability to require borrowers to graduate.
It must be recognized most, but not all, FmHA notes, security
instruments and/or loan agreements contain clauses requiring a borrower
to graduate when other credit can be obtained. The clause may say
''upon reasonable terms and conditions,'' ''on terms prevailing in the
area for loans for similar periods of time and purpose,'' or ''at
reasonable rates and terms for loans for similar purposes and periods of
time.'' These three provisions are all construed to mean the borrower
agrees to and can be forced, through legal action if necessary, to
graduate if it appears to FmHA that other credit can be obtained from
another source at reasonable rates and terms.
07 CFR 1951.254 Responsibility.
(a) The State Director is responsible for:
(1) Monitoring the orderly and timely review of the graduation
process and to assure the provisions of this subpart are complied with
in each State under his or her jurisdiction.
(2) Meeting with investment bankers, insurance and mortgage
companies, District President of the Federal Intermediate Credit Bank,
leaders of banks and organizations such as banking and savings and loan
associations serving areas within the State to discuss the FmHA
graduation policy. State Directors should also look for opportunities
at State or area banking or savings and loan association meetings to
convey the same messages.
(3) Graduation review and follow-up on all insured Business and
Industry loans.
(b) The District Director is responsible for:
(1) Monitoring the County Office graduation process for effectiveness
and conformance to this subpart.
(2) Meeting with lenders, that primarily lend in the District area,
to discuss graduation and determine their criteria and interest in
refinancing Community Program and Multiple Housing borrowers.
(3) Graduation review and follow-up on all Community Program and
Multiple Housing borrowers.
(4) Follow-up to ensure that County Supervisors meet with
conventional lenders in the area.
(c) The County Supervisor is responsible for:
(1) Graduation review and follow-up action on all Farmer Program and
rural Housing borrowers.
(2) Meeting with leaders from insurance and mortgage companies,
banks, savings and loan associations, Federal Land Banks and Production
Credit Associations as often as necessary to keep abreast of current
lending activities and to discuss the FmHA graduation policy.
(d) The County Committee is responsible for assisting the County
Supervisor in the review of only Farmer Program borrowers. However, an
exception will occur when a borrower has both a farm loan and another
type FmHA loan. In this case the County Committee will assist the
County Supervisor in the simultaneous review of all FmHA loans for which
the borrower is indebted.
(e) FmHA may enter into contracts whereby contractors will contact
borrowers referred to them by FmHA to attempt to have them refinance
their FmHA loans with private credit. See FmHA Instruction 2024-A,
Exhibit D (available in any FmHA office) for contracting program
authority guidance.
(48 FR 40203, Sept. 6, 1983, as amended at 53 FR 39740, Oct. 12,
1988; 56 FR 12442, Mar. 26, 1991)
07 CFR 1951.255 Nondiscrimination.
All loan servicing actions described in this subpart will be
conducted without regard to race, color, sex, marital status, national
origin, age, or physical or mental handicap (borrower must possess the
capacity to enter into a legal contract for services).
1951.256 -- 1951.260 (Reserved)
07 CFR 1951.261 Graduation of FmHA borrowers to other sources of
credit.
(a) Reaching an understanding with applicants and borrowers. (1)
Prior to loan closing, the servicing official will thoroughly discuss
the graduation requirements with the applicant and document the
discussion in the runing case record or other form provided for this
purpose. During the discussion, the applicant will be informed that:
(i) FmHA loans are a temporary source of credit; and that borrowers
will be requested to refinance their loans with other lenders when such
credit is available at reasonable rates and terms.
(ii) FmHA will expect them to comply with the FmHA graduation
requirement, as evidenced by the legally enforceable graduation clause
contained in the FmHA note, security instrument and/or loan agreement.
(iii) The loan will be reviewed on a regular basis for graduation
even though the loan has not matured.
(iv) A meeting may be requested by FmHA to discuss the graduation
requirement; and that they will be required to provide specific types
of financial information upon request.
(v) In certain cases, there are prepayment restrictions and/or other
limiting conditions which must be considered in the graduation process.
(vi) Requests for an additional loan, subordination, or consent to
additional indebtedness will not normally be approved until the
graduation request is resolved. (See 1951.263 of this subpart).
(2) Periodically the servicing official will reemphasize the
graduation requirement with borrowers during routine field visits and
office contacts.
(3) The servicing official will review in detail the possibility of
graduation during account servicing contacts.
(b) The graduation review period. (1) Graduation review lists will
be prepared as follows:
(i) By October 1 of each year the Finance Office furnishes the County
Office a list of active program borrowers who are to be considered for
graduation.
(A) For Farmer Program and Single Family Housing borrowers the list
will contain the names of borrowers who meet the criteria in Exhibit C
of this regulation. Farmer Program borrowers having received debt write
down within the past 3 fiscal years will not be included. The County
Supervisor will add to the list Farmer Program borowers whose financial
condition has substantially improved, except for those in bankruptcy.
The list will contain borrowers who have ben indebted for at least 3
years for Emergency (EM) and Economic Emergency (EE) loans, Operating
Loans ((OL), Farm Ownership (FO), Soil and Water (SW) and Softwood
Timber (ST) loans. Length of time of the indebtedness will not be a
determining factor on Single Family Housing borrowers.
(1) Nonsubsidized borrowers.
(2) Borrowers with outstanding balances (principal and interest) in
excess of $5,000.
(B) The County Supervisor will, upon receipt of the list:
(1) Identify RH borrowers that will, in accordance with 1951.254(d),
not require County Committee review action.
(2) Divide those RH borrowers identified in 1951.261(b)(l)(i)(B)(1)
of this section into four groups in such a manner that approximately
one-fourth will be reviewed each quarter.
(ii) For Community Programs except for Business and Industry loans
which are handled by the B&I Chief, the District Director, using the
Rural Community Facilities Tracking System (RCFTS) will generate a list
by June 1 of each year, indicating borrowers who have been indebted for
at least 5 years.
(iii) By March 1 of each year the State Office will furnish each
District Office a list of Multiple Family Housing (MFH) Program
borrowers and MFH Program transferees who have assumed loans on new
terms and who have been indebted for 15 years in the case of an
unsubsidized project and 20 years in the case of a subsidized project.
The State Office will compile the list using the Multi-Family Housing
Information Status Tracking and Retrieval System (MISTR).
(iv) By October 1 of each year, the County Supervisor, using
Management System Cards, will prepare a graduation review list
indicating borrowers who have been indebted for at least 6 years under
the RL Program.
(2) Borrowers' names with all outstanding loans will appear on the
graduation review lists in accordance with the following:
(i) For Single Family Housing and Farmer Programs, borrowers are
first selected for review based on the outstanding loan with the
earliest closing date. The graduation review lists compiled in
odd-numbered years will include the names of all borrowers whose oldest
outstanding loan was closed during odd-numbered calendar years. The
same procedure will apply to borrowers whose oldest outstanding loan
closed during even-numbered calendar years. Once a borrower has
appeared on the graduation review list, the borrower will automatically
reappear on the list every 2 years unless screened out by criteria in
exhibit C.
(ii) For Community and Business programs, graduation review lists
will be compiled on the basis of the year in which the initial loan or
transfer was closed. The graduation review lists compiled in
odd-numbered years will include the names of all borrowers whose loans
were closed during odd-numbered calendar years. The same procedure will
apply to borrowers whose loans closed during even-numbered calendar
years.
(iii) If the servicing official or County Committee has knowledge of
any other borrower whose financial circumstances have changed
sufficiently to warrant consideration, that borrower will also be
included in the graduation review.
(3) The servicing official will manage the graduation of borrowers
throughout the year to accomplish graduation prior to receiving a new
graduation list. The State Director through the issuance of a State
Supplement will establish program timetables. The National Office will
establish reporting requirements to monitor the administration of this
subpart.
(c) Survey of the lender criteria and policies. In order for the
graduation program to work effectively, both the servicing official and
lender(s) must be briefed on each other's programs, lending criteria and
policies. Periodically during the year, the servicing official will
briefly explain the graduation process and solicit lender assistance in
refinancing FmHA borrowers. Information gathered from these contacts
will be summarized in narrative form for each FmHA program and placed
with the graduation review list in the District or County Office
operational file on other credit. (The servicing official, in lieu of
writing a narrative for all programs, may use Exhibit A for Farmer
Program loans and Exhibit B for Rural Housing loans.) For Community
Program borrowers, the servicing official will request the assistance of
the State Director pursuant to 1942.2(a)(2)(i) of subpart A of part
1942. At a minimum, the narrative for each loan program will contain
the following:
(1) Lenders' interest in refinancing FmHA borrowers.
(2) Lenders' rates, terms, fees, loan conditions and policies.
(3) The amount of estimated credit available to FmHA borrowers.
(4) Lenders' interest in screening borrowers under the trial referral
provisions of 1951.261(f) of this subpart.
(d) The initial screening. Upon receipt of the graduation review
list, the servicing official will screen the list for those borrowers
who are clearly unable to graduate. This initial screening will focus
upon information immediately available in the borrower's case file and
in the operational file on other credit.
(1) The servicing official will not review borrowers who are clearly
unable to meet the established minimum lending criteria and/or policies
set forth pursuant to paragraph (c) of this section.
(2) It will not be necessary to review borrowers with a specified
interest rate refinancing ceiling clause in their loan instruments, as
long as credit at the specific interest rate is not available from other
sources. It will also not be necessary to review borrowers who have
notes, security instruments, or loan agreements which do not contain a
graduation clause. However, the servicing official will encourage
either type of borrower to graduate voluntarily.
(3) A borrower's ability to accept other credit may be limited by
factors over which the borrower has little or no control, such as a
referendum required by a public body borrower. However, the existence
of such factors will not preclude FmHA from requesting a borrower to
graduate nor the borrower from making a diligent effort to seek other
credit should such a request be made. The prepayment restriction
contained in Section 502(c)(1) of Title V of the Housing Act of 1949, as
amended, for RRH, RCH, and LH loans and transfers approved on new terms
after December 21, 1979, is a factor which must be considered. These
prepayment restrictions are found in 1944.176(c)(2) of subpart D of
part 1944 for LH loans and 1944.236(b)(4) of subpart E of part 1944 for
RRH and RCH loans. Tenant notification requirements and restrictive use
provisions, as outlined in 1965.90 of this chapter must also be
addressed.
(4) The decision reached by the servicing official during the
screening process will be briefly documented next to each borrower's
name on the graduation review list. If the borrower is eliminated from
further review due to an inability to meet established minimum lending
criteria and/or policies (see paragraph (d)(1) of this section),
specific reasons will be included in the borrower's case file.
(e) The thorough review. For those borrowers who are not eliminated
from the graduation review list by the initial screening, the servicing
official will conduct a thorough review of financial information already
in the borrower's case file or request additional information.
Borrowers, upon request by FmHA, are required to supply such financial
information as is necessary to determine whether they are able to
graduate to other credit.
(1) For borrowers who are required to submit annual financial
statements and for which a copy of the most recent fiscal year's
statements are in the borrower's case file, the servicing official will
review these statements in accordance with paragraph (e)(4) of this
section.
(2) In cases where copies of the most recent fiscal year's financial
statements are not in the borrower's case file, FmHA Guide Letter No.
1951-1, or a letter of similar format, will be used by the servicing
official to request the borrower to provide such financial statements
within 60 days for group type loans and 30 days for individual type
loans. At a minimum, the financial statements requested from the
borrower will be a balance sheet and a statement of income and expense.
Otherwise, the financial statements will be those normally required of a
particular borrower at the end of that borrower's fiscal year. For
borrowers who are not required to furnish audited financial statements,
the balance sheet and statement of income and expense may be of the
borrower's own format if the borrower's financial situation is
accurately reflected. The following FmHA forms may also be used:
(i) Farmer Program and Rural Housing: Form FmHA 431-2, ''Farm and
Home Plan;'' Form FmHA 1944-3, ''Budget and/or Financial Statement,''
and Form FmHA 431-4, ''Business Analysis-Nonagricultural Enterprise,''
as appropriate.
(ii) Community Programs; Grazing, Irrigation and Drainage: Form
FmHA 442-2, ''Statement of Budget Income and Equity;'' and Form FmHA
442-3, ''Balance Sheet.''
(iii) Multiple Family Housing: Form FmHA 1930-7, ''Statement of
Budget and Cash Flow (Excluding Depreciation);'' and Form FmHA 1930-8,
''Year End Report and Analysis for Fiscal Year Ending -------- .''
(3) FmHA Guide Letter No. 1951-2, or letter of similar format, will
be used if the borrower fails to respond to the first request.
(4) The servicing official, with the assistance of the County
Committee when applicable, will conduct a thorough review of the
borrower's financial and repayment position. For loans to individuals,
this review is based on the financial position of only the borrower,
meaning the person indebted to FmHA as evidenced by the signature on the
Promissory Note, Mortgage and/or other security instrument, and not of
any other household member, not even a spouse, who is not indebted to
FmHA. The thorough review will eliminate those borrowers on the
graduation review list who are unable to meet the established minimum
lending criteria and/or policies. Additional factors to be considered
during the thorough review will include:
(i) The borrower's present and potential income to meet the rates,
terms, loan fees and conditions of other credit (i.e., dept repayment
ability).
(ii) The borrower's liquid and nonessential assets.
(iii) The borrower's equity in real property (including consideration
of any subsidy recapture) and personal property.
(iv) The borrower's repayment history.
(v) The impact graduation would have on typical user costs. User
costs, rental rates, lease fees, or other charges, when borrowers rely
on collection from these sources for debt repayment, should be
reasonable for the area served.
(vi) The Federal, State or local statutory constraints, which may
limit the borrower's ability to refinance, such as a referendum required
of the public body.
(5) Those borrowers who will not be requested to graduate, as a
result of the thorough reviews, will be so noted on the graduation
review list and handled in the same manner as those borrowers eliminated
during the initial screening process. (See paragraph (d)(4) of this
section).
(6) When a borrower has been requested to provide financial
information in accordance with FmHA Guide Letter No. 1951-1, or letter
of similar format, and the subsequent review process (including the
trial referrals) determines the borrower will not be requested to
graduate, the borrower will be informed in writing that no further
action will be considered this year. FmHA Guide Letter No. 1951-7 may
be used for this purpose.
(7) The servicing official, following the thorough review, will
prepare Form FmHA 1951-24, ''Results of Borrower Graduation Review,''
listing only borrowers who will be requested to graduate. Separate
Forms FmHA 1951-24 will be prepared by program area as follows:
(i) For Community Program and Multiple Family Housing borrowers, the
servicing official will obtain the advice and written concurrence of the
State Director prior to making the request for a borrower to graduate
and prior to execution of the last page of Form FmHA 1951-24.
(ii) For all other programs, the servicing official, and when
applicable, the County Committee, will execute the last page of Form
FmHA 1951-24.
(f) Trial referral. The servicing official, prior to actually
requesting a borrower to graduate as described in paragraph (g) of this
section, may make a trial referral. This trial referral can be either
verbal or written with individual lenders or by group method and could
include all or part of those borrowers selected for graduation in
accordance with paragraph (e)(7) of this section. Prospectus
information will be obtained from the borrower's file and will be
submitted to the lender using FmHA Guide Letter No. 1951-3 for Farm
Program borrowers, FmHA Guide Letter No. 1951-4 for Rural Housing
borrowers, or letters of similar format. Other data may be added if
requested by lenders. The prospectus will contain the borrower's name,
address, original loan amount, date of the loan, the interest rate, and
the unpaid loan balance. For borrowers selected for a trial referral, a
prospectus will be prepared and provided to each lender who chooses to
participate, whose lending areas include the borrower's location and
whose criteria the borrower appears to meet. Lenders, following receipt
and review of a prospectus, will be encouraged to indicate their
willingness to contact the borrower and accept an application for
further consideration. If one or more lenders express interest in a
particular borrower, the borrower will be provided the lenders' names as
possible sources of other credit when the servicing official requests
the borrower to graduate. If the lenders participating in the trial
referral represent the most likely sources of other credit in a given
lending area, and if these lenders fail to show interest in a particular
borrower, this is evidence that there is no credit available for that
particular borrower and no further effort needs to be made to effect
graduation at this time. This information will be noted next to the
borrower's name on the graduation review list and the name will be
removed from Form FmHA 1951-24 by the servicing official. The lender's
participation in the trial referral provision of this paragraph will be
optional. Normally, the lender's interest will be determined at the
time of the servicing official's survey of lender criteria and policies
(see paragraph (c) of this section). If one or more lenders indicate a
willingness to participate, the servicing official should use the trial
referral provision if one or more of the following factors exists:
(1) When the servicing official is not sure that local lenders would
be interested in a particular borrower due to such factors as low unpaid
balance, location of the security within the lending area or other
factors not made clear at the time of the servicing official's contact
with the local lender.
(2) When there is a substantial cost imposed by the lender on the
FmHA borrower for filing a loan application.
(3) When the servicing official has reason to believe borrowers will
not actively seek, on a voluntary basis, refinancing credit from those
lenders believed to be most willing to consider such credit.
(4) When failure to employ this system would make it difficult or
time consuming for the servicing official to identify potential willing
lenders in the event the borrower refuses to voluntarily contact
lenders.
(g) Requesting the borrower to graduate. Borrowers who are to be
requested to graduate will be listed on Form FmHA 1951-24. In selecting
borrowers who will be required to graduate, the servicing official will
give full consideration to the financial strength, income capability,
and debtor characteristics which appear to meet lender criteria.
(1) FmHA Guide Letter No. 1951-5, or a letter of similar format,
will be used to request the borrower to graduate. The approximate date
by which the borrower will provide evidence of the borrower's ability or
inability to graduate will be shown on the management system card for
appropriate follow-up action. That date, determined by the number of
days following the date on which the FmHA Guide Letter No. 1951-5, or
letter of similar format, is mailed to the borrower, will be as follows:
(i) 30 days for Farmer Program and Rural Housing borrowers.
(ii) 90 days for group type borrowers.
(iii) Additional time may be allowed, for example, when a borrower
expects to receive income in the near future for the payment of FmHA
account(s) which would substantially reduce the amount required for
refinancing, or when a borrower is a public body and must issue bonds to
accomplish graduation.
(2) In applying for other credit, FmHA Guide Letter No. 1951-5, or a
letter of similar format, will inform the borrower to seek a loan only
in the amount necessary to repay the unpaid balance of the FmHA debt.
(3) If a borrower is unable to graduate the loan in full, written
evidence must be furnished to FmHA by the borrower, showing:
(i) The name(s) of other lender(s) contacted,
(ii) The amount of loan requested by the borrower and the amount, if
any, offered by the lender(s),
(iii) The rates and terms offered by the lender(s) or the specific
reason(s) why other credit is not available, and
(iv) The purpose of the loan request.
(4) The District Director with the advice of the State Director, or
the County Supervisor in consultation with the County Committee, when
applicable, will consider new information submitted by the borrower or
obtained from other reliable sources following a graduation request.
The servicing official must verify all information submitted by the
borrower or obtained from other sources to determine the information's
reliability and reevaluate the borrower's financial circumstances. If
the information submitted is not adequate and/or reliable, the servicing
official will contact other sources of credit in the area and document
the findings in the borrower's case file. The difference in interest
rates between FmHA and other lenders will not be sufficient reason for
failure to graduate if that other credit is available at rates and terms
which the borrower can reasonably be expected to pay. An exception is
made where there is an interest rate ceiling imposed by Federal law or
contained in the note or mortgage.
(5) Under certain circumstances, an appearance of a Farmer Program
borrower before the FmHA County Committee may be advisable. For all
other types of loans, the servicing official may offer to meet with the
borrower.
(i) If additional information confirms the borrower will be unable to
graduate, the servicing official will notify the borrower in writing
that the request to graduate has been withdrawn. The specific reasons
for withdrawing the request will be recorded on Form FmHA 1951-24, in
the borrower's case file and noted briefly on the graduation review
list.
(ii) If the additional information confirms the borrower can
graduate, the servicing official will inform the borrower using FmHA
Guide Letter No. 1951-6, or letter of similar format, that legal action
will be recommended if positive steps to graduate are not taken in 15
days for individual loans and 60 days for group loans. However, a
longer period may be granted by the servicing official if conditions
warrant such action.
(48 FR 40203, Sept. 6, 1983, as amended at 52 FR 26137, July 13,
1987; 53 FR 17688, May 18, 1988; 53 FR 39740, Oct. 12, 1988; 56 FR
12442, Mar. 26, 1991)
07 CFR 1951.262 Action when borrower fails to cooperate, respond and/or
graduate.
(a) When a borrower with other than farmer program loans fails to:
(1) Provide information following receipt of both FmHA Guide Letters
No. 1951-1 and 1951-2 or letters of similar format, such borrowers will
not be asked to graduate. They are at that point, in default of their
security instruments, which require the borrower to comply with all
future regulations not inconsistent with the security instruments. The
servicing official will, based on the borrower's failure to supply
information in accordance with 1951.261(e) of this subpart, prepare the
required documents recommending legal action and submit them together
with the borrower's case file to the official authorized in 1955.15 of
subpart A of part 1955 of this chapter to approve foreclosure of the
loan type involved (approval official) with a written report outlining
credit sources contacted by FmHA and the borrower, the reasons given by
the borrower for failure to graduate, action taken by FmHA to verify the
availability of credit, and the borrower's available financial resources
along with any other data pertinent to the case. The approval official
may, with the concurrence of the Regional Attorney, when appropriate,
accelerate the account based on the borrower's failure to perform as
required by this subpart and the loan and security instruments. For
Single Family Housing loans, written concurrence of the Regional
Attorney is required before accelerating the account.
(2) Apply for or accept other credit following receipt of both FmHA
Guide Letters No. 1951-5 and 1951-6, or letters of similar format, such
borrowers will not be given further notice to graduate but at that point
are in default under the graduation requirement of their security
instruments. The servicing official will prepare the required documents
to recommend legal action and submit them to the approval official as
outlined in paragraph (a)(1) of this section.
(b) For borrowers with other than farmer program loans, the official
authorized to approve foreclosure will review those cases submitted to
his or her office and determine what action must be taken on the basis
of the FmHA notes, security instruments, and/or loans agreements signed
by the borrower and the facts and recommendations provided by the
servicing official.
(1) If the approval official determines the borrower is unable to
graduate, the graduation request may be withdrawn. The approval
official will request the servicing official to notify the borrower and
withdraw the graduation request in accordance with 1955.261(g)(5)(i) of
this Subpart.
(2) If the approval official determines the borrower is able to
graduate, foreclosure action will be initiated in accordance with
1955.15(d)(2)(ii) of subpart A of part 1955 of this chapter. If the
borrower's account is accelerated, the borrower will be given the right
to appeal the decision in accordance with subpart B of part 1900 of this
chapter. The advice of the Regional Attorney is required before
accelerating the account. For Single Family Housing loans, written
concurrence of the Regional Attorney is required before accelerating the
account.
(c) When a farmer program loan borrower fails to provide information
following the receipt of both FmHA Guide Letters 1951-1 and 1951-2, or
fails to graduate after receipt of both FmHA Guide Letters 1951-5 and
1951-6, or letters of similar format, the County Supervisor will prepare
the documents required for OGC's review listed in 1951.265 of this
subpart. The County Supervisor will forward the case to the District
Office for the District Director's concurrence for legal action to
liquidate the account. If the District Director concurs with the
decision of the County Supervisor, the case will be forwarded to OGC
through the State Office for their concurrence.
(1) If the District Director or the OGC do not concur with the County
Supervisor's decision to take legal action to liquidate the account, the
District Director after consultation with the Farmer Program Staff will
return the case to the County Supervisor with appropriate instructions
for the future servicing of the case. The County Supervisor will notify
the borrower of the withdrawal of the request in accordance with
1951.261 of this subpart.
(2) If the District Director and OGC concur with the County
Supervisor's decision to take legal action to liquidate the account, the
case will be returned to the County Supervisor. The County Supervisor
should use the appropriate statement on Exhibit B-2 to subpart B of part
1900 of this chapter and use it to notify the borrower of FmHA's intent
to accelerate the account and to foreclose for failure to graduate or
failure to provide requested information. Any appeal will be conducted
in accordance with the regulations in subpart B of part 1900 of this
chapter. If the borrower does not appeal the notice of intent to
accelerate or if the adverse decision is upheld, the County Supervisor
will send the case to the District Director for acceleration of the
account in accordance with subpart A of part 1955 of this chapter.
Exhibit D of subpart A of part 1955 of this chapter (available in any
FmHA office) will be completed in accordance with the FMI to delete the
statement regarding deferrals.
(3) If the borrower appeals the County Supervisor's decision to
accelerate and liquidate the account and the decision is reversed, the
District Director after consultation with the Farmer Program Staff will
provide the County Supervisor appropriate instructions on the future
servicing of the case.
(50 FR 23903, June 7, 1985, and 50 FR 45777, Nov. 1, 1985, as amended
at 53 FR 35717, Sept. 14, 1988; 53 FR 39741, Oct. 12, 1988)
07 CFR 1951.263 Application for subsequent loan, subordination, or
consent to additional indebtedness from a borrower who has been
requested to graduate.
(a) Borrowers who have been requested to graduate in accordance with
1951.261(g) of this subpart will not normally be considered for a
subsequent loan, subordination, or consent to additional indebtedness
until the graduation issue is resolved. An exception may be made where
the proposed action is needed to alleviate an emergency situation, such
as meeting applicable health and/or sanitary standards which require
immediate attention.
(b) In situations where the borrower has been requested to graduate
and has also been denied a request for a subsequent loan, subordination,
or consent to additional indebtedness, appeal rights should be given
simultaneously for both issues.
(c) When FmHA's graduation request has been upheld through the
appeals process, any request for additional assistance under this
section may be denied without further appeal rights.
07 CFR 1951.264 Special requirements for Multiple Housing borrowers.
Upon graduation and acceptance of the full payment from a Multiple
Housing borrower, the State Director will provide the National Office
with a report as described in 1965.90(d) of subpart B of part 1965 of
this chapter.
07 CFR 1951.265 Documents for Office of General Counsel (OGC) review.
When the State Director requests advice pertaining to a graduation
request, the borrower's case file will be sent to the Regional Attorney
and will include:
(a) Organizational documents;
(b) Debt instruments;
(c) Security instruments, including loan agreements and/or
resolutions;
(d) Recent financial data;
(e) The servicing official's survey of lender criteria and policies;
(f) The servicing official's narrative outlining factors considered
and specific reasons for making graduation request of the borrower;
(g) Copies of the letter requesting borrower to graduate and all
subsequent correspondence between servicing official and borrower
relative to the graduation request;
(h) Any other pertinent information, including copies of any Federal,
State, or local statutory constraints which may impact on the borrower's
ability to refinance.
07 CFR 1951.266 State supplements and guides.
State Directors may supplement this subpart to meet State and local
laws, regulations, and practices in accordance with FmHA Instruction
2006-B (available in any FmHA office).
1951.267 -- 1951.299 (Reserved)
07 CFR 1951.300 OMB control number.
Collections of information requirements contained in this subpart
have been approved by the Office of Management and Budget and have been
assigned OMB control number 0575-0093.
07 CFR 1951.300 Pt. 1951, Subpt. F, Exh. A
07 CFR 1951.300 Exhibits to Subpart F
07 CFR 1951.300 Exhibit A -- Suggested Outline for Seeking Information
From Lenders on Credit Criteria for Graduation of Agricultural Loans
Date:
Name of Lender:
Title:
Address:
Name of County Supervisor:
Service Area:
1. Is the lender interested in making additional agricultural loans
to new borrowers in your FmHA service area for:
Annual Operating Purposes -- Yes: ---- ; No: ---- .
Intermediate term loans -- (i.e. Machinery or Breeding Livestock) --
Yes: ---- ; No: ---- .
Long Term -- (i.e. Real Estate) -- Yes: ---- ; No: ---- .
Is there any limitation on the amount of new Agriculture credit or
number of new customers the lender will consider? Yes: ---- ; No:
---- ;
Explain:
2. What are the current interest rates, loan terms, loan fees, and
approximate processing time for:
3. Is there a risk differential in establishing interest rate charges
for new customers? Yes: ---- ; No: ---- .
If yes, explain: --
4. Is there a minimum or maximum loan size policy? Yes: ---- ; No:
---- .
If yes, explain: --
5. Is there any geographical restrictions or types of enterprises for
which the lender will not make an operating or real estate loan? Yes:
---- ; No: ---- .
If yes, explain: --
6. Is there a minimum gross or net income to qualify as a farm or
farm operator? Yes: ---- No: ---- .
If yes explain:
7. What type and how many years records does the lender require on
new and/or highly leveraged operators (i.e., balance sheets, P&L
statements, tax returns, etc.)? ------------
8. Will the lender make a low percentage ''security'' loan if cash
flow is weak. Yes: ---- ; No: ---- .
9. What debt to equity ratio must be maintained before additional
collateral or debt reduction is required? ------------
10. Will the lender make a loan that has a negative first year cash
flow but shows positive cash flow by the second or third year when
realistic ''normal'' prices are used or because of declining term debts?
Yes: ---- ; No: ---- .
Explain:
11. Will the lender make a ''Full Budget'' operating loan? Yes:
---- ; No: ---- . Would the lender require all crop and/or livestock
sales to be turned into the bank? Yes: ---- ; No: ---- .
Explain:
12. What is the normal loan to market value of security (by type of
collateral or enterprise)?
Cattle
General Farms
Machinery
Specialized Farms
13. What is the financial criteria and/or ratios the lender uses for
a typical Agriculture borrower?
14. For the purpose of reducing the number of inappropriate
referrals, would the lender like the opportunity to review specific
borrower financial information prior to the borrower being asked to file
a formal application? Yes: ---- No: ---- . If the answer is yes,
only those borrowers who are listed on Form FmHA 1951-24 will be
referred to the lender, The lenders should be advised, however, the
information supplied to them will not include the borrowers name, social
security number, exact address, or place of employment that could be
used to link specific borrowers to the information being provided by
FmHA.
07 CFR 1951.300 Pt. 1951, Subpt. F, Exh. B
07 CFR 1951.300 Exhibit B -- Suggested Outline for Seeking Information
From Lenders on Credit Criteria for Graduation of Single Family Housing
Loans
Date:
Name of Lender:
Title:
Address:
Name of County Supervisor:
Service Area:
1. Is the lender interested in making loans to refinance rural
housing borrowers? Yes: ---- ; No: ---- .
If later, when?
How much credit does the lender expect to have available in the next
three to four months for making such loans? $ ------------
In the next twelve (12) months? $ ------------
2. What are the loan terms? ------------
3. What is the current interest rate? ------------ Variable Rate.
Fixed rate.
If variable, how is it determined? ------------
4. Is a risk differential used in establishing interest rates charged
for new customers? Yes: ---- ; No: ---- .
If yes, explain: --
5. What can a typical loan applicant be expected to pay for:
6. Is mortgage guarantee insurance required? Yes: ---- ; No: ----
. If yes, how many years? ---- . Cost? ------------ .
7. Is there a minimum or maximum loan size policy? Yes: ---- ; No:
---- .
If yes, explain: --
8. Is there a minimum and maximum home value the lender will loan on?
Yes: ---- ; No: ---- . If yes, minimum: $ ------------ ; maximum:
$ ------------ .
9. Does the lender use a loan to market value ratio? ------------
10. Is there a minimum net and gross income criteria? Yes: ---- ;
No: ---- . If yes, net: $ ------------ ; gross: $ ------------ .
11. Does the lender use a minimum loan or home value to income ratio?
Yes: ---- ; No: ---- . If yes, loan to income ratio: ------------
Value to income ratio: ------------
12. Is there a percentage of gross income a typical applicant should
have available to pay housing costs? ------------
a. To pay for principal, interest, taxes and insurance (PITI)? ----
%.
b. To pay for the total housing costs and other credit obligations?
---- %.
13. Are there any age of home, housing type, site size, and/or
geographic restriction policies? Yes: ---- ; No: ---- .
If yes, List:
14. Other Comments:
15. For the purpose of reducing the number of inappropriate
referrals, would the lender like the opportunity to review specific
borrower financial information prior to the borrower being asked to file
a formal application? Yes: ---- ; No: ---- . If the answer is yes,
only those borrowers who are listed on Form FmHA 1951-24 will be
referred to the bank. The lenders should be advised, however, the
information supplied to them will not include the borrower's name,
social security number, exact address, or place of employment that could
be used to link a specific borrower to the information being provided by
FmHA.
(48 FR 40203, Sept. 6, 1983; 48 FR 41142, Sept. 14, 1983)
07 CFR 1951.300 Subpart G -- Borrower Supervision, Servicing and
Collection of Single Family Housing Loan Accounts
Source: 56 FR 6946, Feb. 21, 1991, unless otherwise noted.
07 CFR 1951.301 Purpose.
This subpart sets forth policies and procedures of the Farmers Home
Administration (FmHA) to ensure that in borrower supervision, servicing
and collection of Single Family Housing Loan Accounts, all authorities
are considered and used to assist borrowers to become successful
homeowners, thereby reducing the number and amount of borrower
delinquencies and borrower failures resulting in liquidation of the
account. This subpart pertains to all section 502 and 504 Rural Housing
(RH) loans (except RH loans for farm service buildings) hereby referred
to as Single Family Housing (SFH) borrowers, including those who are
also indebted for a Farmer Program loan, i.e. farm ownership (FO),
operating (OL), soil and water (SW), recreation (RL), emergency (EM),
economic emergency (EE), economic opportunity (EO), special livestock
(SL), and software timber (ST). Farmer Program loans and RH loans for
farm service buildings will be serviced in accordance with applicable
farmer program regulations. The requirements of this subpart do not
apply if the decision has been made to liquidate the farmer program
loan(s) of a borrower who also has an RH loan(s), if the dwelling was
used as security for the farm loan(s). In these cases, the RH loan
account will be handled in accordance with applicable portions of
subpart S of part 1951 and 1955.15(d)(2)(iv) of subpart A of part 1955
of this chapter pertaining to acceleration of the RH account. This
subpart does not apply to borrowers who assumed RH loans, or have
purchased inventory housing by credit sale on nonprogram terms unless
refinanced in accordance with 1951.315 of this subpart. These are
nonprogram (NP) loans, not SFH loans, and will be serviced according to
subpart A of part 1965 of this chapter. SFH cases where unauthorized
loan or other financial assistance has been received will be serviced
according to subpart M of part 1951 of this chapter. In executing the
authorities provided in this subpart, FmHA will observe requirements of
the Equal Credit Opportunity Act (ECOA) which prohibits discrimination
on the basis of race, color, religion, national origin, sex, marital
status, age, or handicap.
07 CFR 1951.302 Authorities and responsibilities.
Where a servicing and collection contract has been entered into
between the FmHA National Office and a contractor, the contractor is
responsible for servicing and collection actions required by the
contract for loans covered by the contract.
1951.303 (Reserved)
07 CFR 1951.304 Definitions.
As used in this subpart only:
(a) Current. The full amount of the scheduled payment has been
received by FmHA by the due date.
(b) Past due. The full amount of the scheduled payment has not been
received by FmHA by the due date.
(c) Delinquent. Any amount 30 days or more past due.
1951.305 -- 1951.306 (Reserved)
07 CFR 1951.307 Supervision.
Supervision and counseling will be provided when deemed necessary to
give borrowers an opportunity to become successful homeowners, thereby
accomplishing the objectives of the loan.
(a) Supervising and counseling borrowers. When it is known borrowers
are experiencing financial difficulties or other problems, or when
borrowers request assistance, FmHA may counsel them on use and cost of
credit, conserving energy, property maintenance, and applicable FmHA
authorities and requirements.
When deemed necessary, FmHA will assist in development of a budget to
help borrowers make the best use of their resources.
(b) Use of counselors from other sources. FmHA may enter into a
Cooperative Agreement with a nonprofit corporation, public body, or
other agency or organization which has employees with training and
experience in counseling services. When an Agreement of this type is in
effect, FmHA will refer borrowers for counseling when he/she determines
such counseling may be beneficial to the borrower. Trained counselors
will be provided at no cost to the borrower or FmHA. FmHA will allow
outside counselors 1 month from the date of the letter to develop an
acceptable repayment agreement with delinquent borrowers normally
scheduled to make monthly payments before initiating liquidation action.
(c) Technical and Supervisory Assistance (TSA) grants. In counties
or areas in which TSA grants have been funded and implemented, FmHA will
refer to the grantee FmHA low-income borrowers who need counseling and
supervisory assistance as defined in subpart K of part 1944 of this
chapter, and recommend their participation.
07 CFR 1951.308 Payment coupons and change in payment plan.
(a) Issuing payment coupons. A booklet of 12 payment coupons and
envelopes is provided initially for each monthly payment borrower and
annual payment borrower converted to monthly. Annual payment borrowers
will also be provided with a one year supply of monthly payment coupons.
Payment coupons will be mailed directly to the borrower. A new coupon
booklet will be sent to the borrower when the borrower's payments are
changed or the old coupon booklet is completed. A monthly billing
statement may be sent to borrowers instead of payment coupons for the
states that have implemented escrowing.
(b) -- (c) (Reserved)
07 CFR 1951.309 Receiving and applying payments.
(a) Payments on account. Borrowers will mail their payments directly
to the address shown on the payment coupon in one of the envelopes
provided with the coupon packet. Borrowers on an annual payment plan
send their payments to the FmHA county office which services their loan,
or other address as FmHA directs. Borrowers who bring cash payments to
the county office will be charged a money order fee. If the fee is not
paid, the money order fee will be deducted from the payment.
(b) Application of payment -- (1) Regular payments. Regular payments
are all payments other than extra payments and refunds and include the
items in paragraphs (b)(1) (i) through (vi) of this section. All direct
payments are considered regular payments. Regular payments will be
applied by FmHA in the following order of priority:
(i) Escrow for taxes and/or insurance, if applicable.
(ii) Any fees or charges such as late fees, administrative fees,
uncollectible check charges, etc., if applicable.
(iii) Advances for recoverable costs in the amount necessary to keep
the advance accounts current, (applied first to amortized, then
unamortized advances). Payments on amortized advances are applied only
in full monthly increments.
(iv) Accrued interest on the note account.
(v) Scheduled repayment of deferred mortgage payments, if applicable.
(vi) Principal on the note account.
(2) Payments insufficient to pay the amount due. When a borrower,
who has more than one loan of the same type, makes a payment in an
amount insufficient to pay the amount then due, the payment shall be
applied on a prorata basis to each loan according to the amount then
due.
(3) Extra payments and refunds. Payments derived from cash proceeds
of real property insurance, the sale or refinancing of real estate not
mortgaged to the Government, or similar transactions are considered
extra payments. Refunds are the return of unused loan or grant funds.
Extra payments and refunds will be credited to the borrower's note
account(s) as of the date of Form FmHA 451-2, ''Schedule of
Remittance,'' and will be applied as prescribed in paragraphs
(b)(1)(iv), (v) and (vi) of this section. Extra payments and refunds do
not relieve borrowers from making their next scheduled payment.
(c) (Reserved)
(56 FR 6946, Feb. 21, 1991, as amended at 56 FR 41766, Aug. 23, 1991)
07 CFR 1951.310 Amortization of recoverable cost.
When an advance is made by FmHA to pay recoverable costs, the
payments will automatically increase during the amortization period by
the amount necessary to repay the advance. The advance will be charged
to the initial loan or the lowest loan number within the fund code still
outstanding and will bear interest at the rate of such loan.
(a) Monthly payment borrowers. If there are unpaid amortized cost
items already on the account, the charges will be combined and
reamortized. The amortization period for the combined advances will be
based upon the term of the advance which permits the longer repayment
period. If the new installment would be less than the previous
installment, the larger installment will be used, thus causing the
balance to be paid over a shorter period. Advances for payment of real
estate taxes are amortized for the number of months for which the taxes
are being paid. For example, an advance for 2 years' taxes is amortized
over 2 years. Advances for purposes other than real estate taxes are
amortized for 12 months unless FmHA determines, based on the borrower's
repayment ability, a longer period is needed. An amortization period of
more than 12 months will be used only when the cost is of a nonrecurring
type. In no case will the amortization period exceed 8 years.
(b) Annual payment borrowers. Recoverable costs will be
automatically due and payable for annual payment borrowers on the next
payment due date, unless FmHA determines, based on the borrower's
repayment ability, that a longer period is needed and the account is
converted to a monthly payment plan. In such cases, real estate taxes
can be amortized over the number of years for which the taxes are being
paid. Advances for purposes other than real estate taxes can be
amortized for a period not to exceed 8 years.
(c) (Reserved)
07 CFR 1951.311 Reporting responsibilities.
(a) (Reserved)
(b) Annual statement. At the end of each calendar year, FmHA will
provide each borrower with a statement showing the unpaid loan balance
and the amount of principal and interest paid during the year. If the
borrower received subsidy that is subject to recapture, the cumulative
interest credit granted will be shown. For those borrowers required to
escrow, the status and disbursements shall be shown. The interest paid
and, if appropriate, the escrow disbursements will be reported to IRS.
(c) (Reserved)
07 CFR 1951.312 Servicing monthly and annual payment borrowers.
FmHA will use all authorities available to give borrowers an
opportunity to become successful homeowners. Collection of a
delinquency from an Internal Revenue Service (IRS) offset will be
considered to the extent permitted by law. When foreclosure is
recommended on borrowers with a monthly payment plan, including annual
payment borrowers converted to monthly, for failure to make scheduled
FmHA payments, the account will not be accelerated unless at least 3
payments are past due; except that, if the borrower is unable or
unwilling to bring and keep the account current, the County Supervisor
may recommend foreclosure when the account remains 2 payments past due
for at least 3 consecutive months. For annual payment borrowers, the
account will not be accelerated until at least one annual payment (or
any portion thereof which is equivalent to at least 3/12 of the annual
installment) is 90 days past due and arrangements have not been made to
bring the account current. Delinquent annual payment borrowers should
be requested to convert to monthly payments any time a servicing benefit
is provided such as interest credit assistance and moratorium, if the
borrower has monthly income. However, such borrowers cannot be forced
to convert to monthly payments as a condition to receiving interest
credit or a moratorium. All actions taken, agreements reached and
recommendations made in the servicing of a borrower's account are to be
documented. Account servicing includes the following:
(a) Borrower abandonment of the dwelling. Borrowers who have
abandoned the security property do not qualify for interest credits,
moratorium, or delinquency workout agreement; therefore the servicing
contacts/guide letters detailed in this section are not applicable (see
7 CFR 1955.55 for information concerning abandonment). When it becomes
known a borrower has abandoned the security property and the account is
delinquent, the borrower will be instructed to contact the county office
so arrangements can be made to bring the account current. If, within 10
days, the borrower does not bring the account current; make
arrangements to bring the account current or provide FmHA evidence that
action has been initiated to sell the house, the account may be
accelerated without further servicing.
(b) Interest credit. When servicing loan accounts, FmHA will make
sure borrowers are receiving all of the interest credit assistance for
which they are eligible.
(c) Moratorium. When it is known (or if it appears) that
circumstances exist which may entitle a brorrower to a moratorium, FmHA
will inform the borrower this assistance may be available and provide
the borrower a form on which to apply for a moratorium.
(d) Rescheduled payment agreement. Delinquent borrowers are expected
to bring their accounts current as soon as possible, based on their
ability to repay as determined by completing a budget. Borrowers who
are able will pay all or a substantial portion of the delinquent amount
in a single payment. Monthly payment borrowers unable to do so will pay
their regularly scheduled payment plus an additional amount until the
account is current. Annual payment borrowers should pay the delinquent
amount during the year so that the account is current prior to the next
scheduled payment. The remaining past due balance should usually be
paid within 2 years, but in no case will the repayment period exceed the
remaining term of the loan. The delinquent borrower's circumstances
will be reviewed annually to determine if the remaining past due balance
can be paid in full or if the additional payment amount should be
modified. For monthly payment borrowers, payments in addition to the
regularly scheduled amount to repay a delinquency must be at least $10
per month.
(e) Systematic method to service accounts of delinquent monthly and
annual payment borrowers. FmHA will promptly and systematically service
delinquent accounts to attempt to have the problems resolved so the
borrower's homeownership is not jeopardized. Although a sufficient
number of servicing letters are needed to document that borrowers have
been notified of benefits which may be available to them, FmHA may
contact the borrower through personal contact, either by telephone or in
person. During a telephone or personal contact, an attempt will be made
to reach a firm agreement with the borrower to resolve the delinquency.
All contacts and attempted contacts should be documented in the
borrower's servicing record. If the borrower does not qualify for
additional benefits (moratorium or subsidy) and the borrower is unable
or unwilling to reach a satisfactory agreement to repay the delinquency,
FmHA will discuss voluntary liquidation of the account. If a borrower
has not resolved a delinquency and FmHA determines liquidation is
necessary, FmHA will attempt to have the borrower meet his/her loan
obligation by selling the property to repay the loan account. Voluntary
sale by borrowers allows them to realize any equity they have in the
property (as adjusted by recapture of subsidy, if applicable). To
ensure consistency, a series of Guide Letters (available in any FmHA
office) are provided FmHA field staffs for discretionary use in
servicing delinquent accounts. At appropriate times during servicing
contacts borrowers will be advised about interest credit and
moratoriums. When a borrower becomes 30 days or more past due under the
terms or conditions of Form FmHA 1953-37, ''Delinquency Workout
Agreement (DWA), the agreement becomes null and void. Any reference to
this agreement also refers to Form FmHA 1951-37, ''Additional Payment
Agreement'' and Form FmHA 451-37, ''Additional Partial Payment
Agreement.'' A borrower who misses a scheduled payment and has made
payments as agreed for less than 3 months will be advised that if the
account is not brought current, action may be taken to liquidate the
account without further servicing, provided servicing letters have been
sent or personal contact made documenting the borrower has been notified
of benefits which may be available to them (e.g., interest credit
assistance and moratorium). If the decision is made to liquidate, the
borrower should be encouraged to sell the security property. A borrower
who misses a scheduled payment and has made payments as agreed for more
than 3 months will be serviced as though it is an initial delinquency.
07 CFR 1951.313 Moratoriums.
(a) Definitions. As used in this section:
(1) Moratorium. A period of up to 2 years during which scheduled
payments are deferred for payment at a later date.
(2) Scheduled payments. The amount of the monthly or annual
installment on a promissory note as modified by an interest credit
agreement, delinquency workout agreement, amortization of an advance by
FmHA, or other agreements between FmHA and the borrower.
(3) Temporary. A period of time not to exceed 2 years. For example,
it would not be appropriate to grant a moratorium to a borrower who
frequently experiences periods of unemployment and it is likely such
periods of unemployment will continue. In such a case, unemployment
could not be considered temporary.
(4) Unduly impaired standard of living. An adverse condition,
exceeding a normal or reasonable financial setback, that temporarily
prevents a borrower from meeting necessary living expenses and scheduled
payments on the FmHA loan.
(b) Eligibility requirements. The borrower will be provided a form
to complete when FmHA becomes aware of existing circumstances beyond the
borrower's control which may entitle a borrower to a moratorium or if
the borrower requests a moratorium without filing the form. If needed,
FmHA will assist the borrower in completing the form. All of the
following conditions must exist before a moratorium can be granted:
(1) The borrower is temporarily unable for one of the following
reasons to continue making scheduled payments without unduly impairing
his/her standard of living:
(i) Income reduction of at least 20 percent. If the borrower is
currently receiving interest credit, the 20 percent reduction will be
from the income on which the current interest credit agreement is based.
If the borrower is not receiving interest credit, the 20 percent
reduction will be from verified income for the past year. A 20 percent
reduction by itself, however, does not make a borrower eligible for a
moratorium. A budget must be prepared and must indicate that the
borrower's standard of living will be unduly impaired if payments with
the maximum authorized interest credit are required. FmHA will
determine if the borrower qualifies for interest credit or additional
interest credit before granting a moratorium.
(ii) The need to pay unexpected and unreimbursed expenses resulting
from an accident, illness, injury or death of a family member or damage
to the security property if adequate hazard insurance coverage was
unavailable.
(2) The borrower must occupy the dwelling unless the dwelling is
determined by FmHA to be uninhabitable.
(3) The borrower's account is not currently accelerated.
(4) The borrower agrees to notify FmHA if the circumstances on which
the moratorium was based change.
(c) Granting a moratorium. A moratorium on scheduled payments will
be granted when:
(1) The borrower has made written request on a form provided by FmHA.
(2) FmHA has verified the accuracy of the information provided and
determines that the borrower is receiving all authorized interest credit
and meets all the moratorium eligibility requirements.
(d) Approval authority. FmHA will notify the borrower in writing of
the action taken on a moratorium application within 15 days after
receipt of the completed written application by FmHA. If the moratorium
is denied, the borrower will be notified in accordance with paragraph
(k) of this section, and 1910.6(b)(1) of subpart A of part 1910 of this
chapter.
(e) Moratorium period. A moratorium will be in effect for a period
not to exceed 2 years unless earlier cancelled. The borrower's
circumstances will be reviewed annually but the moratorium will be
cancelled any time the reason for the moratorium no longer exists. A
moratorium may be retroactive for up to 90 days prior to the date the
request for a moratorium was received by FmHA if the circumstances for
which the moratorium is to be granted existed during that time. In
situations under 1944.5(d)(11) of part 1944 of this chapter where the
income of a spouse living apart from the borrower family is included,
the moratorium may be retroactive for up to 90 days prior to either the
date the moratorium request was received or the end of the 6 month
period, whichever is later.
(f) Annual review. For borrowers receiving interest credit, the
borrower's circumstances will be evaluated during the annual interest
credit review to determine if a moratorium is still justified. For
borrowers not receiving interest credit the borrower's circumstances
will be reviewed annually on the anniversary date of the moratorium. If
circumstances warrant, the moratorium will continue in effect;
otherwise it will be cancelled. The borrower will be sent a letter
requesting information in connection with the annual review. If the
borrower does not respond to the annual request, the moratorium will be
cancelled. There will be no appeal of a cancellation because a borrower
failed to respond to the annual request. A moratorium will never
continue for a period of more than 2 years. If the moratorium was
granted to pay unexpected and unreimbursed expenses, the borrower must
show that an amount at least equal to the deferred payments has been
applied toward the expenses or the moratorium will be cancelled.
Although the borrower is expected to pay the taxes and insurance, if
possible, during the moratorium period the real estate taxes and hazard
insurance premium can be paid by FmHA and charged to the loan account,
if the borrower is unable to pay the taxes and premium, as authorized
in, 1806.6 of subpart A of part 1806 of this chapter (paragraph VI of
FmHA Instruction 426.1) or subpart C of part 1965 of this chapter, as
applicable. Borrowers on escrow will be sent a billing statement each
month for the taxes and insurance. If the borrower is unable to pay the
taxes when they become due and payable from the taxing authority or
insurance, when the premium must be paid, FmHA will pay these expenses
by voucher.
(g) Action at the end of the moratorium period. At the end of the
moratorium period, FmHA will verify the borrower's annual income and
obtain a current budget to determine the borrower's repayment ability.
The borrower will be advised by letter of the action taken, the reasons
for the action, and the new repayment schedule. Loans with a portion of
the payment deferred under 1944.35 of subpart A of part 1944 of this
chapter will be handled in accordance with this paragraph and 1951.330
of this subpart.
(1) Borrowers on a monthly payment plan who can bring the account
current within 2 years by paying the payments which were deferred, in
addition to regularly scheduled payments, will execute a delinquency
workout agreement to establish a new repayment schedule.
(2) When a borrower cannot bring the account current within 2 years
through use of a delinquency workout agreement, the loan will be
reamortized within the remaining term of the loan.
(3) When a borrower does not have repayment ability if the loan were
reamortized within the remaining term of the loan, the loan may be
reamortized for the remaining term plus a period not to exceed the time
a moratorium was in effect. If the loan was not originally scheduled
for maximum legal term, the loan can be reamortized for the maximum
legal term of the loan plus a period not to exceed the time the
moratorium was in effect, less the number of years the loan has been
outstanding, if the Government's lien priority is not adversely
affected. Fees for title clearance and legal services needed to assure
that the Government's lien priority is retained must be paid by the
borrower or may be advanced by the Government to be charged to the
borrower's account.
(4) Cancellation of accrued interest at the end of the moratorium
period will be considered for borrowers whose payments with maximum
interest credit after the moratorium period exceed 20 percent of their
adjusted income. Part or all of the accrued interest will be cancelled
when reamortization over the maximum authorized period will not result
in payments which are within the borrower's repayment ability. If the
determination is made the borrower cannot make scheduled payments
without cancellation of part or all of the accrued interest at the end
of the moratorium period, FmHA will determine how much interest must be
cancelled to enable the borrower to repay the loan during the maximum
authorized period. The amount of interest to be cancelled will be
deducted from the account balance before reamortizing, in determining
the new repayment schedule.
(5) If after 2 consecutive years of being on a moratorium a borrower
is still unable to resume making scheduled payments, even if the account
were reamortized, all authorized interest credit were granted, and
accrued interest at the end of the moratorium period were cancelled, the
account must be liquidated. The borrower will be notified by letter
that arrangements must be made to sell the security property because of
his or her inability to resume making scheduled payments or FmHA will
proceed with foreclosure.
(h) Cancellation. A moratorium may be cancelled at any time during
the moratorium period if FmHA determines that the reason for the
moratorium no longer exists or the borrower is no longer living in the
property (unless the property is uninhabitable).
(i) Interest accrual. Interest will accrue during the moratorium at
the rate shown on the promissory note as modified by any Interest Credit
Agreement in effect. Interest credit will be granted and renewed
throughout the period a moratorium is in effect for borrowers eligible
for interest credit as authorized in subpart A of part 1944 of this
chapter. Interest on the principal portion of deferred mortgage
payments will accrue at the rate of 1 percent.
(j) (Reserved)
(k) Appeal rights. The borrower will be advised in writing of the
right to appeal when a moratorium request is denied, a moratorium is
cancelled, or the interest accrued during the moratorium is not
cancelled unless one or more of the following applies:
(1) The request was based on loss of income and the reduction did not
equal at least 20 percent of the borrower's confirmed income.
(2) The moratorium terminated because it was in effect for a total of
2 years.
(3) The accrued interest was not cancelled because the borrower's
payments after the moratorium did not exceed 20 percent of income.
(4) The borrower failed to respond to the request for information
during the annual review period.
(l) Waiting period. There is no waiting period between moratoriums
provided the condition on which the later moratorium is granted differs
from the preceding one.
(56 FR 6946, Feb. 21, 1991, as amended at 56 FR 41766, Aug. 23, 1991)
07 CFR 1951.314 Reamortizations.
Reamortizing section 502 and 504 RH loans extends loan payments to
the maximum authorized repayment period, or rearranges the payments
within the remaining years of the original repayment period. Loans with
a portion of the payments deferred under 1944.35 of subpart A of part
1944 of this chapter may be reamortized in accordance with 1951.330 of
this subpart.
(a) Conditions. RH loan accounts may be reamortized under any of the
following circumstances:
(1) When the borrower has made extra payments or refunded loan funds
totaling at least 10 percent of the loan balance and the borrower
concurs with the decision to reamortize the account balance.
(2) At the end of the moratorium period.
(3) When an individual farmer program loan for real estate purposes
or a section 502 or 504 RH loan is being made to a presently indebted
section 502 or 504 RH borrower, and FmHA determines the borrower cannot
reasonably be expected to meet installments due unless the account is
reamortized.
(4) When the loan was not scheduled for the maximum legal term at the
time the loan was made (e.g., a housing loan is scheduled for a 26 year
term, although, the maximum legal term is 33 years) and the security
life of the property is such that the term can be extended, the loan may
be reamortized for the maximum legal term less the number of years the
loan has been outstanding provided FmHA determines the borrower's
financial condition has changed and the borrower cannot reasonably be
expected to meet the obligation unless the account is reamortized.
Existing loans scheduled for a 33 year term cannot be extended to 38
years. Fees for title clearance and legal services needed to assure the
Government's lien priority is retained will be paid by the borrower or
advanced by FmHA to be charged to the borrower's account.
(5) When an unauthorized loan or unauthorized interest credit has
been serviced according to subpart M of part 1951 of this chapter, and
the reversal and reapplication of payments have resulted in a
delinquency which requires more than 2 years for the borrower to repay
under a delinquency workout agreement.
(6) To initially establish a borrower on an escrow system when real
estate taxes for one or more years and/or an insurance premium for one
year is advanced by FmHA and the borrower is not able to repay the
advance within the number of years represented by the taxes or
insurance, as applicable. Nonprogram (NP) accounts will only be
reamortized in this instance if the borrower is an owner/occupant. FmHA
will pay the taxes and/or insurance of an NP borrower who is an
investor/nonoccupant only if the borrower is unwilling or unable to pay
the taxes and/or insurance. If paid by FmHA, it will be charged to the
loan account as an unamortized cost.
(7) To bring a delinquent account current in cases where same-terms
assumption is authorized.
(8) When a decision has been made under applicable farmer program
regulations to provide servicing benefits on the farmer program loan(s)
of a borrower who also has an RH loan.
(9) When reinstating an account which has been accelerated.
(b) Required actions. The borrower must sign a reamortization
agreement form provided by FmHA to effect the reamortization. The
interest rate on the loan will be unchanged.
(56 FR 6946, Feb. 21, 1991, as amended at 56 FR 41766, Aug. 23, 1991)
07 CFR 1951.315 Refinancing.
Refinancing of section 502 loans is authorized when the property
meets program standards and either interest credit would not be
available because the loan was approved prior to August 1, 1968, or the
loan was made as an above-moderate income or NP loan and the borrower
would now be eligible for a loan with interest credit and, through
circumstances beyond the borrower's control, the borrower is in danger
of losing his/her home. Refinancing will be processed as a subsequent
loan in accordance with Subpart A of part 1944 of this chapter and will
be for the amount of the FmHA debt plus closing costs if necessary.
07 CFR 1951.316 Servicing a note-only loan.
A loan made on a note-only basis will be serviced in a manner which
is in the Government's best interest. The following applies:
(a) Sale of real property improved with note-only loan. When
property which was improved with note-only funds is sold, FmHA will
attempt to collect the balance owed on the loan. If collection cannot
be made, the debt may be assumed by the purchaser of the property on the
terms of the note. If collection or assumption cannot be effected FmHA
will determine if the borrower has assets and whether a judgment should
be sought.
(b) Note-only in connection with secured loan(s). When a borrower
owes both secured and RH note-only loans and the security property is
transferred to a party who will assume the secured loan(s) on other than
a same rates and terms assumption, the amount to be assumed will be the
total of the secured and unsecured loans, not to exceed the market value
of the security property. When all of the transferor's debt is not
assumed, the balance will be collected. If not collected FmHA will
determine if the borrower has assets and whether a judgment should be
sought.
(c) Deceased borrower. When a note-only borrower dies, FmHA will
determine if there are relatives who will repay the loan. If payments
are not made, FmHA will determine whether there are assets in the
borrower's estate from which a claim may be collected. If there are
assets, a claim against the decedent's estate will be pursued.
07 CFR 1951.317 Servicing the account of a borrower who enters active
military duty after a loan is closed.
The Soldiers and Sailors Relief Act requires that the effective
interest rate charged a borrower who enters active military duty after a
loan is closed will not exceed 6 percent. This applies only to
full-time active military duty, and does not include military reserve
status or National Guard participation. When the borrower or the
borrower's dependents are occupying the security property, the borrower
may be entitled to interest credit which would result in an effective
interest rate lower than 6 percent. Therefore, such a loan will accrue
interest at the lesser of the effective interest rate under an interest
credit agreement or at 6 percent for as long as the borrower is in
active military duty status. It is the borrower's responsibility to
inform FmHA of his or her entry into the separation from active military
duty. FmHA will, however, grant and terminate this benefit when they
become aware of and verify the borrower's military status by any means.
This assistance will be granted effective when FmHA has verification the
borrower qualifies or the date of last payment, whichever is later.
When the borrower no longer qualifies, termination will be effective on
the date of the next scheduled payment after FmHA has verification of
the borrower's status to support termination. This assistance will not
be granted or terminated retroactively.
07 CFR 1951.318 Reporting to credit bureaus.
(a) Initial reporting. FmHA will initially report to credit bureaus
monthly payment borrowers whose accounts are 30 days or more past due by
at least 1/12 or the annual installment amount on January 1. FmHA will
notify borrowers that their account is to be reported. Borrowers who
are to be reported as delinquent will have 60 days to bring the account
current. If the account is not brought current during that time, the
account will be reported to the credit bureau as delinquent, and the
status of the account updated monthly to the credit bureau file for 7
years. Referrals will include any or all of the following information:
(1) Case number, including Social Security Number.
(2) Name, including co-borrower, if any.
(3) Association code (e.g., individual or joint).
(4) Special comments code (e.g., account in dispute).
(5) Street address.
(6) City, State, Zip code.
(7) Date loan was made.
(8) Type of loan (e.g., real estate).
(9) Loan number.
(10) Total loan amount.
(11) Date of last payment.
(12) Status (e.g., in collection, foreclosure started).
(13) Date loan became delinquent.
(14) Unpaid balance.
(15) Amount past due.
(16) Terms.
(b) Reviewing account status. If a borrower desires an explanation
of the account or disagrees with the stated delinquency during the
60-day period between notification and referral, the borrower may
request a meeting with FmHA to discuss the account. If a borrower
questions the account status, the account will not be referred until it
is determined if the status is correct. FmHA will withhold the referral
until the borrower's questions are resolved. After an account has been
referred, borrowers may question information reported by contacting the
credit bureau or FmHA. FmHA will determine within 15 days what
corrective action, if any, is necessary to resolve the request.
07 CFR 1951.319 Pilot projects.
From time to time FmHA conducts pilot projects to test concepts
related to the management and/or sale of SFH inventory property which
may deviate from the provisions of this subpart, but will not be
inconsistent with provisions of the Housing Act of 1949, as amended, or
other Acts affecting FmHA's SFH program. Prior to initiation of a pilot
project, FmHA will publish in the Federal Register a Notice outlining
the nature, scope, and duration of the pilot. The pilot projects may be
handled by FmHA employees and/or under contract with persons, firms, or
other entities in the private sector.
1951.320 (Reserved)
07 CFR 1951.321 FmHA instructions.
Detailed FmHA instructions for administering this subpart are
available in any FmHA office (FmHA Instruction 1951-G).
1951.322 -- 1951.329 (Reserved)
07 CFR 1951.330 Servicing loans with deferred mortgage payments.
This section describes servicing of loans with a portion of the
payments deferred under 1944.35 of subpart A of part 1944 of this
chapter.
(a) General servicing. (1) Borrowers who have loans with deferred
payments are eligible for all servicing actions.
(2) Borrowers who have loans with deferred payments whose accounts
become delinquent will be serviced in accordance with 1951.312(e) of
this subpart.
(3) Interest deferred will not accrue interest. Any principal
deferred will accrue interest at a 1 percent rate.
(b) Repayment of deferred mortgage payments. (1) When 20 percent of
the borrower's adjusted family income exceeds the full note rate
payment, plus taxes and insurance premium, the borrower is required to
begin repaying the deferred portion of the payments.
(2) The amount of payment will be calculated by subtracting the full
note rate payment, real estate taxes and insurance premiums from twenty
percent of the adjusted family income.
(3) The borrower will execute a new form designated by FmHA based on
the amount calculated in paragraph (b)(2) of this section.
(4) The borrower's household income will continue to be verified
annually, and a new form designated by FmHA executed annually, at the
time of review. If the borrower experiences a change in household
income, changes may be made in the repayment of deferred payments in
accordance with the guidelines provided in 1944.34 of subpart A of part
1944 of this chapter.
(5) The borrower will continue to pay the deferred installment, based
on 20 percent of the adjusted household income, until the deferred
payments are paid in full, or the mortgage is terminated and the total
deferment is recaptured.
(c) Reamortization. Loans with a portion of the payments deferred
under 1944.35 of subpart A of part 1944 of this chapter may be
reamortized under the conditions set forth in 1951.313 and 1951.314 of
this subpart. However, the deferred portion of the interest payments
will not be converted to principal and capitalized.
(d) Recapture. If the borrower sells or otherwise transfers title of
the property to another party before the total amount deferred is
repaid, deferred mortgage payments not already repaid are included in
total subsidy granted, and recapture will be calculated in accordance
with subpart I of this part.
(56 FR 41766, Aug. 23, 1991)
1951.331 -- 1951.349 (Reserved)
07 CFR 1951.350 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget and
assigned OMB control number 0575-0060. Public reporting burden for this
collection of information is estimated to vary from 5 to 30 minutes per
response, with an average of .28 minutes 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. Send comments regarding this burden estimate or any
other aspect of this collection of information, including suggestions
for reducing this burden, to Department of Agriculture, Clearance
Officer, OIRM, room 404-W, Washington, DC 20250; and to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Washington, DC 20503.
07 CFR 1951.350 Subpart H -- (Reserved)
07 CFR 1951.350 Subpart I -- Recapture of Section 502 Rural Housing
Subsidy
Source: 44 FR 56308, Oct. 1, 1979, unless otherwise noted.
07 CFR 1951.401 Purpose.
This subpart outlines the policies and procedures for the recapture
of interest credits or Homeownership Assistance Program (HOAP) subsidy
granted on initial and subsequent section 502 Rural Housing (RH) loans,
transfers, and credit sales approved on or after October 1, 1979.
07 CFR 1951.402 Policy.
The policy of the Farmers Home Administration (FmHA) is to recapture
all or a portion of the Interest Credit and HOAP Assistance (hereafter
known as ''subsidy'') granted, while providing incentive for the
borrower to occupy and maintain the property in marketable condition.
The real estate that secures the RH loan is the only security for the
subsidy granted the borrower.
1951.403 -- 1951.405 (Reserved)
07 CFR 1951.406 Recapture of subsidy.
Subsidy granted on section 502 RH initial and subsequent loans and
credit sales made or assumed on same or new terms is subject to
recapture if the loan, assumption, or credit sale is approved on or
after October 1, 1979. The subsidy is to be repaid when:
(a) The borrower sells, transfers, or without the Government's
consent does not occupy the property or requests a release of the
Government's lien on the property, or
(b) The security is liquidated by foreclosure, or the property is
voluntarily conveyed to the Government.
07 CFR 1951.407 Determining amount of subsidy to be recaptured.
The amount of subsidy to be repaid to the Government will be based on
the amount of subsidy granted on the loan, the appreciation in property
value between the closing date of the loan and the date the account is
satisfied, the method by which the loan is satisfied, the period of time
the loan is outstanding, and the amount of equity the borrower has in
the property when the loan being made or assumed is closed.
(a) Voluntary conveyance or foreclosure. The unpaid balance of loans
being liquidated by voluntary conveyance or foreclosure is the sum of
unpaid principal, interest, and total subsidy granted on the loan. In
cases of foreclosure or voluntary conveyance no deficiency judgment will
be sought to recover any subsidy.
(b) Sale or transfer. The unpaid balance of loans being liquidated
by sale or transfer is the sum of unpaid principal, interest, and a
share of the subsidy. The amount of subsidy to be repaid by the
borrower will be determined based on provisions of the ''Subsidy
Repayment Agreement'' (Exhibit A incorporated as a part hereof),
executed by the borrower whose loans(s) are subject to this Subpart at
the same time the first Interest Credit Agreement is signed on or after
October 1, 1979. The County Supervisor will compile the following
information and complete Exhibit C (available in any FmHA office) when
the loan is to be repaid.
(1) The original borrower equity in the security property when the
first loan subject to recapture was approved. (See item 6(f) Exhibit
A).
(2) The unpaid balance of any prior lien.
(3) The selling expense to be paid by the borrower.
(4) The market value of the property on the date the loan is to be
paid in full determined by:
(i) The reported selling price, unless the County Supervisor believes
the amount is substantially below the property value. In such cases, an
appraisal of the security property will be made. If the appraised value
is 5 percent or more above the reported selling price, recapture will be
based on the appraised value rather than the reported selling price.
(If the appraised value is to be used rather than the selling price, the
borrower will be informed of the appraised value), or
(ii) An appraisal in the case of a transfer, voluntary conveyance, or
foreclosure.
(5) The number of months the first loan subject to recapture of
subsidy was outstanding. See ''Date of Note'' on the Subsidy Repayment
Agreement (Exhibit A).
(6) The amount of subsidy granted, unpaid principal and interest
owned, and the average interest rate paid by the borrower will be
obtained from the Finance Office.
(c) Refinancing, graduation or offer to pay in full. Borrowers who
continue to occupy the dwelling as a permanent residence may pay the
principal and interest owed on the loan in full and delay repaying the
amount of subsidy owed until the dwelling is sold or no longer occupied
by the borrower. In such cases, the amount of subsidy to be repaid will
be determined when the principal and interest balance is paid. The
mortgage securing the FmHA RH loan(s) will not be released of record
until the total amount owed the Government is repaid. The FmHA mortgage
securing the subsidy owed may be subordinated to permit graduation or
refinancing in accordance with the conditions in 1965.106(b) of subpart
C of part 1965 of this chapter.
(44 FR 56308, Oct. 1, 1979, as amended at 49 FR 1885, Jan. 16, 1984;
52 FR 9113, Mar. 23, 1897)
1951.408 (Reserved)
07 CFR 1951.409 Finance Office responsibility.
The Finance Office shall keep a cumulative record of interest credits
and HOAP assistance granted on each loan approved or assumed after
October 1, 1979. When requested by the County Office, the Finance
Office will determine the average interest rate paid by the borrower
over the life of the loan(s). Annually, the Finance Office will notify
the borrower and County Office of the cumulative amount of subsidy
granted that is subject to recapture.
07 CFR 1951.410 Assumptions of loans with subsidy subject to recapture.
An RH loan, with subsidy subject to recapture, may be assumed in the
same manner as any other loan. In such cases the amount of subsidy to
be repaid by the borrower as determined by Exhibit C (available in any
FmHA office) may be assumed and amortized with principal and interest in
lieu of making a subsequent loan to repay the subsidy.
(44 FR 56308, Oct. 1, 1979, as amended at 49 FR 1885, Jan. 16, 1984)
07 CFR 1951.411 Modification of security instruments for loans being
transferred.
(a) When a section 502 RH loan is secured by a lien which does not
contain the covenant securing recapture of subsidy, and such loan is
assumed by an eligible low or moderate income applicant, a new or
supplemental mortgage will be recorded which explicitly secures the
recapture of any subsidy which may be granted on the loan being assumed.
Recapture, however, will not apply on loans approved on or before
October 1, 1979, and a new or supplemental mortgage will not be taken to
secure recapture when the loan is assumed by or on behalf of a deceased
borrower's spouse, or family who were members of the household and
directly dependent on the borrower for their support at the time of the
borrower's death.
(b) Also a new mortgage will be taken if a subsequent loan is being
made in conjunction with the transfer or if required by State
Supplement. In all other cases, a supplemental mortgage approved by OGC
will be executed and recorded.
07 CFR 1951.412 Servicing of loans approved after October 30, 1978, and
before October 1, 1979.
RH loans approved after October 30, 1978, and before October 1, 1979,
have a new mortgage, modified mortgage or a supplemental mortgage that
secures the right to recapture the subsidy granted. These borrowers
also signed a statement acknowledging that they understood that the
subsidy is subject to recapture. Since recapture will not apply to
these borrowers, the County Supervisor will take the following servicing
action:
(a) Return the signed statements, which acknowledge the right to
recapture, with a letter explaining that the subsidy granted or to be
granted will not be subject to recapture. This servicing action should
be done as soon as possible, however, in no case should it be later than
the time interest credits are renewed.
(b) Release as a valueless lien, any supplemental mortgage that was
taken only to secure the right to recapture.
(c) Mortgages taken to secure the loan being made as well as the
right to recapture will not be releases of record unless the account is
paid in full. Payment in full of such account will not include any
subsidy granted.
07 CFR 1951.413 Subsidy Repayment Fact Sheet.
For all RH loans that will be secured by a mortgage, the applicant
will be given a copy or mailed a copy of Exhibit B of this regulation,
''Subsidy Repayment Fact Sheet'' within three (3) business days after
receipt of the application in the County Office.
07 CFR 1951.413 Pt. 1951, Subpt. I, Exh. A
07 CFR 1951.413 Exhibits to Subpart I
07 CFR 1951.413 Exhibit A -- Subsidy Repayment Agreement
Date of Note ---------- Amount of Note ---------- Date of mortgage
---------- Date of Note ---------- Amount of Note ---------- Date of
mortgage ----------
Type of assistance:
1. Interest credit
2. Homeownership Assistance Program
Address of Property:
--
Borrower:
Co-Borrower:
1. This agreement entered into pursuant to 7 CFR 1951-I, between the
United States of America, acting through the Farmers Home Administration
(FmHA) (herein called ''the Government'') pursuant to section 521 of
Title V of the Housing Act of 1949 and the borrower(s) whose name(s) and
address(es) appears above (herein sometimes referred to as
''borrower''), supplements the note(s) from borrower to the Government
as described above, and any promissory note(s) for loans made to
borrower in the future by the Government. Such future notes, when
executed, will be listed below the signature line of this Subsidy
Repayment Agreement.
2. I (we) agree to the condition set forth in this agreement for the
repayment of the subsidy granted me (us) in the form of interest credits
or Homeownership Assistance Program (HOAP) subsidy (hereinafter called
''subsidy'').
3. I (we) agree that the real property described in the mortgage(s)
listed above is pledged as security for repayment of the subsidy
received or to be received. I (we) agree that the subsidy is due and
payable upon the transfer of title or non-occupancy of the property by
me (us). I (we) understand that the real estate securing the loan(s) is
the only security for the subsidy received. I (we) further understand
that I (we) will not be required to repay any of the subsidy from other
than the value (as determined by the Government) of the real estate,
mortgaged by myself (ourselves) in order to obtain a Section 502 Rural
Housing (RH) loan.
4. I (we) understand that so long as I (we) continue to own the
property and occupy the dwelling as my (our) residence, I (we) may repay
the principal and interest owed on the loan and defer repaying the
subsidy amount until title to the property is conveyed or the dwelling
is no longer occupied by me (us). If such a request is made, the amount
of subsidy to be repaid will be determined when the principal and
interest balance is paid. The mortage securing the FmHA RH loan(s) will
not be released of record until the total amount owed the Government has
been repaid.
5. I (we) agree that Paragraph 6 of this agreement is null and void
should the property described in the mortgage(s) be voluntarily conveyed
to the Government or liquidated by foreclosure.
6. When the debt is satisfied by other than voluntary conveyance of
the property to the Government or by foreclosure, I (we) agree that sale
proceeds will be divided between the Government and me (us) in the
following order:
(a) Unpaid balance of loans secured by a prior mortgage as well as
real estate taxes and assessments levied against the property which are
due will be paid.
(b) Unpaid principal and interest owed on FmHA RH loans for the
property and advances made by FmHA which were not subsidy and are still
due and payable will be paid to the Government.
(c) I (we) will receive from the sale proceeds actual expenses
incurred by me (us) necessary to sell the property. These may include
sales commissions or advertising cost, appraisal fees, legal and related
costs such as deed preparation and transfer taxes. Expenses incurred by
me (us) in preparing the property for sale are not allowed unless
authorized by the Government prior to incurring such expenses. Such
expenses will be authorized only when FmHA determines such expenses are
necessary to sell the property, or will likely result in a return
greater than the expense being incurred.
(d) I (we) will receive the amount of principal paid off on the loan
calculated at the promissory note interest rate.
(e) Any principal reduction attributed to subsidized interest
calculations will be paid to the Government.
(f) I (we) will receive my original equity which is the difference
between the market value of the security, as determined by the FmHA
appraisal at the time the first loan subject to recapture of subsidy was
made, and the amount of the FmHA loan(s) and any prior lien. This
amount is ---------- and represents ---------- percent of the market
value of the security. (The percent is determined by dividing my (our)
original equity by the market value of the security when the loan was
closed.) The dollar amounts and percent will be entered at the time this
agreement is signed by me (us) and will be part of this agreement.
(g) The remaining balance, after the payments described in (a) thru
(f) above have been paid is called value appreciation. The amount of
value appreciation to be paid to the Government, in repayment or the
subsidy granted, is the lesser of (1) the full amount of the subsidy or
(2) an amount determined by multiplying the value appreciation by the
appropriate factor in the following table.
(h) I (we) will receive the amount of value appreciation less the
amount paid the Government as determined in (g) above. I (we) will also
receive an additional amount in proportion to my original equity by
reducing the amount of value appreciation due to the Government by the
percent of my (our) original equity as shown in (f) above.
(i) If I (we) am the recipient of HOAP, the amount of value
appreciation to be recaptured will be calculated as if I (we) had paid 1
percent interest on the loan, unless the average interest rate paid by
me (us) was greater than 1 percent. In such cases it will be determined
based on the average interest rate paid by me (us).
(j) If this agreement is for a subsequent loan(s) only, the amount of
repayment determined in (g) above will be reduced by the following
percent: ---------- . This percent will be determined by dividing the
amount of the loan(s) subject to recapture by the total outstanding RH
debt. This percentage will be entered at the time I (we) sign this
agreement.
(k) If this agreement is for more than one loan that is subject to
recapture, the subsidy repayment computations will be based on the total
subsidy granted on all loans.
7. When a FmHA RH loan is repaid by other than foreclosure, voluntary
conveyance, or sale of property, the amount of subsidy to be repaid the
Government will be determined in the same manner as described in
paragraph 6 of this Exhibit but based on the appraised value determined
by FmHA instead of sales price. In such cases, the subsidy due to the
Government will remain a lien on the property until paid. It must be
paid upon non occupancy, sale, or transfer of title to the property.
8. I (we) have read and agree to the provisions of this agreement.
Borrower
Co-Borrower
Date signed
Accepted and Agreed to
By ------------ (FmHA Offical)
Title
Date
07 CFR 1951.413 Pt. 1951, Subpt. I, Exh. B
07 CFR 1951.413 Exhibit B -- Subsidy Repayment Fact Sheet
Subsidy granted by the Farmers Home Administration (FmHA) to section
502 Rural Housing borrowers on loans approved after October 1, 1979, is
subject to recapture. This means that when a borrower's home is sold,
transferred, or is no longer occupied as the borrower's residence, all
or part of the interest credit or home ownership assistance subsidy
granted on the loan must be repaid to the Government. The amount to be
repaid will be determined on the basis of a formula that permits the
borrower to retain a portion of the value appreciation available when
the home is sold or the mortgage otherwise paid-off.
The purpose of granting a housing subsidy is to assist a borrower to
obtain decent, safe, and sanitary housing. Housing subsidy costs have
risen dramatically in recent years. Through the use of a subsidy
repayment agreement, the borrower and the Government share this cost.
The borrower's contribution to subsidy cost will be from equity acquired
through appreciation of the mortgaged property. Therefore, the longer
the borrower lives in and maintains the property the greater the portion
of the subsidy the borrower may retain.
1. The Mortagages or Deeds of Trust, signed by those receiving
interest credit or home ownership assistance subsidy, contain a
provision making the amount of subsidy a lien against the property.
2. When a house is sold, transferred or no longer occupied as the
borrower's residence, the amount of subsidy to be repaid will be due and
payable.
3. When a borrower pays off the loan, but continues to live in the
dwelling, the amount of subsidy to be repaid will be calculated. The
borrower may elect to defer the repayment of subsidy, however, until the
property is sold or no longer used as the borrower's residence. This
protects borrowers from being forced to sell their home because of
subsidy recapture.
4. A chart printed on the subsidy repayment agreement which is
available from any FmHA county office will be used to calculate borrower
and FmHA shares of any value appreciation.
07 CFR 1951.413 Subpart J -- (Reserved)
07 CFR 1951.413 Subpart K -- Predetermined Amortization Schedule System
(PASS) Account Servicing
Source: 50 FR 8597, Mar. 4, 1985, unless otherwise noted.
07 CFR 1951.501 General.
(a) This subpart prescribes the policies, authorizations, and
procedures for implementing and servicing PASS for all of the following
Farmers Home Administration (FmHA) Multiple Family Housing (MFH) loan
recipients which includes Farm Labor Housing (LH) and Rural Rental
Housing (RRH) including Rural Cooperative Housing (RCH) and Congregate
Housing and includes:
(1) All MFH loans, credit sales, reamortizations, and transfers
closed on or after May 1, 1985, and
(2) All MFH loan recipients converting from the Daily Interest
Accrual System (DIAS) to PASS according to 1951.517 of this subpart,
except:
(i) Seasonal LH and LH loans to individual farmers may be closed on
monthly or annual payment schedules and also may be closed on Daily
Interest Accrual under subpart A of part 1951 of this chapter.
Instructions for scheduling payments are according to the Forms Manual
Insert (FMI) for Form FmHA 1944-52, ''Multiple Family Housing Promissory
Note.''
(ii) Rural Housing Site (RHS) loans and Site Option (SO) loans will
be closed and serviced on Daily Interest Accrual under subpart A of part
1951 of this chapter. Payment billings are subject to 1951.506 of this
subpart.
(b) All MFH loan recipients not described in paragraph (a) of this
section will continue to be subject to the servicing and collection
requirements of subpart A of part 1951 of this chapter. For the
purposes of this subpart, all references to ''County Supervisor'' in
subpart A of part 1951 shall be construed to mean ''District Director.''
(c) All FmHA MFH loans (RRH, RCH, LH, RHS, and SO) whether DIAS or
PASS, are subject to the definitions contained in 1951.504 of this
subpart, and payment application as outlined in 1951.510 of this
subpart.
(d) All MFH loan payments will be processed using Exhibit A of this
subpart (available in any FmHA office).
(50 FR 8597, Mar. 4, 1985, as amended at 53 FR 16244, May 6, 1988;
56 FR 28038, June 19, 1991)
1951.502 (Reserved)
07 CFR 1951.503 Authorities and responsibilities.
District Directors are responsible for administering this subpart
under the general guidance and supervision of the State Director. The
District Office Management System will be fully used to accomplish this
responsibility.
07 CFR 1951.504 Definitions and statements of policy.
(a) Advance regular payment. Regular payments made at election of
the borrower to pay the account ahead of schedule. These payments may
be either full or partial payments and will be applied to the amortized
payment schedule by the Finance Office.
(b) Amortization schedule. An amortization schedule is the projected
application of periodic payments to principal and interest at the
promissory note rate so the debt will be paid in full over the number of
periods specified in the promissory note, assumption agreement (new
terms), or reamortization agreement. Computation is based on a 30-day
month and a 360-day year.
(c) Amortized recoverable costs. Recoverable cost items may be
amortized over a period up to 5 years. This function will allow the
servicing official to voucher recoverable cost items such as taxes.
(1) Payment of real estate taxes. When a borrower's taxes are paid
by voucher, the amortization period of the tax advance will be the
number of months for which the taxes are being vouchered with a maximum
of 5 years.
(2) Costs other than real estate taxes. Advances for costs other
than real estate taxes will be amortized for 12 months unless, based on
the borrower's repayment ability, a longer period is needed. An
amortization period of more than 12 months will be used only when the
cost is of a nonrecurring type. In no case, however, will the repayment
period exceed 5 years.
(3) Retroactive amortization of recoverable costs. Recoverable costs
which have been vouchered since May 1, 1985, may, with National Office
approval, be retroactively amortized for applicable time periods as
shown in paragraphs (c)(1) and (c)(2) of this section, if payments made
since the costs were vouchered are sufficient to bring both the loan and
cost accounts current. The following information should be forwarded to
the National Office for approval of the reclassification to amortized
status, and forwarded to the Finance Office for processing: An audit
showing all costs vouchered along with payments made since the date of
the cost item and to be made prior to the reclassification; the
estimated reapplication of the payments due to reclassification showing
that the account will be current after the reclassification; and the
proposed budget and management case files.
(d) Audit receivables. Loan, grant or subsidy funds which were used
by the borrower for unauthorized purposes; have been identified by the
Office of Inspector General (OIG) in an audit; and, which FmHA is
requiring the borrower to repay.
(e) Conversion. The act of changing a borrower's account from DIAS
to PASS.
(f) Daily Interest Accrual System (DIAS). A system whereby interest
is charged daily from the date a payment is received in the District
Office to the next date a payment is received. A daily interest accrual
factor is computed by multiplying the outstanding principal balance by
the effective interest rate and dividing by 365 days. Computation is
always based on a 365 day year. Interest on each payment is charged on
the actual number of days that a principal balance is outstanding.
(g) District Director. For the purpose of this subpart the term
includes the Assistant District Director, and other qualified District
staff who may be delegated responsibilities according to 1930.143 of
subpart C of part 1930 of this chapter, and the provisions of subpart F
of part 2006 of this chapter (available in any FmHA office). In the
case of LH loans still being serviced in the County Office, this
definition also includes qualified County Office staff. This definition
further includes the Area Loan Specialists in Alaska, Island Directors
in Hawaii, Directors of Western Pacific Territories, and other qualified
staff members in Alaska, Hawaii, and Western Pacific Territories,
respectively.
(h) Extra payment. Extra payments are applied all to principal on
the end of the loan and are funds derived from:
(1) Sale of basic chattel or real estate security, including rental
or lease of real estate security of a depreciating or depleting nature.
(2) Refinancing of real estate debt.
(3) Mineral royalties.
(4) Cash proceeds of real property insurance as provided in subpart A
of part 1806 of this chapter (FmHA Instruction 426.1).
(5) Sale of real estate not mortgaged to the Government, pursuant to
a condition of loan approval.
(6) Transactions of a similar nature which reduce the value of the
security for the loan(s).
(i) Project late fee. The amount charged a borrower's project
account for a delinquent payment according to 1951.510(c)(2) of this
subpart, or when an uncollectible regular payment has been processed
according to 1951.506(c) of this subpart.
(j) Non-recoverable costs. Payments charged to a loan program
insurance fund by use of a fund code. These costs are only incurred
after Government acquisition of title to the property, and are therefore
charged to an inventory account.
(k) Occupancy surcharges. A monthly surcharge on units in projects
where the initial loan was made or insured pursuant to a contract
entered into on or after December 15, 1989. These surcharges will be
collected from the tenant by the borrower on the same day and in
addition to regular rents. The amounts to be collected will be in
accordance with exhibit B of this subpart.
(l) Overage. This term refers to both ''overage'' and ''surcharge''
described in exhibit H to subpart C of part 1930 of this chapter.
(m) Payment effective date. The payment effective date is the day of
the month on which payments will be effectively applied to the account
by the Finance Office for the month payment is due regardless of the
payment reception date. On PASS all payments will be applied as of the
first day of the month.
(n) Payment reception date. The day of the month the payment is
received in the District Office.
(o) Predetermined Amortization Schedule System (PASS). System
whereby FmHA will apply loan payments based on an amortization schedule.
(p) Promissory note installment. The unrounded amortized installment
shown on the promissory note, conversion agreement, assumption agreement
or reamortization agreement, whichever is currently in effect.
(q) Recoverable costs. Additional project costs such as vouchered
insurance or taxes which FmHA requires a borrower to pay.
(r) Refund payment. Payments from unused loan funds which are
applied to principal on the end of the loan account.
(s) Regular payment. All monthly payments scheduled according to
PASS. Does not include extra payments, advance regular payments, refund
payments or voluntary additional principal payments.
(t) Subsidized installment. The promissory note installment reduced
by the terms of Form FmHA 1944-7, ''Multiple Family Housing Interest
Credit and Rental Assistance Agreement.'' The subsidized installment is
the unrounded amortized installment computed at the subsidized interest
rate.
(u) Subsidy credit. The difference between a borrower's monthly
promissory note installment and the monthly subsidized installment.
(v) Voluntary additional principal payment. Payments applied all to
principal which are made at the election of the borrower in addition to
regularly scheduled payments and with FmHA approval. Such payments will
not affect the schedule payment status or change the amount of the
regular monthly payments. Funds for voluntary additional principal
payments are derived from sources other than extra payment sources.
Payments will be applied to current loans only.
(50 FR 8597, Mar. 4, 1985, as amended at 53 FR 2194, Jan. 26, 1988;
53 FR 16244, May 6, 1988; 55 FR 25078, June 20, 1990; 56 FR 66961,
Dec. 27, 1991)
Effective Date Note: At 56 FR 66961, Dec. 27, 1991, 1951.504 (k)
and (l) were revised, effective January 27, 1992. For the convenience
of the reader, the superseded text is set forth as follows.
1951.504 Definitions and statements of policy.
(k) Occupancy surcharges. A monthly surcharge on occupied units in
projects where the last loan was made or insured pursuant to a contract
entered into on or after June 16, 1990. These surcharges will be
collected from the tenant by the borrower on the same day and in
addition to regular rents. The amounts to be collected will be in
accordance with exhibit B of this subpart.
(l) Overage. This term refers to both ''overage'' and ''surcharge''
described in Exhibit H to Subpart C of Part 1930 of this chapter.
1951.505 (Reserved)
07 CFR 1951.506 Processing payments.
(a) Regular payments. Regular payments and advance regular payments
will be processed as follows:
(1) All payments will be based on tenants occupying the units as of
the first day of the month for which the payment statement is generated.
For the purposes of this subpart the word ''tenant'' also means RCH
''member.''
(2) The borrower must mail all Forms FmHA 1944-8, ''Tenant
Certification,'' or for tenants receiving Section 8 assistance, the
acceptable Department of Housing and Urban Development (HUD) form, to
the District Director on the same day, or before, the tenant occupies
the unit. The District Director will verify the information on the
tenant certification as required in paragraph VII F of Exhibit B to
subpart C of part 1930 of this chapter. The data from the verified
tenant certification should be entered on a ''master'' Form FmHA
1944-29, ''Project Worksheet for Interest Credit and Rental Assistance''
filed with the current tenant certifications in the District Office
Servicing file. Only tenants with current tenant certifications shown
on this ''master'' list may be certified for interest credit or rental
assistance.
(3) On the 20th day of each month, the Finance Office will generate
and mail to each borrower Form FmHA 1944-9A, ''Multiple Family Housing
Statement of Payment Due,'' showing the current monthly payment due,
unpaid late fees, any other charges to the account, and delinquent
payments, if any, due on the first day of the following month. This
payment statement will be determined from current Finance Office records
but will not reflect overage or occupancy surcharge due from the
borrower or rental assistance due the borrower.
(4) Upon receipt of Form FmHA 1944-9A, the borrower will submit to
the District Office Form FmHA 1944-29 with the payment indicated or
adjusted as indicated in paragraph (a)(5) of this section.
(5) Form FmHA 1944-29, prepared by the borrower must reflect the
following:
(i) Only tenants occupying units the first day of the month for which
payment is due.
(ii) Interest credit and rental assistance may be claimed only for
tenants with current tenant certification as specified in paragraph VII
F 2 of Exhibit B to subpart F of part 1930 of this chapter.
(iii) Overage up to the market rent must be paid to FmHA by the
borrower for tenants without current tenant certifications unless there
is a formal eviction in process, then the payment will be calculated
based on the expired tenant certificate. The District Director may
determine that the tenant may be required to reimburse the borrower for
that overage as allowed in paragraph VII F of Exhibit B to subpart C of
part 1930 of this chapter.
(iv) Any occupancy surcharge due FmHA as described in exhibit B of
this subpart.
(v) The borrower may subtract any rental assistance due the project
(supported by current tenant certifications) from the payment due and
remit a ''net'' payment. Calculations supporting the ''net'' payment
must be shown on Part I of Form FmHA 1944-29.
(6) The District Director will certify that data on current tenant
certifications held in the District Office supports claims on Form FmHA
1944-29. The District Director will transmit payments as directed in
Exhibit A of this subpart (available in any FmHA office).
(b) Other payments. Payments made through the District Office will
be processed according to subpart B of part 1951 of this chapter
(available in any FmHA office).
(c) Uncollectible payment. Uncollectible payments will be handled
under subpart B of this part. The payment effective date for the
replacement payment will be the date the replacement payment is received
in the District Office, not the date of the original payment.
(50 FR 8597, Mar. 4, 1985, as amended at 51 FR 27671, Aug. 1, 1986;
55 FR 25078, June 20, 1990; 56 FR 2256, Jan. 22, 1991; 56 FR 28038,
June 19, 1991)
07 CFR 1951.507 Maintaining borrower accounts.
(a) Accounts of active borrowers. The foundation for proper and
timely debt payment is sound budgeting and monthly review of income and
expenses by the borrower and, as necessary, the District Office staff.
Account maintenance, therefore, must begin with initial planning and
must be an integral part of ongoing analysis, planning and folllow-up
management assistance.
(b) Accounts of collection-only borrowers. Collection only accounts
will be serviced according to 1951.7(b) of Subpart A of this part.
(c) Notifying borrowers of late fees and past due payments. The
Finance Office will automatically notify each borrower of late fees for
payments which were unpaid on the 10th day of the month. A copy of the
notice will be mailed to the District Office servicing the account.
(d) Subsequent servicing. Delinquent accounts will be serviced
according to the respective program requirements. Accounts will also be
serviced under subpart B of part 1965 of this chapter.
(e) Maintaining records of accounts in District Offices. Records of
accounts will be maintained in the District Office. Form FmHA 1905-6,
''Management System Card -- Multifamily Housing,'' or other system
authorized by FmHA regulations will be maintained for each project. For
projects on PASS, the Management System Card will be flagged with an
orange signal between Position ''5'' and ''RRH''. Exhibit A-1 of this
subpart (available in any FmHA office) should be used to track payments.
(50 FR 8597, Mar. 4, 1985, as amended at 56 FR 28038, June 19, 1991)
1951.508 (Reserved)
07 CFR 1951.509 Occupancy surcharges.
(a) Authorization to Collect Occupancy Surcharge. Public Law 101-235
enacted December 15, 1989, and amended by Public Law 101-625, prescribes
provisions for FmHA to collect an additional monthly amount from
borrowers on all initial section 515 loans made or insured pursuant to a
contract entered into on or after December 15, 1989.
(1) A contract entered into for this purpose is when a completed Form
FmHA 1944-51, ''Multiple Family Housing Obligation -- Fund Analysis,''
is properly delivered to the borrower on or after December 15, 1989.
(That delivery date is the date entered in Item 51 on Form FmHA
1944-51).
(2) The term occupancy surcharge shall be used hereafter to describe
this additional monthly charge.
(b) Occupancy Surcharge Payments. These monthly payments shall be
made from project income which will be collected from tenants or from
subsidy which the tenant will be entitled to. The amount of surcharge
assessed per unit, in the initial year of operation will be $2 per unit.
This surcharge assessment will increase by $2 per unit each year
thereafter for 19 years. The amount of the surcharge assessment which
the tenant pays will be based on the income level of each tenant
household. Tenant households who pay more than 30 percent of their
annual adjusted income in rent and utilities will not be required to pay
occupancy surcharge.
(1) Annual increases will cease 20 years from the date of the first
surcharge payment due on the initial or oldest loan in the project.
(2) Surcharge payments will continue after the annual increase period
has expired, but surcharge unit assessments will remain at the levels
established at year 20 of the initial loan for the remaining life of the
loan.
(3) If a subsequent loan is made and the initial loan in the project
is subject to occupancy surcharge, the annual increase period will still
expire 20 years from the first surcharge payment due on the initial
loan.
(c) Increases in Tenant Contribution Due to Occupancy Surcharges.
Borrowers/Managers are responsible for initiating and monitoring
surcharge annual increases and all surcharge increases and decreases due
to change in tenant contributions. These changes require no prior
review by FmHA. All tenants must be notified of any changes in their
surcharge contribution in the following manner:
(1) Tenants moving into newly constructed projects in their first
year of operation should be informed of the occupancy surcharge
requirements when their lease and initial tenant certification is
signed. They should also be apprised at that time of possible surcharge
changes based on their income levels.
(2) When there are surcharge changes due to income changes and
regular recertifications, the current signed tenant certification
showing the level of surcharge due will serve as notification of the
change.
(3) Tenants who experience surcharge changes due to the annual $2 per
unit increase on the surcharge anniversary date must be sent a
notification of the change in accordance with exhibit B of this subpart.
(d) Occupancy Surcharge Account. Occupancy surcharge monies
collected by FmHA will be deposited in the Rural Housing Insurance Fund
(RHIF) in such a manner as to accrue interest on the total amount of
funds collected. These monies will be made available only for payments
of principal and interest on guaranteed equity loans made under the
authorization of section 515 of the HUD Act of 1989. Payments from the
occupancy surcharge account will only be in amounts necessary to ensure
that additional project expense from the incurred guaranteed equity loan
does not raise rent payments above prescribed maximum rent levels
necessary to operate the project. Any monies not expended in the
project from which the payments were made will be used in other projects
to make payments of principal and interest on a guaranteed equity loan.
(e) Occupancy Surcharge Takeout. The method for allowing payments on
these guaranteed equity loans out of the occupancy surcharge account
will be forthcoming a such time as needed and will conform with
appropriate legislative requirements in effect at that time.
(f) Collection of Occupancy Surcharge by FmHA. The policies and
methods for collecting surcharge are set forth in exhibit B of this
subpart.
(56 FR 66961, Dec. 27, 1991)
Effective Date Note: At 56 FR 66961, Dec. 27, 1991, 1951.509 was
revised, effective January 27, 1992. For the convenience of the reader,
the superseded text is set forth as follows.
1951.509 Occupancy surcharge payments.
(a) Authorization to Collect Occupancy Surcharge. Section 515(t)(4)
of the Housing Act of 1949, added by section 207 of the Housing and
Urban Development (HUD) Act of 1989, Public Law 101-235 which was
enacted December 16, 1989, prescribes provisions for FmHA to collect an
additional monthly amount from borrowers on all section 515 loans made
or insured pursuant to a contract entered into on or after June 16,
1990.
(1) A contract is entered into when a completed Form FmHA 1944-51,
''Multiple-Family Housing Obligation -- Fund Analysis,'' is properly
delivered to the borrower on or after June 16, 1990. (That delivery
date is the date entered in item 51 on Form FmHA 1944-51).
(2) The term ''occupancy surcharge'' shall be used hereafter to
describe this additional monthly charge.
(b) Occupancy Surcharge Payments. These monthly payments shall be
made from project income which will be collected from tenants. The
amount to be collected in the first year after the loan is made or
insured will equal $2 per month, for each occupied unit in the project,
and shall increase by $2 per unit annually for the next 19 years, based
on the income status of tenants residing in each unit.
(1) These annual increases will cease 20 years from the date of the
first surcharge payment due on the account.
(2) Annual increases shall not be required for a unit occupied by a
family or individual who is paying more than 30 percent of their annual
adjusted gross income in rent and utilities.
(3) Surcharge payments will continue after the annual increase period
has expired, but will remain at the levels established at year 20 for
the remaining life of the loan.
(4) If a subsequent loan is made, the annual increase period for the
project will extend for 20 years from the date of the subsequent loan.
(c) Increases in tenant contribution due to occupancy surcharges.
Borrowers/managers are responsible for initiating and monitoring all
surcharge increases. These increases require no prior review by FmHA.
All tenants must be notified of any changes in their surcharge
contribution in the following manner:
(1) Newly constructed projects in their first year of operation
should inform the tenant of the $2 initial charge when their lease is
signed. They should also be apprised at that time of possible $2 annual
increases based on their income levels.
(2) Tenants in projects where the increase is due to the annual
increase or tenants residing in an existing project where a subsequent
loan or a servicing action made the project subject to occupancy
surcharge, must notify the tenant at least 30 days before the effective
date of the increase. This notification will be in writing, outlining
any changes that will occur. All tenants in the project will be sent a
notification, regardless of whether their actual surcharge contribution
changed or not.
(d) Occupancy Surcharge Account. Occupancy surcharge monies
collected by FmHA will be deposited in the Rural Housing Insurance fund
(RHIF) in such a manner as to accrue interest on the total amount of
funds collected. These monies will be made available only for payments
of principal and interest on guaranteed equity loans made under the
authorization of section 515 of the HUD Reform Act of 1989. Payments
from the occupancy surcharge account will only be in amounts necessary
to ensure that additional project expense from the incurred guaranteed
equity loan does not raise rent payments above prescribed maximum rent
levels necessary to operate the project. Any monies not expended in the
project from which the payments were made, will be used in other
projects to make payments of principal and interest on a guaranteed
equity loan.
(e) Occupancy Surcharge Takeout. The method for allowing payments on
these guaranteed equity loans out of the occupancy surcharge account
will be forthcoming at such time as needed and will conform with
appropriate legislative requirements in effect at that time.
(f) Collection of Occupancy Surcharge by FmHA. The policies and
methods for collecting surcharge is set forth in exhibit B of this
subpart.
(55 FR 25078, June 20, 1990)
07 CFR 1951.510 Payment application.
(a) Regular payment due date. The regular payment due date is the
first day of each month. All months will be counted as 30 days (360 day
year).
(b) First regular payment. (1) The first regular amortized payment
after loan closing for transfers (new terms), reamortizations, voluntary
conversions, credit sales, or loans closed after interim financing must
be at least one (1) month from closing. For example, if a loan is
closed on January 31, the first regular amortized payment will be due
March 1. For multiple advance loans the first payment must be at least
one (1) month after the final advance.
(2) For transfers (same terms) payments on loans already on PASS will
be due on the next scheduled due date.
(3) Transfers (same terms) converting from DIAS to PASS are loans
retaining the same interest rate and final due date and regular
amortized payments will be due 30 days form either the date of closing
or the interest only installment, whichever is later.
(c) Delinquent payments. (1) A loan payment is considered delinquent
the first day following the due date if it is not received by the
District Office. However, borrowers will be allowed a ten (10) day
grace period following the due date to make their payment. Late fees
will be charged, effective on the eleventh (11th) day of the month.
Thereafter, late charges will be assessed as described in paragraphs (c)
(2) and (3) of this section.
(2) The project account will be charged a late fee when the regular
payment is not received in the District Office by the tenth (10) day of
the month the payment is due or when the payment is applied by the
Finance Office and does not fully pay the regular payment and other
charges for each project loan. Late fees collected by the Finance
Office will be deposited in the Rural Housing Insurance Fund (RHIF).
(i) The project late fee is six percent of the total regular
payment(s) due shown on the promissory note(s), conversion agreement(s),
assumption agreement(s) or reamortization agreement(s).
(ii) A project late fee will be charged for any unpaid portion of the
regular payment(s) exceeding $15.00.
(iii) A project late fee will be charged one time only, for each
regular payment.
(iv) Except for cooperative housing, project late fees may not be
paid from project income as specified in paragraph XIII B2a(4) of
Exhibit B to subpart C of part 1930 of this chapter.
(v) Exceptions may be made to late fee charges only as follows:
(A) The State Director may allow an exception for any project for
three (3) monthly project late fee charges in any calendar year, based
on the State Director's determination that the late fees place an unfair
burden on the project. For each exception requested, the borrower must
provide a written explanation of the circumstances which caused the late
payment and what actions will be taken to bring the account current.
(B) The National Office may authorize exceptions to late fees for
borrowers who have late fees exceeding the State Director's exception
authority. When the State Director determines that the application of a
late fee would place an unfair burden on the borrower, the State
Director may submit a request for an exception to the late fee to the
National Office. The request will include an explanation of the
circumstances, a recommendation for action and all relevant case file
material. The National Office will review the request and notify the
State Director what action should be taken on the account.
(C) When an exception to late fees is granted, the State Director
will notify the borrower on Form FmHA 1951-51, ''Multiple Family Housing
Exception to Late Fees,'' completed according to the FMI.
(D) When an application for late fee exception is denied the State
Director must give the borrower appeal rights under subpart B of part
1900 of this chapter.
(3) When a regular payment continues to be delinquent on the first of
the month following the delinquent payment due date, interest will be
charged on the unpaid principal at the note rate until all regular
payments, recoverable cost charges, late fees and occupancy surcharges
have been paid current in accordance with the number of full
installments required by the promissory note. This interest will be in
addition to the scheduled interest of the regular payment. The account
will no longer be on the previous amortization schedule. The account
may be brought back on the previous amortization schedule by making a
voluntary additional principal payment in an amount equal to the
scheduled principal that was used to pay the additional interest
charged.
(d) Subsidy credit. When the Finance Office receives the regular
payment, subsidy credit will be applied to the loan account before any
payment or other credit is applied to the account. Subsidy credit will
be applied first to accrued interest and then to principal after all
interest is paid. Subsidy credit will not be applied to late fees,
audit receivables, or recoverable cost charges.
(e) Regular payments. Regular payments will be applied in the
following priority:
(1) Amortized audit receivables.
(2) Unamortized audit receivables.
(3) All project late fees due.
(4) Occupancy surcharges.
(5) Amortized recoverable costs due.
(6) Unamortized recoverable costs due.
(7) Overage.
(8) All other interest due.
(9) Principal.
(10) Any remaining regular payment will be applied as an advance
regular payment unless specifically designated otherwise.
(f) Advance regular payments. These payments affect the payment
status of the loan. The loan account must be current before a payment
can be applied as an advance payment. The payment effective date will
be the due date of the next regular payment which is not fully paid.
(g) Extra and refund payments. Both will be applied as principal to
the last installment to become due under the note.
(h) Voluntary additional principal payments. These payments will
only be credited to the account when all regularly scheduled payments on
the account have been paid. Voluntary additional principal payments are
credited all to principal, as of the payment effective date, and do not
affect the payment status of the loan.
(i) Projects with initial and subsequent loan(s). Regular payments
on projects with an initial and subsequent loan(s) will be applied
according to the priorities listed in 1951.510(e) of this subpart.
Each priority item will be paid for all project loans before moving to
the next item.
Payments will be applied for each priority item in accordance with
the loan number, beginning with the initial loan and ending with the
highest numbered subsequent loan.
(j) Final payments. Final payments will be applied on the next
payment due date or the final due date shown on the promissory note,
assumption agreement or reamortization agreement, whichever is sooner.
The District Office must contact the Finance Office for the amount of
the final payment. Final payment should be accepted under conditions
specified in 1965.90 of subpart B to part 1965 of this chapter.
(50 FR 8597, Mar. 4, 1985, as amended at 53 FR 16245, May 6, 1988;
55 FR 5975, Feb. 21, 1990; 55 FR 25078, June 20, 1990; 56 FR 2257,
Jan. 22, 1991)
1951.511 (Reserved)
07 CFR 1951.512 Changes in the application of loan payments.
District Office employees with State Director authorization according
to 1930.143 of subpart C to part 1039 of this chapter are authorized to
approve reapplication of loan payments between accounts when payments
have been applied in error. All authorization for reapplication of
payments must conform to the policies expressed in this subpart. No
change may be made if the loan is paid in full, the cancelled note or
notes have been returned to the borrower, and the security instruments
have been satisfied. The District Director will process the changes as
prescribed in Exhibit A of this subpart (available in any FmHA office).
(56 FR 28038, June 19, 1991)
07 CFR 1951.513 Overpayments and refunds to borrowers.
Overpayments and refunds to borrowers will be processed according to
1951.13 of Subpart A of this part.
07 CFR 1951.514 Recoverable and non-recoverable cost charges.
The District Director will service recoverable and non-recoverable
cost items according to 1951.14 of Subpart A of this part and subpart P
of part 2024 which is available in any FmHA office. (Recoverable and
non-recoverable costs are defined in 1951.504 of this subpart.)
(53 FR 16245, May 6, 1988)
07 CFR 1951.515 Promissory notes for borrowers who convert to PASS.
Promissory notes in the hands of investors when a loan is converted
to PASS will be repurchased by the Finance Office and forwarded to the
District Office for storage.
1951.516 (Reserved)
07 CFR 1951.517 Conversion from DIAS to PASS.
(a) Conversion prior to May 1, 1985. The account of any existing RRH
loan recipient who elected to convert to PASS before October 31, 1983,
by following instructions prescribed by FmHA, and who signed their
conversion documents before May 1, 1985, or any recipient of a new loan,
credit sale, or transfer (new terms) closed between November 1, 1983,
and April 30, 1985, who elected to convert to PASS, will be converted on
May 1, 1985, as if the loan has been on an amortization schedule from
the date of the loan, transfer (new terms), or reamortization (new
terms), whichever occurred later.
(b) Conversion on or after May 1, 1985 -- (1) Required conversion.
After May 1, 1985, all MFH loans, transfers or reamortizations must be
closed on PASS, except LH loans specified in 1951.501(a)(2)(i) of this
subpart. All borrowers receiving subsequent loans or reamortizations
must convert all initial and subsequent loans on the project to PASS.
If the subsequent loan and conversion are not closed on the first of the
month, the interest from the date of closing to the first of the month
will be capitalized. Recoverable costs and unpaid interest may be
capitalized on coversions required by subsequent loans or reamortization
of one loan on the project account.
(2) Voluntary conversion. District Directors shall approve voluntary
conversion of any account from DIAS to PASS upon a request by the
borrower, when the following conditions are met:
(i) The loan account and reserve account are current less any
authorized withdrawals at the time of conversion.
(ii) Conversion does not result in a rent increase.
(iii) The conversion is effective the first day of the month.
(3) Processing conversions. The following actions must be taken to
convert an account from DIAS to PASS:
(i) Form FmHA 1951-50, ''Multiple Family Housing Conversion
Agreement,'' will be completed according to the FMI except loans
converted on Form FmHA 1965-9, ''Multiple Family Housing Assumption
Agreement,'' or FmHA 1965-16, ''Multiple Family Housing Reamortization
Agreement.'' The terms of Forms FmHA 1965-9 and FmHA 1965-16 convert the
account to PASS.
(ii) When the borrower will continue to receive interest credit
following conversion, the current interest credit agreement will be
cancelled by preparing and submitting a new Form FmHA 1944-7. Form FmHA
1944-7 should be attached to Form FmHA 1951-50, and submitted to the
Finance Office, Attention: Multiple Family Housing Unit.
(iii) On the back of the original note or assumption agreement (new
terms), below all signatures and endorsements, the District Director
will insert the following: ''A Form FmHA 1951-50 dated ------ 198 -- ,
in the principal sum of $ ------ , has been given to modify the payment
schedule of the note.
(4) Principal balance to be converted. For transfers and
reamortizations, the applicable transfer or reamortization form will
convert the account. The principal balance converted to PASS will be
established according to the FMI for Form FmHA 1965-9, Form FmHA
1965-10, or FmHA 1965-16, and the following:
(i) For transfers (new terms), any unpaid interest to the date of
closing may be capitalized. When the transfer is other than the first
day of the month, the interest from closing to the first of the
following month will be established as an ''interest only'' installment
due on the first of the following month. The interest only installment
should be collected at transfer closing. See FMI for Forms 1965-9 and
1965-10 for details.
(ii) For transfer (same terms), interest will not be capitalized.
Accrued interest from the last payment to the date of closing will be
collected at closing. If the transfer is other than the first of the
month, the interest from the previous payment to date of closing will be
paid by the transferor and an interest only installment will be
established for the balance of the month based on PASS. The interest
only installment will be due on the first of the following month by the
transferee and must be collected at transfer closing. To establish the
interest only installment, use the formula shown on the FMI for Form
FmHA 1965-9 and Form FmHA 1965-10.
(iii) Reamortizations will always be closed the first day of the
month. Unpaid interest to the date of closing may be capitalized.
(iv) Audit receivables may not be transferred or reamortized.
(5) Terms of conversion. All conversion on Form FmHA 1951-50 will be
at the interest rate and within the remaining terms shown on the
converting promissory note, assumption agreement (new terms) or
reamortization agreement (new terms).
(50 FR 8597, Mar. 4, 1985, as amended at 53 FR 15800, May 4, 1988;
53 FR 16245, May 6, 1988)
07 CFR 1951.518 Determining current loan balances for transfer.
Same terms transfers, when the transferor has been converted to PASS,
must take place in a current loan status on the date of the transfer.
Any delinquent principal and interest must be brought current.
Overpayments and advance regular payments made on PASS accounts result
in the creation of a ''future paid'' status account under AMAS. These
advance payments must be reversed off and applied to the transferor's
principal balance prior to determining the loan balance to be
transferred. If the future payments have been made through rental
assistance, they must be refunded to the transferor and reapplied in the
form of cash on the loan balance.
(53 FR 16245, May 6, 1988)
1951.519 -- 1951.547 (Reserved)
07 CFR 1951.548 Exception authority.
The Administrator of the Farmers Home Administration may, in
individual cases, make an exception to any requirements of this Subpart
not required by the authorizing statute if the Administrator finds that
application of such requirement would adversely affect the interest of
the Government. The Administrator will exercise the authority only at
the request of the State Director. The District Director will submit
the request supported by data: demonstrating the adverse impact;
identifying the particular requirement involved; showing proper
alternative courses of action; and, identifying how the adverse impact
will be eliminated.
1951.549 (Reserved)
07 CFR 1951.550 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0106. Public reporting burden for this collection
of information is estimated to be 15 minutes per response, with an
average of 15 minutes 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. Send comments regarding this burden estimate or any other
aspect of this collection of information, including suggestions for
reducing this burden, to Department of Agriculture, Clearance Office,
OIRM, Room 404-W, Washington, DC 20250; and to the Office of Management
and Budget, Paperwork Reduction Project (OMB 0575-0106), Washington, DC
20503.
(56 FR 28039, June 19, 1991)
07 CFR 1951.550 Exhibits to Subpart K
07 CFR 1951.550 Exhibit A -- (Reserved)
07 CFR 1951.550 Pt. 1951, Subpt. K, Exh. B
07 CFR 1951.550 Exhibit B -- Occupancy Surcharge Payments
This exhibit prescribes the methods for arriving at monthly occupancy
surcharge rates for tenants in Farmers Home Administration (FmHA) Rural
Rental Housing (RRH) and Rural Cooperative Housing (RCH) section 515
projects. This exhibit affects all initial loans made or insured
pursuant to a contract entered into (when a properly completed Form FmHA
1944-51, ''Multiple Family Housing Obligation -- Fund Analysis,'' is
delivered to the borrower. This delivery date is the date entered in
item 51 on the 1944-51) on or after December 15, 1989.
A. Initial loans made pursuant to contracts entered into on or after
December 15, 1989, will be subject to all occupancy surcharge
requirements contained within this exhibit.
B. Subsequent loans will not be subject to occupancy surcharge unless
the initial loan in the project is subject to occupancy surcharge.
C. Project consolidations will make the new consolidated project
subject to occupancy surcharge when one or more of the loans are subject
to occupancy surcharge and will be handled in accordance with subpart B
of part 1965 of this chapter.
All RRH and RCH applicants will be informed at the application stage
of the Agency's occupancy surcharge requirements and procedures. All
borrowers will be advised that all occupancy surcharge charges must
comply with this Exhibit.
Tenants moving into projects that are subject to occupancy surcharge
requirements should be informed by the borrower/manager of those
requirements when the lease and initial tenant certification are signed
by the tenant. They should also be apprised at that time of possible
surcharge changes based on tenant household income levels.
The first monthly occupancy surcharge payment and all payments
thereafter will have the same due dates as amortized loan installment
due dates. Surcharges will be based on tenants in residence on the
first of the month prior to the payment due date.
Occupancy surcharge is a monthly charge on units in projects where
the initial loan was made or insured pursuant to a contract entered into
on or after December 15, 1989. The surcharge assessment due will be
collected from borrowers by FmHA and set aside to offset any rent
increases which may result when the project becomes eligible for a
guaranteed equity loan, 20 years from the date the initial loan was made
or insured.
The amount of surcharge assessed in the initial year will be $2 per
unit, per month, with annual increases of $2 per unit for a 19 year
period. At the expiration of the 20 year period, annual increases will
stop but the surcharge payment will continue at that established rate
for the remaining life of the loan.
The residing tenant will only be required to pay the portion of the
surcharge assessment that would be included within 30 percent of their
annual adjusted gross income.
Example: (No RA Available for Unit)
Basic Rent for Project -- $200 per month
Occupancy Surcharge Assessment for Year One is $2
Net Tenant Contribution (NTC) -- $195
Tenant Pays -- $200 -- No Occupancy Surcharge (To pay any portion of
the $2 would have put the tenant over 30 percent of their annual
adjusted income).
Borrowers will not be required to pay the unpaid portion of the
surcharge assessment that exceeds the tenant contribution.
Vacant units will not be subject to surcharge payments but will be
subject to annual increases in unit surcharge rates on surcharge
anniversary dates.
A. If a tenant's income increases, and that tenant was not previously
paying surcharge at the maximum level assessed to the unit, they may
become subject to paying a higher level of surcharge. This amount of
surcharge increase is not to exceed the maximum surcharge assessed to
the unit by annual increases.
B. If a tenant's income decreases and that decrease will cause the
level of surcharge previously paid to exceed 30 percent of their annual
adjusted income, the surcharge payments will be decreased accordingly.
C. Annual increases in occupancy surcharges will always be in $2
increments but tenants may qualify to pay any portion of the surcharge
unit assessment, rounded up to the nearest $1.
Example: Basic Rent for Project -- $200 per month
Occupancy Surcharge Assessment for Year 2 is $4
Tenant NTC -- $203
Tenant Pays $200 + $3 Occupancy Surcharge
Tenants receiving RA will always be subject to the maximum occupancy
surcharge assessments because their rent contributions will never exceed
30 percent of their annual adjusted gross income.
Example: Basic Rent in Project -- $200 per month
Tenant NTC = $150
Year One -- Tenant Pays $150 and RA Pays $52 = $202 ($50 Basic Rent +
$2 Surcharge)
Year Two -- Tenant Pays $150 and RA Pays $54 = $204 ($50 Basic Rent +
$4 Surcharge)
If the tenant continues to receive RA, annual increase surcharge
assessments will continue to be paid from RA.
Tenants paying overage will be subject to maximum surcharge
assessments until their rent, utilities and surcharge equals 30 percent
of their annual adjusted gross income. The amount of overage tenants
pay will reduce by the amount of surcharge assessed to the unit.
Example: Basic Rent for Project is $200 per month
Tenants NTC -- $210 (No change in income throughout example)
Year One -- Tenant Pays $210 ($200 basic + $2 Surcharge + $8 overage)
Year Two -- Tenant Pays $210 ($200 basic + $4 Surcharge + $6 overage)
Year Five -- Tenant pays $210 ($200 basic + $10 Surcharge + $0
overage)
Year Six -- Tenant Pays $210 ($200 + $10 Surcharge) While the unit
surcharge increases to $12, the tenant experienced no surcharge annual
increase because, at this point, 30 percent of their annual adjusted
gross income will only cover rent, utilities and a $10 occupancy
surcharge.
Tenants paying market rent will pay up to the maximum surcharge
assessments plus any annual increases until rent, utilities and the
surcharge level equals 30 percent of their annual adjusted gross income.
Note: An easy formula to use for market tenants is:
Take the lesser figure of Tenant's 30 Percent or Maximum Contribution
(Market plus Surcharge).
Minus Basic Rent.
Minus Occupancy Surcharge unit assessment.
Balance is Overage.
Example: Basic Rent is $200 per month, Market Rent is $425 per month
Tenant NTC -- $430 (no change in income throughout example)
Tenant's maximum contribution is $425 plus surcharge rate
Year One -- Tenant Pays $427 ($425 Market Rent + $2 Surcharge) minus
basic Rent minus Surcharge = $225 Overage
Year Two -- Tenant Pays $429 ($425 Market Rent + $4 Surcharge) minus
Basic Rent minus Surcharge = $225 Overage
Year Three -- Tenant Pays $430 ($425 Market Rent + $5 Surcharge)
minus Basic Rent minus Surcharge = $224 overage
Year Four -- Tenant Still Pays $430. Tenant did not pay surcharge
annual increase for this year because they are now paying 30 percent of
their annual adjusted gross income for rent, utilities and surcharge.
A. Projects subject to occupancy surcharge provisions where tenants
are receiving sources of rental assistance other than from FmHA (private
project RA, HUD Section 8, State Funded RA, etc.) should be handled on a
case-by-case basis and in consultation with the National Office.
B. Whether occupancy surcharge will be paid by rental assistance
coming from sources other than FmHA is dependent upon the terms of the
contracts from which the funds are expended.
A. The annual surcharge increases will continue for a period of 19
years from the first surcharge anniversary date of the loan in the
project that established the surcharge.
B. After the 19 year annual increase period expires, tenants will
continue surcharge payments for the remaining life of the loan at the
unit rate established on the anniversary date of year 19. The tenant
will continue to pay the portion of that unit rate that is within 30
percent of their annual adjusted gross income.
The surcharge anniversary date is the effective date for the $2 per
unit annual increase assessment. This date will always be established
one year from the first surcharge payment due. The first surcharge
payment is due at the same time the first amortized loan installment is
due which is one month from the Amortized Effective Date (AED).
Example:
Loan Closed -- 10/12/91
AED Date -- 11/01/91
1st Amortized Payment Due -- 12/01/91
1st Surcharge Payment Due -- 12/01/91
Surcharge Anniversary Date -- 12/01 for all Subsequent Years
No Further Annual Increases after Year 2011
A. Changes in the amount of surcharge tenants pay due to income
changes, the regular tenant recertification process and surcharge
anniversary increases will always be handled as separate actions, even
though they could be effective on the same date. Examples of change in
tenant surcharge payments are:
1. Changes in tenant income during the year can increase or decrease
the portion of the assessed surcharge per unit which the tenant must
pay.
2. The amount of surcharge paid by the tenant can increase or
decrease on the yearly recertification date of Form FmHA ''Tenant
Certification'' if the tenants income has changed.
3. The amount of surcharge paid by the tenant can increase on the
surcharge anniversary date.
4. Tenants paying market rent may experience a increase/decrease in
the amount of cash they pay for surcharge as a result of the anniversary
increase and any income changes.
B. When there are surcharge changes due to income changes and regular
recertifications, the current signed tenant certification showing the
level of surcharge due will serve as notification of the change.
C. Prior to the project anniversary date, all current Forms FmHA
1944-8, ''Tenant Certification'' must be reviewed for any changes
occurring during the year that would change the status of the tenant
related to a surcharge annual increase. Surcharge anniversary reviews
must be accomplished by the borrower/manager in a timely manner. The
process requires no prior review by FmHA and should be handled in
accordance with the following:
1. Prior to the surcharge anniversary date established for the
project, all current tenant certifications on file must be reviewed.
2. All tenants in the project will be sent a notification that the
surcharge unit assessment has increased by $2, that a review of their
income has occurred and notice of any change in their contribution
brought about by the surcharge annual increase. Tenants who will
actually experience an increase in their Net Tenant Contribution
(tenants paying market rent) should be notified at least 30 to 60 days
(or in accordance with State or local statutes) prior to the effective
date of the increase. These notifications should do the following:
a. Make all tenants aware of the review of their tenant certification
and of any changes in the amount of RA they receive, overage they pay or
any changes in cash they pay as a result of the review.
b. Offer the tenants an opportunity to meet with management to
discuss the changes brought about by the review. (The point of
discussion should be based solely on information contained on the tenant
certification since the occupancy surcharge requirement is mandated by
law).
D. If there are surcharge changes due the tenant as a result of the
surcharge anniversary date, it should be manually recorded on the
current tenant certification by marking through the old recorded
surcharge rate and inserting the new rate.
A. Payment of occupancy surcharge must be a viable part of the lease
agreement between the tenant and the borrower/manger in accordance with
paragraph VIII A 3 of exhibit B of subpart C of part 1930 of this
chapter.
B. Nonpayment of occupancy surcharge by the tenant is a violation of
that lease and can be used as grounds for eviction.
C. If the borrower/manager has correctly followed the certification
procedure as outlined in paragraph VII F of exhibit B of subpart C of
part 1930 of this chapter, and there is still no current valid Tenant
Certification on file for the tenant at the time of the surcharge
anniversary review, and it is determined the fault of the tenant, the
tenant will automatically be subject to paying market rent plus the
maximum surcharge assessed to the unit. The tenant should be notified
of this action in accordance with paragraph VII F 5 b of exhibit B of
subpart C of part 1930 of this chapter.
D. The District Director can authorize a waiver of occupancy
surcharge while eviction is being actively pursued up to resolution of
the eviction action in two instances.
1. When there is not a valid tenant certification on file and it is
the fault of the tenant.
2. When the tenant refuses to pay occupancy surcharge.
E. If it is concluded that the lack of current tenant certification
is the fault of the borrower/manager, then the borrower/manager
(project) must pay market rent plus the maximum occupancy surcharge due
for that unit until there is a current certification.
A. If the initial loan in the project is subject to occupancy
surcharge, all other loans in the project will be subject to occupancy
surcharge.
B. Subsequent loans, made for any purpose, will not subject a project
to paying occupancy surcharge if the initial loan in the project is not
subject to occupancy surcharge.
C. If units are added with a subsequent loan and the project is
subject to surcharge because of the initial loan, the anniversary date
for the project will remain the same as the one already established by
the initial loan. See paragraph XII A for how occupancy surcharge
increases apply, and paragraph XII B for period of duration of
collection.
1. Tenants moving into the new units will be subject to the level of
surcharge assessment already reached for the project by annual
increases.
2. The first surcharge payment for the new tenants will begin when
their first rent payment for the project is due.
3. On the project anniversary date, all Tenant Certifications for the
project will be checked for tenant eligibility for any occupancy
surcharge changes.
A. If none of the loans in any of the projects to be consolidated are
subject to the occupancy surcharge provisions, the new consolidated
project will not be subject to occupancy surcharge.
B. If one of the projects being consolidated is subject to the
occupancy surcharge provisions and one project is not, the following
conditions apply:
1. The total units in the project after consolidation will be subject
to the occupancy surcharge.
2. The level of the surcharge assessment for the consolidated project
will be the same as the assessment for the oldest project already
subject to the surcharge. (EXAMPLE: If the project with the oldest
surcharge is in its fourth year, the assessment for all units in the new
consolidated project will begin at $8 per unit).
3. All tenants in the project, who were not previously subject to
surcharge but will now be subject to surcharge because of the
consolidation, must be notified 30 to 60 days prior to the first
surcharge payment due date.
4. All leases not previously modified to include occupancy surcharge
must be modified.
5. The first occupancy surcharge payment for the new consolidated
project is due when the first new amortized loan installment is due for
the project.
6. The anniversary date established for the project already subject
to the occupancy surcharge will be the anniversary date for the new
consolidated project.
7. The annual surcharge increase period will expire twenty (20) years
from the due date of the first occupancy surcharge payment for the first
project that was subject to the assessment prior to consolidation.
C. If all projects being consolidated are subject to the occupancy
surcharge provisions, but have different anniversary dates and different
twenty (20) year expiration dates, the following conditions apply:
1. The earliest anniversary date of the projects being consolidated
will be the anniversary date for the newly consolidated project.
Example:
Project 01-1: Anniversary Date on 10/1/90
Project 02-2: Anniversary Date on 5/1/91
Consolidated Project Anniversary Date is 10/1
2. The beginning level of the surcharge assessment for the
consolidated project will be the same as the project with the earliest
surcharge payment due date.
Example:
Project 01-1 First Surcharge Payment 10/1/90
Project 02-2 First Surcharge Payment 5/1/91
Date of Consolidation 12/1/91
Project 01-1 is in the 2nd Year of Surcharge
Tenants in project 02-2 will be assessed $4 per unit, effective
1/1/92
All tenants in the consolidated project will be reviewed for the
surcharge anniversary increase on 10/1/92
3. The annual surcharge increase period will expire twenty (20) years
from the due date of the first occupancy surcharge payment for the
newest loan of the projects being consolidated.
A. Project owners/managers will collect the occupancy surcharge
amount from tenants at the same time they collect monthly rents.
B. Project owners/managers will collect information from Forms FmHA
1944-8 and report the amount of surcharge due FmHA on Form FmHA 1944-29,
''Project Worksheet for Interest Credit and Rental Assistance,'' both as
a project total and per unit amounts.
C. Project owners will remit the collected amount to FmHA when they
remit their monthly loan payments as a part of that payment. The method
of RA ''netting'' will also apply to occupancy surcharges.
D. If occupancy surcharges are not remitted to FmHA in correct
amounts and in the specified timely manner, and the project account
becomes delinquent as a result, late fees, if applicable, will be
assessed to the account.
E. FmHA will remit the collected amount to the Finance Office in
accordance with the prescribed collection process in FmHA Instruction
1951-B and of 1951-K of this subpart.
A. The occupancy surcharge monies collected nationwide by FmHA will
be deposited in the Rural Housing Insurance Fund (RHIF) and will accrue
interest to the account on the total amount of funds collected.
B. FmHA will track occupancy surcharge balances by project through
the use of the Automated Multi-Housing Accounting System (AMAS).
C. FmHA will report to borrowers the amount of surcharge collected
per project once a year on Form FmHA 1951-54, ''Annual Statement of
Account.''
(56 FR 66962, Dec. 27, 1991; 57 FR 1313, Jan. 13, 1992)
Effective Date Note: At 56 FR 66962, Dec. 27, 1991, in part 1951,
Exhibit B of subpart K was revised, effective January 27, 1992. (See
also correction published at 57 FR 1313, Jan. 13, 1992.) For the
convenience of the reader, the superseded text is set forth as follows.
07 CFR 1951.550 Pt. 1951, Subpt. K, Exh. B, Note
This exhibit prescribes the methods for arriving at monthly occupancy
surcharge rates for tenants in Farmers Home Administration (FmHA) Rural
Rental Housing (RRH) and Rural Cooperative Housing (RCH) Section 515
projects. This Exhibit includes all loans made or insured (when a
properly completed Form FmHA 1944-51, ''Multiple-Family Housing
Obligation-Fund Analysis,'' is delivered to the borrower) on or after
June 16, 1990.
II. Definitions.
A. Occupancy Surcharge. A monthly surcharge on occupied units in
projects where a loan was made or insured pursuant to a contract entered
into on or after June 16, 1990. This surcharge will be collected from
borrowers by FmHA and set aside to offset any rent increases which may
result when the project becomes eligible for a guaranteed equity loan,
20 years from the date of the last loan made on the project.
B. Initial Tenant. This term refers to a new or existing tenant who
occupies a unit in a project the first year the occupancy surcharge is
assessed and collected.
C. Replacement Tenant. This term refers to a tenant who replaces a
tenant in a unit where an occupancy surcharge is or can be assessed and
collected.
D. Surcharge Anniversary Date. The effective date of surcharge
annual increases and is established from the first loan which made the
project subject to payment of occupancy surcharge. The date will be 12
months from the first payment due date of that loan.
III. Initial Understanding With Borrower.
All RRH and RCH applicants will be informed at the application stage
of the agency's occupancy surcharge requirements and procedures. All
borrowers will be advised that all occupancy surcharge changes must
comply with this Exhibit.
IV. Eligible Projects.
A. Loans made pursuant to a contract entered into prior to June 16,
1990, will not be subject to the occupancy surcharge requirements.
B. Loans made pursuant to a contract entered into on or after June
16, 1990, will be subject to all occupancy surcharge requirements within
this Exhibit.
V. Surcharge Payment Due Dates.
The first monthly occupancy surcharge payment and all payments
thereafter will have the same due dates as amortized loan installment
due dates. Surcharges will be based on tenants in residence on the
first of the month prior to the payment due date.
VI. Required Occupancy Surcharge Payment Amounts.
A. The amount of the surcharge for the initial year of operation
(first 12 months of surcharge collection) will be $2 per occupied unit,
per month, regardless of the tenants income or occupancy status.
B. This surcharge will increase by $2 per unit each year thereafter.
Those units occupied by tenants who pay more than 30 percent of their
annual adjusted gross income for rent and utilities are exempt from the
annual increase. They will remain exempt from surcharge increases until
their rent and utilities no longer exceeds 30 percent of their annual
adjusted gross income.
C. Vacant units will not be subject to surcharge payments or any
annual increases for the duration of the vacancy.
D. Once a surcharge payment is established for a tenant it will never
be reduced.
1. If a tenant's income increases, that tenant may become subject to
a higher surcharge at the time of regular surcharge annual increases.
2. If a tenant's income decreases, that tenant may be eligible to
continue paying the surcharge at their present rate instead of incurring
an annual increase.
3. If a tenant moves from one unit to another within the same
project, the surcharge will be the higher rate either of the vacated
unit or the newly occupied unit.
E. Replacement tenants will be subject to the surcharge level
established for the unit during the occupancy of the previous tenant.
(At their initial occupancy they will be charged the same level of
surcharge that the previous tenant was paying upon move-out.) However,
if the replacement tenant is paying more than 30 percent or annual
adjusted gross income for rent and utilities, they will not be subject
to annual increases, but will continue to pay the surcharge rate in
effect at the time of their initial occupancy.
1. If a replacement tenant's income increases and that tenant begins
to pay less than 30 percent of their annual adjusted gross income for
rent and utilities, they will become subject to the surcharge annual
increase.
2. If the unit the replacement tenant moves into was vacant the
previous month, they will pay the same rate of surcharge as the last
tenant who occupied the unit.
F. Surcharges for projects in connection with transfers,
reamortizations, and loan and project consolidations will be handled in
accordance with subpart B of part 1965 of this chapter.
VII. Tenants Receiving Rental Assistance (RA).
Tenants receiving RA will always be subject to annual surcharge
increases because their rent contribution will never exceed 30 percent
of their annual adjusted gross income.
Example: Basic Rent in Project $200 per month:
Initial Tenant = Net Tenant Contribution (NTC) -- $150
Year One -- Tenant Pays $150; plus RA Pays $52 /1/ =$202
Year Two -- $150; plus $54 /2/ =$204
If tenant continues to receive RA, surcharge annual increases will
continue to be paid from RA.
VIII. Tenants Paying Overage.
Tenants paying overage will always be subject to surcharge annual
increases. The amount of overage tenants pay will reduce by the
additional surcharge amount.
Example:
Basic Rent for Project/$200 per month
Initial Tenant (NTC) -- $210 (with no change in income throughout
example)
Year One -- Tenant Pays $210 ($200 basic plus $2 surcharge plus $8
overage)
Year Two -- Tenant Pays $210 ($200 basic plus $4 surcharge plus $6
overage)
Year Five -- Tenant Pays $210 ($200 basic plus $10 surcharge plus $0
overage)
Year Six -- Tenant Pays $210 ($200 plus $10 surcharge). Tenant
experienced no surcharge annual increase because, at this point, 30
percent of their annual adjusted gross income is now being paid toward
rent and utilities
IX. Annual Increases of Occupancy Surcharge.
A. The annaul surcharge increases will continue for a period of 19
years from the surcharge anniversary date.
B. Twenty years from the first project occupancy surcharge payment
the annual increases stop.
C. After the annual increase period stops, the surcharge payment will
continue for the remaining life of the loan at whatever level the unit
has reached at that time.
D. Annual increases will always be charged in $2 increments, even
though the increase may cause some tenants to exceed 30 percent of their
annual adjusted gross income by $1.
X. Surcharge Anniversary Date Rent Change.
A. The anniversary date is the effective date for surcharge changes
due to annual increases and will always be one year from the first
surcharge payment collected. (Same as first amortized loan installment
due date).
Example: Loan Closed -- 10/12/90; AED Date -- 11/01/90
1st Amortized Payment Due -- 12-01-90
1st Surcharge Payment Due -- 12-01-90
Surcharge Anniversary Date -- 12/01 for all subsequent years
B. Rent changes due to the regular tenant recertification process and
surcharge changes due to anniversary increases will always be handled as
separate actions, even though they could be effective on the same date.
C. Changes in tenant income during the year will never change the
occupancy surcharge rate for the tenant until the surcharge anniversary
date.
D. When there is a regular rent change in a project (change in basic
and market rents), the occupancy surcharge rate will still not be
changed until the surcharge anniversary date.
E. When a replacement tenant moves into a unit, they will pay the
surcharge at the rate established for the unit during the occupancy of
the previous tenant until the surcharge anniversary date. At the
anniversary date, the tenant's income will decide if they are subject to
paying an annual increase or continue at the rate of their initial
occupancy.
Previous tenant's surcharge rate was $6.
Replacement tenant moves into vacant unit 09/01/90.
The initial surcharge rate for the unit will be $6.
The Project Anniversary Date is 11/01/90. Replacement tenant's
surcharge will increase by $2 if they are paying less than 30 percent of
their annual adjusted income for rent and utilities. If not, the
surcharge rate will remain at $6.
F. On the project anniversary date, all current Forms FmHA 1944-8,
''Tenant Certification,'' must be reviewed for any changes occurring
during the year that would change the status of the tenant related to a
surcharge annual increase. Surcharge anniversary reviews must be
accomplished by the borrower/manager in a timely manner. The process
requires no prior review by FmHA and should be handled in accordance
with the following:
1. Sixty to thirty days prior to the surcharge anniversary date
established for the project all current tenant certifications on file
must be reviewed.
2. Any tenant who does not have a current, valid tenant certification
on file, will automatically be subject to the surcharge annual increase
of $2.
3. All tenants in the project will be sent a notification that the
review has occurred regardless of whether they experienced an increase
in surcharge or not. As mandated by State law, those tenants whose
surcharge contribution increased should be notified at least 30 days
prior to the effective date of the increase. This notice should also do
the following:
a. Make all tenants aware of the review of their tenant certification
and of any changes in the amount of RA they receive or overage they pay,
as a result of the review.
b. Offer the tenants an opportunity to meet with management to
discuss the changes brought about by the review. (The point of
discussion should be solely based on information contained on the tenant
certification since the occupancy surcharge requirement is mandated by
law.)
XI. Other Occupancy Surcharge Rent Changes.
Surcharge increases for existing tenants residing in projects that
become subject to the surcharge assessment because of a subsequent loan
or a servicing action (i.e., project consolidation), should be notified
of the rent change in accordance with section X F 2 of this Exhibit.
XII. Subsequent Loans.
A. If the project obtaining the subsequent loan was not previously
subject to the occupancy surcharge, all rental units in the project will
be affected by the surcharge requirements, and be subject to the same
requirements as Paragraph VI of this Exhibit. The due date of the
initial $2 surcharge will be the first installment due date of the
subsequent loan.
B. If the project to which the subsequent loan is made was already
paying surcharge payments, annual increases for the project will be
extended 20 years from the first amortized installment due date of the
subsequent loan.
1. Existing tenants will continue to pay the surcharge at the rate
already established.
2. The anniversary date for the project will remain the same as the
one already established for the project by the loan which initiated the
requirement for the surcharge.
3. If additional units are added with the subsequent loan, initial
tenants moving into the new units will be subject to $2 per unit, per
month, until the project anniversary date is reached. On the project
anniversary date, all tenant certifications for the project will be
checked for eligibility for any surcharge annual increases.
C. Equity loans made for the sole purpose of preventing prepayment in
accordance with exhibit E of subpart B of part 1965 of this chapter,
will not qualify the project for the occupancy surcharge requirement.
XIII. Surcharge Collection Process.
A. Project owners/managers will collect the occupancy surcharge
amount from tenants at the same time they collect monthly rents.
B. Project owners/managers will collect information from Form FmHA
1944-8, and report the amount of surcharge due FmHA on Form FmHA
1944-29, ''Project Worksheet for Interest Credit and Rental
Assistance,'' both as a project total and per unit amounts.
C. Project owners will remit the collected amount to FmHA when they
remit their monthly loan payments as a part of that payment. The method
of RA ''netting'' will also apply to occupancy surcharge.
D. If occupancy surcharges are not remitted to FmHA in correct
amounts and in the specified timely manner, and the project account
becomes delinquent as a result, late fees will be assessed to the
account.
E. FmHA will remit the collected amount to the Finance Office in
accordance with the prescribed collection process contained in subpart B
of part 1951 of this chapter.
XIV. Tracking Responsibilities.
A. The occupancy surcharge monies collected nationwide by FmHA will
be deposited in the Rural Housing Insurance Fund (RHIF) and will accrue
interest to the account on the total amount of funds collected.
B. FmHA will track occupancy surcharge balances by project through
the use of the Automated Multi-Housing Accounting System (AMAS).
C. FmHA will report to borrowers the amount of surcharge collected
per project once a year on Form FmHA 1951-54, ''Annual Statement of
Account.''
(55 FR 25079, June 20, 1990)
/1/ $50 Basic Rent plus $2 Surcharge.
/2/ $50 Basic Rent plus $4 Surcharge.
07 CFR 1951.550 Subpart L -- Servicing Cases Where Unauthorized Loan or
Other Financial Assistence was Received -- Farmer Programs
Source: 50 FR 45777, Nov. 1, 1985, unless otherwised noted.
07 CFR 1951.551 Purpose.
This subpart prescribes the policies and procedures for servicing
insured Operating (OL), Farm Ownership (FO), Soil and Water (SW),
Recreation (RL), Emergency (EM), Economic Emergency (EE), Special
Livestock (SL), Softwood Timber (ST), Economic Opportunity (EO) loans,
and Rural Housing loans for farm service buildings (RHF) (referred to as
farmer program (FP) loans), when it is determined that the borrower was
not eligible for all or part of the financial assistance received in the
form of a loan or subsidy granted. It does not apply to guaranteed
loans.
(52 FR 26138, July 13, 1987)
07 CFR 1951.552 Definitions.
As used in this subpart, the following definitions apply:
(a) Active borrower. A borrower who has an outstanding account in
the records of the Finance Office, including collection-only or an
unsatisfied account balance where a voluntary conveyance was accepted
without borrower being released from liability or where liquidation did
not satisfy the indebtedness.
(b) Assistance. Financial assistance in the form of a loan or
interest subsidy received.
(c) Debt instrument. Used as a collective term to include promissory
note or assumption agreement.
(d) False information. Information, known to be incorrect, provided
with the intent to obtain benefits which would not have been obtainable
based on correction information.
(e) Inaccurate information. Incorrect information provided
inadvertently without intent to obtain benefits fraudulently.
(f) Inactive borrower. A former active borrower whose loan(s)
has(have) been paid in full or assumed by another party(ies), and who
does not have an outstanding account in the records of the Finance
Office.
(g) Unauthorized Assistance. Any loan, primary loan servicing
action, including Net Recovery Buyout, or interest subsidy received for
which there was no authorization, for which the borrower was not
eligible, or which was obligated from the wrong appropriation or fund.
An unauthorized interest subsidy is a benefit received through a loan
that was made at a lower interest rate than that to which the borrower
was entitled, whether the incorrect interest rate was selected
erroneously by the approval official, or the documents were prepared in
error.
(50 FR 45777, Nov. 1, 1985, as amended at 56 FR 33862, July 24, 1991)
07 CFR 1951.553 Policy.
When it is determined that unauthorized assistance has been received,
an effort must be made to collect from the borrower the sum which is
determined to be unauthorized, regardless of amount, unless any
applicable Statute of Limitations has expired.
1951.554 -- 1951.555 (Reserved)
07 CFR 1951.556 Initial determination that unauthorized assistance was
received.
Unauthorized assistance may be identified through audits conducted by
the Office of the Inspector General (OIG), USDA; through reviews made
by Farmers Home Administration (FmHA) personnel; or through other means
such as information provided by a private citizen which documents that
unauthorized assistance has been received by a borrower. If FmHA has
reason to believe unauthorized assistance was received, but is unable to
determine whether or not the assistance was in fact unauthorized, the
case will be referred to the Office of the General Counsel (OGC) or the
National Office, as appropriate, for review and advice. In every case
where it is known or believed by FmHA that the assistance was based on
false information, investigation by the OIG will be requested, as
provided for in FmHA Instruction 2012-B (available in any FmHA office).
If OIG conducts an investigation, the actions outlined in 1951.557 of
this subpart will be deferred until the OIG investigation is completed
and the report is received. The reason(s) for the unauthorized
assistance being received by the borrower will be well documented in the
case file, and will specifically state whether it was due to:
(a) Submission of inaccurate information by the borrower;
(b) Submission of false information by the borrower;
(c) Submission of inaccurate or false information by another party on
the borrower's behalf such as a seller, developer, real estate broker,
or attorney, when the borrower did not know the other party had
submitted inaccurate or false information;
(d) Error by FmHA personnel, either in making computations or failure
to follow published regulations or other agency issuances; or
(e) Error in preparation of a debt instrument which caused a loan to
be closed at an interest rate lower than the correct rate in effect when
the loan was approved.
07 CFR 1951.557 Notification to borrower.
(a) Collection efforts will be initiated by the County Supervisor by
a letter substantially similar to Exhibit A of this Subpart (available
in any FmHA office), and mailed to the borrower by ''Certified Mail,
Return Receipt Requested,'' with a copy to the State Director; and, for
a case identified in an OIG audit report, copies to the OIG office which
conducted the audit and the Planning and Analysis Staff of the National
Office. This letter will be sent to all borrowers who received
unauthorized assistance, regardless of amount. The letter will:
(1) Specify in detail the reason(s) the assistance was determined to
be unauthorized;
(2) State the amount of unauthorized assistance to be repaid
according to Exhibit D of this Subpart (available in any FmHA office);
and
(3) Establish an appointment for the borrower to discuss with the
County Supervisor the basis for FmHA's claim; and give the borrower an
opportunity to provide facts, figures, written records or other
information which might refute FmHA's determination that the assistance
received was unauthorized.
(b) If the borrower meets with the County Supervisor, the County
Supervisor will outline to the borrower why the assistance was
determined to be unauthorized. The borrower will be given an
opportunity to provide information to refute FmHA's findings. When
requested by the borrower, the County Supervisor may grant additional
time for the borrower to assemble documentation. When an extension is
granted, the County Supervisor will specify a definite number of days to
be allowed and establish the follow up necessary to assure that
servicing of the case continues without undue delay.
07 CFR 1951.558 Decision on servicing actions.
When the County Supervisor is the same official who approved the
unauthorized assistance, the District Director must review the case
before further actions are taken by the County Supervisor.
(a) Payment in full. If the borrower agrees with FmHA's
determination and agrees to repay in a lump sum, the County Supervisor
may allow a reasonable period of time (not to exceed 90 days) for the
borrower to arrange for repayment. The amount due will be the amount
stated in the letter as shown in Exhibit A of this subpart (available in
any FmHA office). The County Supervisor will remit collections to the
Finance Office according to the Forms Manual Insert (FMI) for Form FmHA
451-2, ''Schedule of Remittances,'' for application to the borrower's
account as an extra payment. After a borrower repays an unauthorized
interest subsidy benefit in a lump sum, the loan will be serviced in
accordance with 1951.561(a)(3) of this subpart. In the case of
unauthorized assistance which was identified in an OIG audit, the County
Supervisor will report the repayment as outlined in 1951.568(a) of this
subpart.
(b) Continuation with borrower. If the borrower agrees with FmHA's
determination or is willing to repay but cannot repay the unauthorized
assistance in a lump sum within a reasonable period of time,
continuation may be authorized. Servicing actions outlined in 1951.561
of this subpart will be taken, provided all of the following conditions
are met:
(1) The borrower did not provide false information as defined in
1951.552(d) of this subpart.
(2) It would be highly inequitable to require prompt repayment of the
unauthorized assistance; and
(3) Failure to collect the unauthorized assistance in full will not
adversely affect FmHA's financial interests.
(c) 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 borrower refuses to execute the
documents necessary to make account adjustments or establish an
obligation to repay the unauthorized assistance as provided in 1951.561
of this subpart, or when a borrower fails to respond to the initial
letter prescribed in 1951.557 of this subpart within 30 days, one of
the following actions will be taken:
(1) Active borrower with a secured loan. (i) The County Supervisor
will send Exhibit B of this subpart (available in any FmHA office.)
(ii) If the borrower wants to voluntarily convey, the County
Supervisor will follow the directions in 1955.10 or 1955.20 as
applicable, of subpart A of part 1955 of this chapter.
(iii) If the borrower does not appeal, does not repay the
unauthorized assistance in full, does not voluntarily convey,
voluntarily sell or refinance the entire FmHA debt, the borrower's
account will be accelerated and there will be no appeal of this action.
The County Supervisor and District Director will follow the directions
in 1955.15 of subpart A of part 1955 of this chapter.
(iv) Forced liquidation will not be pursued when:
(A) The amount of unauthorized assistance outstanding, including
principal, accrued interest, and recoverable costs charged to the
account, is less that $1,000; or
(B) It can be clearly documented that it would not be in the best
financial interest of the Government to force liquidation. If the
servicing official wishes to make an exception to forced liquidation
under paragraph (c)(1)(B) of this section, a request for an exception
under 1951.569 of this subpart will be made.
(v) Account adjustments will be made by FmHA without the signature of
the borrower according to 1951.568(a)(5) of this subpart. In these
cases, the borrower will be notified by letter of the actions taken with
a copy of Forms FmHA 1951-12, ''Correction of Loan Account,'' or
1951-13, ''Change in Interest Rate,'' as applicable, enclosed to reflect
the adjustments.
(2) (Inactive borrower or active borrower with unsecured loan such as
collection-only or unsatisfied balance after liquidation). The County
Supervisor will document the facts in the case and submit it to the
State Director who will request the advice of OGC on pursuing legal
action to effect collection. The State Director will tell OGC what
assets, if any, are available from which to collect.
(50 FR 45777, Nov. 1, 1985, as amended at 53 FR 35717, Sept. 14,
1988)
1951.559 -- 1951.560 (Reserved)
07 CFR 1951.561 Servicing options in lieu of liquidation or legal
action.
When all of the conditions outlined in 1951.558(b) of this subpart
are met, servicing options outlined in this section will be considered;
and accounts will be serviced according to this section and 1951.568 of
this subpart.
(a) Active borrower -- (1) Entire loan, or loan servicing
unauthorized. When the entire loan, or all or a portion of primary loan
servicing, is determined to be unauthorized because the borrower was not
eligible, or because the loan or primary loan servicing was approved for
unauthorized purposes, the following alternatives will be considered in
the order listed:
(i) Execution of Form FmHA 1965-11, ''Accelerated Repayment
Agreement,'' according to 1965.26(e) of subpart A of part 1965 of this
chapter, for loans secured by real estate, or rescheduling according to
Subpart A of this part, for loans not secured by real estate, based on
the borrower's repayment ability.
(ii) Refinancing with another type of FmHA loan to repay the
unauthorized loan, if the borrower is eligible for the type loan being
considered.
(iii) When the case cannot be handled according to paragraph
(a)(1)(i) or (a)(1)(ii) of this section, continuance with the loan on
the existing terms may be approved, and the loan will, thereafter, be
serviced as an authorized loan.
(2) Portion of loan unauthorized. When a portion of a loan is
determined to be unauthorized, the Finance Office will be instructed to
separate the authorized and unauthorized portions of the loan, setting
up each as a separate loan at the correct interest rate. The correct
interest rate will be taken from Exhibit C of this subpart (available in
any FmHA office) as of the date of loan approval. All payments made on
the loan being corrected will be reversed and reapplied to the
unauthorized portion. If after reaplication of payments the
unauthorized portion is not paid in full, the options outlined in
paragraph (a) of this section may be considered for repayment of the
balance of the unauthorized portion; and the authorized portion will be
serviced as an outlined loan. See 1951.568 of this subpart for
instructions on setting up separate accounts.
(3) Unauthorized interest subsidy benefits received. When the
borrower was eligible for the loan, but should properly have been
charged a higher interest rate than that shown in the debt instrument on
all or a portion of the loan, resulting in the receipt of unauthorized
interest subsidy benefits, the case will be handled as outlined below.
The unauthorized interest rate will be corrected to the interest rate in
effect on the date the original loan was approved as outlined in
paragraph (a)(3)(iii) of this section.
(i) When a subsidized interest rate was incorrectly charged on the
entire loan, all payments made will be reversed and reapplied at the
correct interest rate; and future installments will be scheduled at the
correct interest rate. After reapplication of payments, the loan will
be treated as an authorized loan.
(ii) When a subsidized interest rate was incorrectly charged on only
a portion of the loan, the Finance Office will be instructed by the
County Supervisor to separate the loan into two portions, with the
correct interest rate established for the portion having the incorrect
subsidized interest rate. All payments made on the loan being adjusted
will be reversed and reapplied, first to the portion with the corrected
interest rate. After reapplication of payments at the correct interest
rate, both portions will be serviced as authorized loans.
(iii) Incorrect interest rates will be corrected as follows referring
to Exhibit C of this subpart (available in any FmHA office) for interest
rates in effect on specific dates:
(A) For disaster Emergency (EM) loans, to the rate for EM annual
production loans.
(B) For Operating Loans -- Limited Resource (OL-LR), to the rate for
regular Operating Loans (OL).
(C) For Farm Ownership -- Limited Resource (FO-LR), to the rate for
regular Farm Ownership (FO).
(D) For all other types of FP loans, to the correct rate for the type
loan involved which was in effect when the loan was approved.
(b) Inactive borrower. When the individual or entity does not have
an outstanding account in the records of the Finance Office, the
following actions will be taken:
(1) Have the inactive borrower execute a promissory note in the
amount of the assistance determined to be unauthorized according to
1951.557 of this subpart. This note will bear interest at the rate
which was in effect for the type loan associated with the unauthorized
assistance when it was approved. The term will not exceed 10 years or
the term of the original loan, whichever, is the shorter term.
(2) Take the best lien obtainable on any collateral having equity
value to secure the note.
(50 FR 45777, Nov. 1, 1985, as amended at 51 FR 4138, Feb. 3, 1986;
56 FR 33862, July 24, 1991)
1951.562 -- 1951.567 (Reserved)
07 CFR 1951.568 Account adjustments and reporting requirements.
When a final determination has been made that unauthorized assistance
has been granted, the Finance Office will be notified of necessary
account adjustments as outlined in this section, depending upon whether
the case of unauthorized assistance was identified by OIG in an audit
report or by another means. The Finance Office will service the
accounts as prescribed in this section.
(a) Audit cases. Only cases of unauthorized assistance identified by
OIG will be reported to the Finance Office by submission on Form FmHA
1951-12 completed in accordance with the FMI. The Finance Office will
flag the account for monitoring and reporting as required. Each payment
reversed will be reapplied as of the original date of credit. ''Loan''
refers to an account with an active borrower unless specified as
''inactive.'' If the borrower has arranged to repay in a lump sum, the
payment will be remitted with Form FmHA 451-2, according to the FMI.
Form FmHA 1951-12 will reflect the amount and the Schedule Number.
(1) Entire loan unauthorized. When the entire loan is unauthorized
because the borrower was not eligible or because the loan was approved
for unauthorized purposes, and continuation is authorized, the Finance
Office will be advised as follows:
(i) Accelerated repayment agreement or loan rescheduled. If the
borrower has executed Form FmHA 1965-11 for loans secured by real
estate; or has executed Form FmHA 1951-4 for loans not secured by real
estate, the form(s) will be prepared and distributed according to the
FMIs, attaching the original form(s) to Form FmHA 1951-12.
(ii) Continuation with loan on existing terms. When it is determined
that all the conditions outlined in 1951.558(b) of this subpart are met
and continuation with the loan on the existing terms is approved, the
servicing official will submit Form FmHA 1951-12 to the Finance Office
to reflect this.
(2) Portion of loan unauthorized. When a loan is to be separated
into authorized and unauthorized portions, the authorized portion will
retain the original loan number, and the original principal amount will
be reduced by the unauthorized amount. A new loan in the unauthorized
amount will be established as the unauthorized loan with the next
available number assigned by the Finance Office. Payments made on the
loan being adjusted will be reversed and reapplied first to the
unauthorized loan. If the reapplication of payments does not pay the
unauthorized loan in full, upon receipt of Forms FmHA 451-26,
''Transaction Record,'' showing the balances of the authorized and
unauthorized loans, the servicing official will proceed under the
provisions of 1951.561(a)(2) and will submit a revised Form FmHA
1951-12 (along with a copy of the original Form FmHA 1951-12).
(3) Unauthorized subsidy benefits received. (i) Entire loan. When
the interest rate on an entire loan is changed, Form FmHA 1951-12 will
be submitted to notify the Finance Office of the correct interest rate
to be charged from the original loan closing date. Payments made will
be reversed and reapplied at the corrected interest rate, after which
the unauthorized subsidy benefits will be reported to OIG as resolved.
The loan will then be treated as an authorized loan.
(ii) Portion of loan. When the interest rate on only a portion of a
loan must be changed, the portion which has the incorrect interest rate
will be established as a new loan at the correct interest rate shown on
Form FmHA 1951-12. Payments made on the loan being adjusted will be
reversed and reapplied first to the loan with the corrected interest
rate. Both loans will then be treated as authorized loans.
(4) Liquidation pending. When liquidation is initiated under the
provisions of this subpart, Form FmHA 1951-12 will be submitted to
advise the Finance Office to establish the unauthorized assistance
account. This account will be flagged ''FAP'' (Foreclosure Action
Pending) or ''CAP'' (Court Action Pending), as applicable.
(5) Liquidation not initiated. Cases in which liquidation would
normally be initiated, but where it is not because of the provisions of
1951.558 (c)(1)(iv)(A) or (c)(1)(iv)(B) of this subpart, will be
adjusted according to 1951.561 (a)(2) or (a)(3) of this subpart and
this section, and the adjustments will be reflected on Form FmHA
1951-12. In this instance only, account adjustments will be made even
though the borrower does not sign Form FmHA 1951-12 and any related
documents.
(6) Establishment of account of inactive borower. (i) When an
inactive borrower agrees to repay unauthorized assistance and executes
documents to evidence such an obligation, Form FmHA 1951-12 will reflect
this, and the Finance Office will establish or the account according to
the terms indicated on Form FmHA 1951-12.
(ii) When a judgment is obtained against such a borrower, Form FmHA
1962-20, ''Notice of Judgment,'' will be prepared and distributed in
accordance with the FMI to establish a judgment account. The FmHA field
office will process the judgment or the third party judgment via the
FmHA field office terminal system.
(7) Payments on authorized and unauthorized loans concurrently. When
a borrower has both authorized and unauthorized loans outstanding,
installments may be scheduled to be paid concurrently on all loans.
Payments may be adjusted by means of rescheduling or reamortizing to
coincide with the borrower's repayment ability according to servicing
regulations for the type loan involved. The County Supervisor will
complete Form FmHA 451-2 so that payments received will be applied first
to the unauthorized loan account to maintain it current, with the
remainder of the payment applied to the other loan(s).
(8) Reporting. At prescribed intervals, the Finance Office will
report to the OIG on the status of cases involving unauthorized
assistance which were identified by OIG in audit reports. For reporting
purposes, the following applies:
(i) For an unauthorized loan account established as provided in
paragraph (a) (1), (2), or (6) of this section, reporting will be as
follows:
(A) When unauthorized assistance is paid in full, it will be reported
on the next scheduled report only, giving the amount collected.
(B) When unauthorized assistance is to be repaid under an accelerated
repayment agreement, the unpaid balance will be reported initially and
the collections and status will be included on each scheduled report
until the account is paid in full.
(C) When continuation with the loan on existing terms is approved, or
after a loan is rescheduled or reamortized, it will be reported as
resolved on the next scheduled report, and no further reporting is
required.
(ii) For unauthorized subsidy cases as provided in paragraph (a)(3)
of this section, when the unauthorized amount has been repaid, or
payments have been reversed and reapplied at the correct interest rate,
the unauthorized subsidy will be reported as resolved on the next
scheduled report. No further reporting is required.
(iii) When an account is established with liquidation action pending
as provided in paragraph (a)(4) of this section, the status will be
included on each scheduled report until the liquidation is completed or
the account is otherwise paid in full.
(iv) When liquidation is not initiated as provided in paragraph
(a)(5) of this section, it will be reported on the next scheduled report
(along with collections, if any). No further reporting is required.
(b) Nonaudit cases. Basically, servicing options which may be used
are the same for audit and nonaudit cases; however, when receipt of
unauthorized assistance is identified by a means other than an OIG audit
report, the Finance Office will be notified only if adjustments to an
account or reinstatement of an inactive account are necessary. Once
adjustments are made as provided in this paragraph, the loan(s) will be
treated as an authorized loan(s). Each payment reversed will be
reapplied as of the original date of credit. After payments are
reversed and reapplied, the servicing official will receive Forms FmHA
451-26 from the Finance Office reflecting the account status.
(1) Account adjustments will be handled as follows:
(i) When a change in interest rate is necessary, retroactive to the
date of loan closing on all or a portion of a loan, Form FmHA 1951-13
will be completed according to the FMI and submitted to the Finance
Office. Payments will be reversed and reapplied accordingly.
(ii) For accounts to be rescheduled or reamortized, Forms FmHA
1951-4, or 1965-11, as applicable, will be prepared and submitted in
accordance with the respective FMI.
(iii) When an inactive borrower agrees to repay unauthorized
assistance and executes documents to evidence such an obligation, the
County Supervisor will notify the Finance Office by memorandum,
attaching a copy of the promissory note. The Finance Office will
establish or reinstate the account according to the terms of the
promissory note.
(iv) If a loan is paid in full, the remittance will be handled in the
same manner as any other final payment.
(2) A delinquency created through reversal and reapplication of
payments to effect corrections outlined in paragraph (b)(1) of this
section will be serviced according to the applicable servicing
regulations for the type loan involved.
(50 FR 45777, Nov. 1, 1985, as amended at 55 FR 35295, Aug. 29, 1990)
07 CFR 1951.569 Exception authority.
The Administrator may in individual cases make an exception to any
requirement or provision of this subpart which is not inconsistent with
the authorizing statute or other applicable law if the Administrator
determines that application of the requirement or provision would
adversely effect the Government's interest. The Administrator will
exercise this authority only at the request of the State Director and on
the recommendation of the appropriate Program Assistant Administrator.
Requests for exceptions must be made in writing by the State Director
and supported with documentation to explain the adverse effect on the
Government's interest, propose alternative courses of action, and show
how the adverse effect will be eliminated or minimized if the exception
is granted.
1951.570 -- 1951.599 (Reserved)
07 CFR 1951.600 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0102.
07 CFR 1951.600 Subpart M -- Servicing Cases Where Unauthorized Loan or
Other Financial Assistance Was Received -- Single Family Housing
Source: 50 FR 12991, Apr. 2, 1985, unless otherwise noted.
07 CFR 1951.601 Purpose.
This subpart prescribes the policies and procedures for servicing
Single-Family Housing (SFH) loans and/or grants made by Farmers Home
Administration (FmHA) 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. As used
in this subpart, SFH includes section 502 Rural Housing (RH) loans and
section 504 loans and grants, as well as sections 523 and 524 Rural
Housing Site (RHS) loans, Section 523 Self-Help Technical Assistance
(TA) grants, and section 525 Technical and Supervisory Assistance (TSA)
grants.
07 CFR 1951.602 Definitions.
As used in this subpart, the following definitions apply:
(a) Active borrower. A borrower who has an outstanding account in
the records of the Finance Office, including collection-only or an
unsatisfied account balance where a voluntary conveyance was accepted
without release from liability or foreclosure did not satisfy the
indebtedness.
(b) Assistance. Financial assistance in the form of a loan, grant,
or subsidy received.
(c) Debt instrument. Used as a collective term to include promissory
note, assumption agreement, grant agreement/resolution, or bond.
(d) False information. Information, known to be incorrect, provided
with the intent to obtain benefits which would not have been obtainable
based on correct information.
(e) Inaccurate information. Incorrect information provided
inadvertently without intent to obtain benefits fraudulently.
(f) Inactive borrower. A former borrower whose loan(s) has(have)
been paid in full or assumed by another party(ies) and who does not have
an outstanding account in the records of the Finance Office.
(g) Recipient. ''Recipient'' refers to an individual or entity that
received a loan, an interest subsidy, or a grant which was unauthorized.
(h) Servicing official. For all Single-Family Rural Housing loans or
section 504 grants, the servicing official is the County Supervisor;
for all other types of loans or grants, the servicing official is the
District Director, an Assistant District Director, or a District Loan
Specialist so designated.
(i) Unauthorized assistance. Any loan, interest subsidy, or grant
received by a borrower or grantee for which there was no regulatory
authorization, or for which the recipient was not eligible. Interest
subsidy includes interest credits, and subsidy benefits received because
a loan was made 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.
07 CFR 1951.603 Policy.
When unauthorized assistance has been received, an effort must be
made to collect from the recipient the sum which is determined to be
unauthorized, regardless of amount, unless any applicable Statute of
Limitations has expired.
07 CFR 1951.604 Categories of unauthorized SFH assistance.
(a) Unauthorized SFH assistance includes but is not limited to these
categories:
(1) Section 502 loan: (i) The recipient was not eligible for a loan.
(ii) The recipient was eligible for a loan but had an income in a
category for which there were no funds available at the time the loan
was approved, and the loan was obligated from funds designated for
another income category. For example, an otherwise-eligible recipient
with above-moderate income who received a loan from low- or
moderate-income funds. This does not include a loan obligated as
low-income where the income rose to moderate prior to closing provided
the case was handled according to 1944.33(a) of this chapter.
(iii) The recipient was eligible and the loan was made for authorized
purposes but the recipient received unauthorized subsidy benefits
because the loan was closed at an interest rate lower than the correct
rate in effect when the loan was approved.
(iv) The loan was made for unauthorized purposes including but not
limited to the following:
(A) To buy or improve income-producing land; or buy, build or
improve income-producing buildings or finance a building not essential
for RH purposes.
(B) To buy, build, or improve a dwelling which exceeds modest
standards for size, design, and cost as compared to other housing in the
locality for low- and moderate-income families as defined in 1944.16 of
subpart A of part 1944 of this chapter.
(C) To buy or improve a nonfarm tract that exceeds a minimum-adequate
site as defined in 1944.11(c) of this chapter.
(D) To refinance debts not meeting the requirements of 1944.22 of
this chapter.
(E) To buy, build, or improve with an initial loan, a dwelling
located in an area not designated as rural, unless it is on a farm as
defined in 1944.2(h) of this chapter.
(v) Unauthorized or excessive interest credits were granted;
however, where the authorized assistance amounts to no more than $5 per
month or $60 per year, no action will be taken to collect.
(vi) Where recapture of subsidy was due but:
(A) The loan was assumed by another party without collecting the
amount due from the transferor (or without the transferee assuming it);
or
(B) Final payment was accepted but did not include the recapture
amount due.
(2) Section 504 loan or grant. (i) The recipient was not eligible
for a loan or grant.
(ii) The loan or grant was made for unauthorized purposes.
(iii) The recipient obtained more than the statutory maximum amount
of loan and/or grant.
(3) Sections 523 and 524 Rural Housing Site (RHS) loan, section 523
Self-Help Technical Assistance (TA) grant, and section 525 Technical and
Supervisory Assistance (TSA) grant.
(i) The recipient was not eligible for the loan/grant.
(ii) The loan or grant was made for unauthorized purposes.
(b) Categories not to be considered as unauthorized assistance within
the scope of this subpart include but are not limited to:
(1) The determination is made that the recipient did not have
repayment ability for a loan initially.
(2) The determination is made that the recipient could likely have
obtained credit elsewhere or financed housing needs with other resources
at the outset.
(50 FR 12991, Apr. 2, 1985, as amended at 51 FR 11563, Apr. 4, 1986;
52 FR 11985, Apr. 14, 1987)
1951.605 (Reserved)
07 CFR 1951.606 Initial determination that unauthorized assistance was
received.
Unauthorized assistance may be identified through audits conducted by
the Office of the Inspector General (OIG), USDA; through reviews made
by FmHA personnel; or through other means such as information provided
by a private citizen which documents that unauthorized assistance has
been received by a recipient of FmHA assistance. If FmHA has reason to
believe unauthorized assistance was received, but is unable to determine
whether or not the assistance was in fact unauthorized, the case will be
referred to the Regional Office of the General Counsel (OGC) or the
National Office, as appropriate, for review and advice. In every case
where it is known or believed by FmHA that the assistance was based on
false information, investigation by the OIG will be requested as
provided for in FmHA Instruction 2012-B (available in any FmHA office).
If OIG conducts an investigation, the actions outlined in 1951.607 of
this subpart will be deferred until the OIG investigation is completed
and the report is received. The reason(s) for the unauthorized
assistance being received by the recipient will be well documented in
the case file, and will specifically state whether it was due to:
(a) Submission of inaccurate information by the recipient;
(b) Submission of false information by the recipient;
(c) Submission of inaccurate or false information by another party on
the recipient's behalf such as a loan packager, developer, real estate
broker, or professional consultants such as engineers, architects, and
attorneys, when the recipient did not know the other party had submitted
inaccurate or false information;
(d) Error by FmHA personnel, either in making computations or failure
to follow published regulations or other agency issuances; or
(e) Error in preparation of a debt instrument which caused a loan to
be closed at an interest rate lower than the correct rate in effect when
the loan was approved.
(50 FR 12991, Apr. 2, 1985, as amended at 51 FR 11563, Apr. 4, 1986)
07 CFR 1951.607 Notification to recipient.
(a) Collection efforts will be initiated by the servicing official by
a letter substantially similar to Exhibit A of this subpart (available
in any FmHA office), and mailed to the recipient by ''Certified Mail,
Return Receipt Requested,'' with a copy to the State Director and, for a
case identified in an OIG audit report, a copy to the OIG office which
conducted the audit and the Planning and Analysis Staff of the National
Office. This letter will be sent to all recipients who received
unauthorized assistance, regardless of amount. The letter will:
(1) Specify in detail the reason(s) the assistance was determined to
be unauthorized;
(2) State the amount of unauthorized assistance to be repaid
according to Exhibit D of this subpart (available in any FmHA office);
and
(3) Establish an appointment for the recipient to discuss with the
servicing official the basis for FmHA's claim; and give the recipient
an opportunity to provide facts, figures, written records or other
information which might alter FmHA's determination that the assistance
received was unauthorized.
(b) If the recipient meets with the servicing official, the servicing
official 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 FmHA's findings. When requested by the
recipient, the servicing official may grant additional time for the
recipient to assemble documentation. When an extension is granted, the
servicing official will specify a definite number of days to be allowed
and establish the follow up necessary to assure that servicing of the
case continues without undue delay.
07 CFR 1951.608 Decision on servicing actions.
When the servicing official is the same individual who approved the
unauthorized assistance, the next-higher supervisory official must
review the case before further actions are taken by the servicing
official.
(a) Payment in full. If the recipient agrees with FmHA's
determination or will pay in a lump sum, the servicing official 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 the
amount stated in the letter as shown in Exhibit A of this subpart
(available in any FmHA office). The servicing official will remit
collections to the Finance Office according to the Forms Manual Insert
(FMI) for Form FmHA 451-2, ''Schedule of Remittances,'' as follows:
(1) In the case of a loan, for application to the borrower's account
as an extra payment.
(2) In the case of a grant, as a ''Miscellaneous Collection for
Application to the General Fund.''
(3) In the case of unauthorized interest credit:
(i) If the loan on which the unauthorized interest credit was granted
is not subject to recapture of subsidy, as ''Miscellaneous Collection
for Application to the General Fund.''
(ii) If the loan on which the unauthorized interest credit was
granted is subject to recapture of subsidy, payments made under the
unauthorized interest credit agreement(s) must be reversed and reapplied
so that the correct amounts of total subsidy granted and principal
reduction attributed to subsidy will be available if recapture must be
calculated at a later date. The County Supervisor will request the
Finance Office to hold the lump-sum payment in suspense until the
payments made under the unauthorized interest credit agreement(s) have
been reversed and reapplied correctly. After the account adjustments
have been completed, the lump-sum payment will be applied as a regular
payment with credit to the borrower as of the date it was collected.
Form FmHA 1944-15, ''Interest Credit Agreement Cancellation,'' or
Form(s) FmHA 1944-6, ''Interest Credit Agreement,'' as appropriate, to
cancel interest credit or adjust the amount of interest credit for each
period of time unauthorized interest credit was granted must be
submitted simultaneously with the lump-sum payment.
(4) In the case of a loan or grant which was identified in an OIG
audit, the servicing official will report the repayment as outlined in
1951.612(b) or 1951.618(a)(1)(i) as applicable.
(b) Continuation with recipient. If the recipient agrees with FmHA's
determination or is willing to pay the amount in question but cannot
repay the unauthorized assistance within a reasonable period of time,
servicing will be as follows:
(1) All categories of unauthorized assistance EXCEPT unauthorized or
excessive interest credit. Continuation with the loan is authorized and
servicing actions outlined in 1951.612 of this subpart will be taken
provided ALL of the following conditions are met:
(i) The recipient did not provide false information as defined in
1951.602(d) of this subpart;
(ii) It would be highly inequitable to require prompt repayment of
the unauthorized assistance; and
(iii) Failure to collect the unauthorized assistance in full will not
adversely affect FmHA's financial interests.
(2) Unauthorized or excessive interest credit. When the unauthorized
assistance is solely in the form of unauthorized or excessive interest
credit, continuation with the loan is authorized, regardless of whether
the borrower provided false information as defined in 1951.602(d) of
this subpart, provided the borrower cooperates in executing documents
necessary to effect account adjustments according to 1951.612(a)(2)(i)
of this subpart. After the account is thus adjusted, the unauthorized
assistance is deemed to have been fully recovered.
(c) Notice of determination when agreement is not reached. If the
recipient does not agree with FmHA's determination, or if the recipient
fails to respond to the initial letter prescribed in 1951.607 within 30
days the servicing official will notify the recipient by letter
substantially similar to Exhibit B of this subpart (available in any
FmHA office) (sent by Certified Mail, Return Receipt Requested), with a
copy to the State Director, and for a case identified in an OIG audit
report, a copy to the OIG office which conducted the audit and the
Planning and Analysis Staff of the National Office. This letter will
include:
(1) The amount of assistance finally determined by FmHA to be
unauthorized;
(2) A statement of further actions to be taken by FmHA as outlined in
paragraph (e)(1) or (e)(2) of this section; and
(3) The appeal rights as prescribed in Exhibit B of this subpart
(available in any FmHA office).
(d) Appeals. Appeals resulting from the letter prescribed in
paragraph (c) of this section will be handled according to subpart B of
part 1900 of this Chapter. All appeal provisions will be concluded
before proceeding with further actions. If the recipient does not
prevail in an appeal, or when an appeal is not made during the time
allowed, the servicing official will proceed with the actions outlined
in paragraph (e) of this section, as applicable. If, during the course
of appeal, the appellant decides to agree with FmHA's findings or is
willing to repay the unauthorized assistance, the servicing official
will proceed with the actions outlined in paragraph (a), (b), or (e) of
this section.
(e) 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 make account adjustments or establish an
obligation to repay the unauthorized assistance as provided in
1951.612, one of the following actions will be taken:
(1) Active borrower with a secured loan. (i) The servicing official
will attempt to have the recipient liquidate voluntarily. If the
recipient agrees to liquidate voluntarily, this will be documented by an
entry in the running record of the case file. A letter will be prepared
by the servicing official and signed by the recipient agreeing to
voluntary liquidation. For organizations, a resolution of the governing
body may be required in addition to the running record notation. 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 subpart A of part 1955 of this chapter unless:
(A) The amount of unauthorized assistance outstanding, including
principal, accrued interest, and any recoverable costs charged to the
account, is less than $1,000; or
(B) It can be clearly documented that it would not be in the best
financial interest of the Government to force liquidation. If the
servicing official wishes to make an exception to forced liquidation
under paragraph (e)(i)(B) of this section, a request for an exception
under 1951.619 will be made.
(ii) When all of the conditions of paragraph (a) or (b) of this
section are met, but the recipient does not repay or refuse to execute
documents to effect necessary account adjustments according to the
provisions of 1951.612, liquidation action will be initiated as
provided in paragraph (e)(1)(i) of this section.
(iii) When forced liquidation would be initiated except that the loan
is being handled under paragraph (e)(1)(i)(A) or (e)(1)(i)(B) of this
section, account adjustments will be made by FmHA without the signature
of the recipient according to 1951.618(a)(5). In these cases, the
recipient will be notified by letter of the actions taken with a copy of
Forms FmHA 1951-12, ''Correction of Loan Account,'' of FmHA 1951-13,
''Change in Interest Rate,'' as applicable, enclosed to reflect the
adjustments.
(2) Grantee, inactive borrower, or active borrower with unsecured
loan (such as note-only, collection-only, or unsatisfied balance after
liquidation). The servicing official will document the facts in the
case and submit it to the State Director who will request the advice of
OGC on pursuing legal action to effect collection. The State Director
will tell OGC what assets, if any, are available from which to collect.
(50 FR 12991, Apr. 2, 1985, as amended at 51 FR 11563, Apr. 4, 1986)
1951.609 -- 1951.611 (Reserved)
07 CFR 1951.612 Servicing options in lieu of liquidation or legal
action to collect.
When the conditions outlined in 1951.608(b) are met, servicing
options outlined in this section may be considered. Accounts will be
serviced according to this section and 1951.618.
(a) Servicing SFH cases involving unauthorized assistance -- (1)
Outstanding Section 502 loan. Continuation with the loan may be
authorized and one of the following servicing actions will be taken as
appropriate to the case:
(i) If the recipient's income was above the moderate-income level but
the recipient was otherwise eligible and the loan was approved for
authorized purposes, a loan closed before November 30, 1983, will be
converted to an ''above-moderate'' RH loan. A loan in this category
which was closed after November 30, 1983, will be converted to ''Non
Program'' (NP) loan. In either case, the interest rate from Exhibit C
of this subpart (available in any FmHA office) which was in effect on
the date the loan was approved will be used and the final due date of
the original loan will be unchanged. The change in interest rate will
be accomplished according to 1951.618 (a)(1)(iii) or (b)(1)(i) of this
subpart, as applicable. If unauthorized interest credits are also
involved, that will be serviced simultaneously according to paragraph
(a)(2) of this section so that payments are reversed and reapplied only
once. A delinquency created through these actions will be serviced
according to subpart G of part 1951 of this chapter.
(ii) If the recipient was eligible for a loan and the loan was
approved for authorized purposes but the incorrect interest rate was
charged, resulting in receipt of unauthorized subsidy benefits, the
interest rate must be corrected to that which was in effect when the
loan was approved. The change in interest rate will be accomplished
according to 1951.618 (a)(1)(iii) or (b)(1)(i), as applicable. A
delinquency which is created through these actions will be serviced
according to subpart G of part 1951 of this chapter.
(iii) If the recipient was not eligible for a loan, or if the loan
was approved for unauthorized purposes as outlined in paragraph
(a)(1)(iv) of 1951.604 of this subpart, the recipient may be allowed to
enter into an accelerated repayment agreement according to
1965.125(a)(3) of subpart C of part 1965 of this chapter, if an SFH
loan, except that the above-moderate or nonprogram (NP) interest rate
which was in effect on the date the loan was approved will be used
according to Exhibit C of this subpart (available in any FmHA office).
This provision should be used only where repayment can be projected. A
loan serviced according to paragraph (a)(1)(iii) of this section will be
classified as a NP loan.
(iv) When the case is not serviced according to paragraph (a)(1)(i),
(ii), or (iii) of this section, continuation with the loan on the
existing terms is authorized, after which the loan will be serviced as
an authorized loan, except that, if interest credits are granted in a
case where continuation is authorized under the provisions of this
paragraph (a)(1)(iv) of this section, all subsidy granted will be
recaptured to the extent proceeds are available when the property is
sold, allowing a deduction for authorized selling expenses only. Where
interest credits are granted in cases of this type, the following
actions must be taken:
(A) The borrower must agree in writing to the recapture of subsidy as
outlined in paragraph (a)(1)(iv) of this section executing an agreement
in the format of Exhibit E of this subpart (available in any FmHA
office).
(B) The original executed agreement will be placed in the case file,
and the borrower's card in the management system will be marked:
All subsidy subject to recapture -- See agreement attached to note or
assumption agreement.
(C) If necessary to secure recapture, a supplemental mortgage will be
taken with the advice of OGC.
(D) If the borrower refuses to execute the agreement prescribed in
paragraph (a)(1)(iv)(A) of this section, interest credits will not be
granted on the loan.
(2) Unauthorized interest credit. When unauthorized interest credit
amounting to no more than $5 per month or $60 per year is granted,
regardless of reason, no account adjustments will be made. For amounts
in excess of $5 per month or $60 per year adjustments are as follows:
(i) On outstanding loan. Continuation with the loan is authorized
provided the recipient executes the forms necessary to effect correction
of the account through reversal and reapplication of payments. The
account will be serviced according to 1951.618(a)(3) of this subpart
for audit cases or 1951.618(b)(1)(ii) of this subpart for nonaudit
cases.
(ii) On inactive loan. Have the recipient execute a promissory note
and give the best mortgage obtainable to secure repayment of the
unauthorized interest credits. The interest rate will be the same as in
the promissory note for the loan which was subsidized through the
unauthorized interest credits, and the term will be within the
recipient's repayment ability or a maximum of 5 years.
(3) Outstanding Section 504 loan.
(i) Secured loan. Continuation under the existing terms is
authorized.
(ii) Unsecured loan. Continuation under the existing terms is
authorized, and the best mortgage obtainable will be taken to secure the
loan.
(4) Outstanding Section 523 or 524 Rural Housing Site loan. When the
objectives of the loan can be achieved, continuation under the existing
terms is authorized.
(5) Section 504 grant. Form FmHA 1944-3, ''Budget and/or Financial
Statement,'' will be completed to determine the recipient's ability to
repay all of the unauthorized assistance with the same interest rate and
term of a section 504 loan.
(i) If the recipient has financial ability to repay all of the
unauthorized assistance, Form FmHA 1940-16 ''Promissory Note,'' will be
executed, and if the grant was $2,500 or more, the best mortgage
obtainable will be taken to secure the repayment of the unauthorized
assistance. The collections, recordkeeping and reporting will be in
accordance with 1951.612(b) of this subpart.
(ii) If the recipient does not have the repayment ability for the
unauthorized assistance, a repayment agreement will be executed (see
Exhibit G of this subpart, available in any FmHA office), and if the
grant was $2,500 or more, the best mortgage obtainable will be taken to
secure the repayment of the unauthorized assistance. However, no action
will be taken to collect the unauthorized assistance until nonoccupancy
by the recipient or transfer of title.
(6) Section 523 Self-Help Technical Assistance (TA) grant or Section
525 Technical and Supervisory Assistance (TSA) grant. If the grant
objectives can be achieved, continuation under the terms of the grant
agreement is authorized. If the grant objectives cannot be achieved and
the grant assistance actually paid out is to be repaid as provided in
the grant agreement, interest will be charged at the rate specified in
the grant agreement for default of 5 percent per annum if the grant
agreement does not specify an interest rate for default cases. When
grant assistance is to be repaid, no further disbursement of committed
funds will be made.
(b) Collections, recordkeeping, and reporting in connection with
repayment of unauthorized grant assistance. When a recipient is to
repay unauthorized grant assistance as provided in paragraph (a)(5) or
(a)(6) of this section, the servicing official must maintain records on
the ''account'' as the Finance Office cannot set up an account for
repayment of a grant. The servicing official will attempt to collect
the monies due, and all collections will be remitted with Form FmHA
451-2 as ''Miscellaneous Collections for Application to the General
Fund.'' For cases identified in OIG audits only, the servicing official
will report by the 1st of March, June, September, and December of each
year the following information on cases of this type to the State
Director: Recipient's name, case number, fund code, audit report
number, audit finding number, date of claim, original amount of claim,
amount collected during the reporting period, and the balance owed on
the unauthorized grant assistance. The State Director will submit a
composite report to the Finance Office by the 15th of March, June,
September, and December of each year.
(50 FR 12991, Apr. 2, 1985, as amended at 50 FR 45781, Nov. 1, 1985;
51 FR 4138, Feb. 3, 1986; 51 FR 11563, Apr. 4, 1986; 53 FR 27825, July
25, 1988; 54 FR 28412, July 6, 1989)
1951.613 -- 1951.617 (Reserved)
07 CFR 1951.618 Account adjustments and reporting requirements.
When a final determination has been made that unauthorized assistance
has been granted, the Finance Office will be notified of necessary
account adjustments as outlined in this section, depending upon whether
the case of unauthorized assistance was identified by OIG in an audit
report or by another means. The Finance Office will service the
accounts as prescribed in this section.
(a) Audit cases. Only the cases of unauthorized assistance
identified by an OIG audit will be reported to the Finance Office by
submission of Form FmHA 1951-12, completed in accordance with the FMI.
The Finance Office will flag the account for monitoring and reporting as
required. Any payment reversed will be reapplied as of the original
date of credit. ''Loan'' refers to an account with an active borrower
unless specified as ''inactive.''
(1) Unauthorized loan. When the loan is unauthorized because the
recipient was not eligible or because the loan was made for unauthorized
purposes, the Finance Office will be advised as follows:
(i) Repayment in full. If the recipient has arranged to repay the
unauthorized loan, the payment will be remitted with Form FmHA 451-2, in
accordance with the FMI. Form FmHA 1951-12 will reflect the amount and
the Schedule Number.
(ii) Accelerated repayment agreement. If the recipient has entered
into an ''Accelerated Repayment Agreement,'' Form FmHA 1965-11 will be
prepared and distributed according to the FMI, attaching the original
form to Form FmHA 1951-12.
(iii) Continuation with loan under existing or modified terms. When
it is determined that all the conditions outlined in 1951.608(b) are
met and continuation with the loan under the existing or modified terms
is authorized, the servicing official will submit Form FmHA 1951-12 to
the Finance Office to reflect this.
(2) Unauthorized subsidy benefits received through use of incorrect
interest rate. When the interest rate on a loan is changed, Form FmHA
1951-12 will be submitted to notify the Finance Office of the correct
interest rate to be charged from the loan closing date. Payments made
will be reversed and reapplied at the corrected interest rate, after
which the unauthorized subsidy benefits will be reported to OIG as
resolved. The loan will then be treated as an authorized loan. When a
loan is converted to above-moderate RH or NP, the loan must be
identified and serviced by the servicing official accordingly. When
Form FmHA 1951-12 is processed, a new Form FmHA 1944-6, ''Interest
Credit Agreement,'' must be submitted, if applicable.
(3) Unauthorized interest credits. Unauthorized interest credits
amounting to $5 per month or $60 per year will be recovered through
submission of Form FmHA 1944-15, ''Interest Credit Agreement
Cancellation,'' or Form FmHA 1944-6, ''Interest Credit Agreement,'' to
cancel or adjust the amount of interest credits for each period of time
unauthorized interest credits were received. Form FmHA 1951-12 will be
prepared in accordance with the FMI and Forms FmHA 1944-15 or 1944-6, as
applicable, will be attached. Payments made during the period
unauthorized interest credits were received will be reversed and
reapplied according to the documents submitted, after which the
unauthorized interest credits will be reported to OIG as resolved. A
delinquency which is created will be serviced according to subpart G of
part 1951 of this chapter.
(4) Liquidation pending. When liquidation is initiated under the
provisions of this subpart, Form FmHA 1951-12 will be submitted to
advise the Finance Office of the unauthorized assistance account to be
established. This account will be flagged ''FAP'' (Foreclosure Action
Pending) or ''CAP'' (Court Action Pending), as applicable.
(5) Liquidation not initiated. Cases in which liquidation has not
been initiated because of the provisions of 1951.608(e)(1)(i)(A) or
(e)(1)(i)(B) will be adjusted according to 1951.612 and this section,
and the adjustments will be reflected on Form FmHA 1951-12. In this
instance only, account adjustments will be made even though the
recipient does not sign Form FmHA 1951-12 and any related documents.
(6) Unauthorized grant assistance. The State Office will submit a
composite report for the State to the Finance Office by the 15th of
March, June, September, and December each year, reflecting the
information outlined in 1951.612(b).
(7) Establishment of account of inactive borrower or judgment
account.
(i) When a recipient agrees to repay unauthorized assistance and
executes documents to evidence the obligation, Form FmHA 1951-12 will
reflect this, and the Finance Office will establish the account
according to the terms shown on Form FmHA 1951-12.
(ii) When a judgment is obtained against a recipient, Form FmHA
1962-20, ''Notice of Judgment,'' will be completed in accordance with
the FMI to establish a judgment account. The FmHA field office will
process the judgment or the third party judgment via the FmHA field
office terminal system.
(8) Reporting. At prescribed intervals, the Finance Office will
report to the OIG on the status of cases involving unauthorized
assistance which were identified by OIG in audit reports. The amounts
to be reported will be determined by the Finance Office after account
servicing actions have been completed. For reporting purposes, the
following applies:
(i) For circumstances outlined in paragraph (a)(1), (a)(2), or
(a)(7)(i) of this section, reporting will be as follows:
(A) When unauthorized assistance is paid in full, this will be
reported on the next scheduled report only.
(B) When unauthorized assistance is to be repaid under an accelerated
repayment agreement, the collections and status will be included on each
scheduled report until the account is paid in full.
(C) When continuation with the loan on existing or modified terms is
approved, this will be reported on the next scheduled report, and no
further reporting is required.
(ii) For unauthorized subsidy cases as provided in paragraph (a)(2)
or (a)(3) of this section, after the unauthorized amount has been repaid
or payments have been reversed and reapplied at the correct interest
rate, the unauthorized subsidy will be reported as resolved on the next
scheduled report. No further reporting is required.
(iii) When liquidation action is pending as provided in paragraph
(a)(4) of this section, the status will be included on each scheduled
report until the liquidation is completed or the loan is otherwise paid
in full.
(iv) When liquidation is not initiated as provided in paragraph
(a)(5) of this section, this will be reported on the next scheduled
report (along with collections, if any). No further reporting is
required.
(v) When unauthorized grant assistance is scheduled to be repaid as
provided in paragraph (a)(6) of this section, collections and status as
reported by the State Office will be included in the report to OIG until
the amount is paid in full.
(b) Nonaudit cases. Basically, servicing is the same for audit and
nonaudit cases; however, when receipt of unauthorized assistance is
identified by a means other than OIG audit report, the Finance Office
will be notified only if adjustments to an account or reinstatement of
an inactive account are necessary. Once adjustments are made as
provided in paragraph (b) of this section, the loan(s) will be serviced
in the same manner as an authorized loan(s). Any payment reversed will
be reapplied as of the original date of credit. After payments are
reversed and reapplied, the servicing official will receive Form FmHA
451-26, ''Transaction Record,'' from the Finance Office reflecting the
account status.
(1) Account adjustments will be handled as follows:
(i) On outstanding loan. Continuation with the loan is authorized
provided the recipient executes the forms necessary to effect correction
of the account through reversal and reapplication of payments. The
account will be serviced according to 1951.618(a)(3) of this subpart
for audit cases or 1951.618(b)(1)(ii) of this subpart for nonaudit
cases.
(ii) For unauthorized interest credits amounting to $5 per month or
$60 per year, Form FmHA 1944-15 or Form FmHA 1944-6, as applicable, will
be submitted to the Finance Office. Payments will be reversed and
reapplied accordingly.
(iii) For accounts to be rescheduled or reamortized, Form FmHA
1965-11, or 452-2, ''Reamortization and/or Deferral Agreement,'' as
applicable, will be prepared and submitted in accordance with the
respective FMI.
(iv) When an inactive borrower agrees to repay unauthorized
assistance and executes documents to evidence such as obligation, the
servicing official will notify the Finance Office by memorandum,
attaching a copy of the promissory note. The Finance Office will
establish the account according to the terms of the promissory note.
(v) When a judgment is obtained against a recipient, Form FmHA
1962-20, ''Notice of Judgment,'' will be completed in accordance with
the FMI to establish a judgment account. The FmHA field office will
process the judgment or the third party judgment via the FmHA field
office terminal system.
(vi) When a loan is paid in full, the remittance will be handled in
the same manner as any other final payment.
(2) A delinquency created through reversal and reapplication of
payments to effect corrections outlined in paragraph (b)(1) of this
section will be serviced according to subpart G of part 1951 of this
chapter.
(50 FR 12991, Apr. 2, 1985, as amended at 50 FR 45781, Nov. 1, 1985;
51 FR 11563, Apr. 4, 1986; 55 FR 35295, Aug. 29, 1990)
07 CFR 1951.619 Exception authority.
The Administrator may, in individual cases, make an exception to any
requirement or provision of this subpart which is not inconsistent with
any applicable law or opinion of the Comptroller General, provided the
Administrator determines that application of the requirement or
provision would adversely affect the Government's interest. Requests
for exceptions must be made in writing by the State Director and
submitted through the Assistant Administrator, Housing. Requests will
be supported with documentation to explain the adverse effect on the
Government's interest, propose alternative courses of action, and show
how the adverse effect will be eliminated or maintained if the exception
is granted.
1951.620 -- 1951.649 (Reserved)
07 CFR 1951.650 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0105.
07 CFR 1951.650 Subpart N -- Servicing Cases Where Unauthorized Loan or
Other Financial Assistance Was Received -- Multiple Family Housing
Source: 50 FR 12996, Apr. 2, 1985, unless otherwise noted.
07 CFR 1951.651 Purpose.
This Subpart prescribes the policies and procedures for servicing
Multiple Family Housing (MFH) loans and/or grants made by Farmers Home
Administration (FmHA) 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. As used in this Subpart, MFH loans and grants are
Section 515 Rural Rental Housing (RRH) and Rural Cooperative Housing
(RCH) loans and Sections 514 and 516 Labor Housing (LH) loans and
grants.
07 CFR 1951.652 Definitions.
As used in this subpart, the following definitions apply:
(a) Active borrower. A borrower who has an outstanding account in
the records of the Finance Office, including collection-only or an
unsatisfied account balance where a voluntary conveyance was accepted
without release from liability or foreclosure did not satisfy the
indebtedness.
(b) Assistance. Financial assistance in the form of a loan, grant,
or subsidy received.
(c) Debt instrument. Used as a collective term to include promissory
note, assumption agreement, grant agreement/resolution, or bond.
(d) False information. Information, known to be incorrect, provided
with the intent to obtain benefits which would not have been obtainable
based on correct information.
(e) Inaccurate information. Incorrect information provided
inadvertently without intent to obtain benefits fraudulently.
(f) Inactive borrower. A former borrower whose loan(s) has(have)
been paid in full or assumed by another party(ies) and who does not have
an outstanding account in the records of the Finance Office.
(g) Recipient. ''Recipient'' refers to an individual or entity that
received a loan, or portion of a loan, an interest subsidy, or a grant
which was unauthorized.
(h) Unauthorized assistance. Any loan, interest subsidy, or grant,
or any portion thereof, received by a borrower or grantee for which
there was no regulatory authorization, or for which the recipient was
not eligible.
Interest subsidy includes interest credits, rental assistance, and
subsidy benefits received because a loan was made 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.
07 CFR 1951.653 Policy.
When unauthorized assistance has been received, an effort must be
made to collect from the recipient the sum which is determined to be
unauthorized, regardless of amount, unless, any applicable Statute of
Limitations has expired. The prepayment restrictions imposed by subpart
E of part 1944 of this chapter do not apply to cases of unauthorized
assistance.
07 CFR 1951.654 Categories of unauthorized assistance.
Unauthorized assistance includes, but is not limited to, these
categories:
(a) The recipient was not eligible for the assistance.
(b) The property, as approved, does not qualify for the program. For
example: An RRH or LH project which clearly is above modest in size,
design and/or cost or was not located in an area designated as rural
when the initial loan was made.
(c) The loan or grant was made for unauthorized purposes. For
example: Purchase of an excessive amount of land.
(d) The recipient was granted unauthorized subsidy in the form of:
(1) Interest credits (IC) on an RRH loan;
(2) Rental Assistance (RA) in connection with an RRH or LH loan; or
(3) A subsidy benefit received through use of an incorrect interest
rate.
1951.655 (Reserved)
07 CFR 1951.656 Initial determination that unauthorized assistance was
received.
Unauthorized assistance may be identified through audits conducted by
the Office of the Inspector General, USDA, (OIG); through reviews made
by FmHA personnel; or through other means such as information provided
by a private citizen which documents that unauthorized assistance has
been received by a recipient of FmHA assistance. If FmHA has reason to
believe unauthorized assistance was received, but is unable to determine
whether or not the assistance was in fact unauthorized, the case will be
referred to the Regional Office of the General Counsel (OGC) or the
National Office, as appropriate, for review and advice. In every case
where it is known or believed by FmHA that the assistance was based on
false information, investigation by the Office of the Inspector General
(OIG) will be requested as provided for in FmHA Instruction 2012-B
(available in any FmHA office). If OIG conducts an investigation, the
actions outlined in 1951.657 of this subpart will be deferred until the
OIG investigation is completed and the report is received. The
reason(s) for the unauthorized assistance being received by the
recipient will be well documented in the case file, and will
specifically state whether it was due to:
(a) Submission of inaccurate information by the recipient;
(b) Submission of false information by the recipient;
(c) Submission of inaccurate or false information by another party on
the recipient's behalf such as a loan packager, developer, real estate
broker, or professional consultants such as engineers, architects,
management agents and attorneys, when the recipient did not know the
other party had submitted inaccurate or false information;
(d) Error by FmHA personnel, either in making computations or failure
to follow published regulations or other agency issuances; or
(e) Error in preparation of a debt instrument which caused a loan to
be closed at an interest rate lower than the correct rate in effect when
the loan was approved.
07 CFR 1951.657 Notification to recipient.
(a) Collection efforts will be initiated by the District Director by
a letter substantially similar to exhibit A of this subpart (available
in any FmHA office), and mailed by the servicing official to the
recipient by ''Certified Mail, Return Receipt Requested,'' with a copy
to the State Director and, for a case identified in an OIG audit report,
a copy to the OIG office which conducted the audit and the Planning and
Analysis Staff of the National Office. This letter will be sent to all
recipients who received unauthorized assistance, regardless of amount.
The letter will:
(1) Specify in detail the reason(s) the assistance was determined to
be unauthorized;
(2) State the amount of unauthorized assistance to be repaid
according to exhibit C of this subpart (available in any FmHA office);
and
(3) Establish an appointment for the recipient to discuss with the
District Director the basis for FmHA's claim; and give the recipient an
opportunity to provide facts, figures, written records or other
information which might alter FmHA's determination that the assistance
received was unauthorized.
(b) If the recipient meets with the District Director, the District
Director 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 FmHA's findings. When requested by the
recipient, the District Director may grant additional time for the
recipient to assemble documentation. When an extension is granted, the
District Director will specify a definite number of days to be allowed
and establish the followup necessary to assure that servicing of the
case continues without undue delay.
07 CFR 1951.658 Decision on servicing actions.
When the District Director is the same individual who approved the
unauthorized assistance, the State Director must review the case before
further actions are taken by the District Director.
(a) Payment in full. If the recipient agrees with FmHA's
determination or will pay in a lump sum, the District Director 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 the amount
stated in the letter as shown in exhibit A of this subpart (available in
any FmHA office). The District Director will remit collections
according to the Forms Manual Insert (FMI) for Form FmHA 1944-9,
''Multiple Housing Certification and Payment Transmittal,'' as follows:
(1) In the case of the loan, for application to the borrower's
account as an extra payment.
(2) In the case of a grant, as a ''Miscellaneous Collection for
Application to the General Fund.''
(3) In the case of a loan or grant which was identified in an OIG
audit, the District Director will report the repayment as outlined in
1951.668 (a)(1)((i), (a)(3), or (a)(6) as applicable.
(4) In the case of RA, the repayment will be handled as outlined in
1951.661 (a)(3) and Exhibit E to FmHA Instruction 1930-C.
(b) Continuation with recipient. If the recipient agrees with FmHA'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 1951.668
will be taken provided all of the following conditions are met:
(1) The recipient did not provide false information as defined in
1951.652 (d);
(2) It would be highly inequitable to require prompt repayment of the
unauthorized assistance; and
(3) Failure to collect the unauthorized assistance in full will not
adversely affect FmHA's financial interests.
(c) Notice of determination when agreement is not reached. If the
recipient does not agree with FmHA's determination, or if the recipient
fails to respond to the initial letter prescribed in 1951.657 within 30
days, the District Director will notify the recipient by letter
substantially similar to exhibit B of this subpart (available in any
FmHA office) (sent by Certified Mail, Return Receipt Requested), with a
copy to the State Director, and for a case identified in an OIG audit
report, a copy to the OIG office which conducted the audit and the
Planning and Analysis Staff of the National Office. This letter will
include:
(1) The amount of assistance finally determined by FmHA to be
unauthorized;
(2) A statement of further actions to be taken by FmHA as outlined in
paragraph (e)(1) or (e)(2) of this section; and
(3) The appeal rights as prescribed in exhibit B of this subpart
(available in any FmHA office).
(d) Appeals. Appeals resulting from the letter prescribed in
paragraph (c) of this section will be handled according to subpart B of
part 1900 of this chapter. All appeal provisions will be concluded
before proceeding with further actions. If the recipient does not
prevail in an appeal, or when an appeal is not made during the time
allowed, the District Director will proceed with the actions outlined in
paragraph (e) of this section, as applicable. If during the course of
appeal the appellant decides to agree with FmHA's findings or is willing
to repay the unauthorized assistance, the District Director will proceed
with the actions outlined in paragraph (a) or (b) of this section.
(e) Liquidation of loan(s) or legal action to enforce collection. If
the recipient is unwilling or unable to arrange for repayment as
provided in paragraph (a) of this section or continuation is not
feasible as provided in paragraph (b) of this section, one of the
following actions, as appropriate, will be taken:
(1) Active borrower with a secured loan. (i) The District Director
will attempt to have the recipient liquidate voluntarily. If the
recipient agrees to liquidate voluntarily, this will be documented by an
entry in the running record of the case file. Where real property is
involved, a letter will be prepared by the District Director and signed
by the recipient agreeing to voluntary liquidation. For organizations,
a resolution of the governing body may be necessary in addition to the
running record notation. 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 subpart A of 1955 of this
chapter unless:
(A) The amount of unauthorized assistance outstanding, including
principal, accrued interest, and any recoverable costs charged to the
account, is less than $1,000; or
(B) It can be clearly documented that it would not be in the best
financial interest of the Government to force liquidation. If the
District Director wishes to make an exception to forced liquidation
under paragraph (e)(1)(i)(B) of this section, a request for an exception
under 1951.669 will be made.
(ii) When all of the conditions of paragraph (a) or (b) or this
section are met, but the recipient does not repay or refuses to execute
documents to effect necessary account adjustments according to the
provisions of 1951.661, liquidation action will be initiated as
provided in paragraph (e)(1)(i) of this section.
(iii) When forced liquidation would be initiated except that the loan
is being handled under paragraph (e)(1)(i)(A) or (e)(1)(i)(B) of this
section account adjustments will be made by FmHA without the signature
of the recipient according to 1951.668(a)(5). In these cases, the
recipient will be notified by letter of the actions taken with a copy of
Form FmHA 1951-12, ''Correction of Loan Account,'' if applicable.
(2) Grantee, inactive borrower, or active borrower with unsecured
loan (such as collection-only, or unsatisfied balance after
liquidation). The District Director will document the facts in the case
and submit it to the State Director who will request the advice of OGC
on pursuing legal action to effect collection. The State Director will
tell OGC what assets, if any, are available from which to collect. The
case file, recommendation of State Director and OGC comments will be
forwarded to the National Office for review and authorization to
implement recommended servicing actions.
(50 FR 12996, Apr. 2, 1985, as amended at 51 FR 11563, Apr. 4, 1986)
1951.659 -- 1951.660 (Reserved)
07 CFR 1951.661 Servicing options in lieu of liquidation or legal
action to collect.
When all of the conditions outlined in 1951.658(b) are met, an
unauthorized loan or grant will be serviced according to this section
and 1951.668, provided the recipient has the legal and financial
capabilities.
(a) Active borrower/grantee -- (1) Unauthorized loan. (i) Correction
of problem. If the problem causing the assistance to be unauthorized
can be corrected, corrective action will be required. For example,
where a loan was in excess of the authorized amount, the recipient will
be required to refund the difference; or where the loan included funds
for purchase of excess land, the recipient will be required to sell the
excess land and the proceeds will be applied to the account as an extra
payment.
(ii) Continuation on existing terms. When there is no specific
problem which can be corrected, continuation on the existing terms is
authorized.
(2) Unauthorized subsidy benefits received through use of incorrect
interest rate. When the recipient was eligible for the loan but should
properly have been charged a higher interest rate than that shown in the
debt instrument, resulting in the receipt of unauthorized subsidy
benefits, the interest rate must be corrected to that which was in
effect when the loan was approved. All payments made will be reversed
and reapplied at the correct interest rate and future installments will
be scheduled at the correct interest rate. A delinquency which is
created will be serviced according to subpart B of part 1965 of this
chapter. After reapplication of payments, the loan will be serviced as
an authorized loan. Change in interest rate will be accomplished
according to 1951.668. When the recipient is a public body with loans
secured by bonds on which interest rate cannot legally be changed or
payments reversed or reapplied, continuation on existing terms is
authorized.
(3) Unauthorized interest credits or rental assistance. In cases
involving RA and/or IC, the subsidy benefits should be terminated as
provided in the Interest Credit and Rental Assistance Agreement.
Unauthorized RA will be serviced as a delinquent account according to
paragraph X B of exhibit E of subpart C of part 1930 of this chapter.
(i) Tenant's failure to properly report changes in income or size of
the household to the borrower. In cases where a tenant has received RA
and/or IC benefits to which he/she was not entitled because of the
tenant's failure to properly report income or changes in household size,
the borrower-landlord will provide the tenant with a notice of intent to
recoup improperly advanced rental subsidy benefits. Such a notice must
inform the tenant of the amount improperly advanced and the lump sum or
monthly amount that will be added to the tenant's rent to recoup the
improper rental subsidy. The borrower will inform the District Director
of the unauthorized benefits and of the agreement made by the tenant to
repay. Money collected will be remitted according to the FMI for Form
FmHA 1944-9. If the borrower has rental assistance, that portion
attributable to RA will be credited to the borrower's RA account. In
the event that the tenant does not repay through active collection
efforts including legal remedy, the borrower will report the facts to
the District Director. The District Director will report to the State
Director who will obtain the advice of OGC on further actions.
(ii) Tenant knowingly misrepresented income or number of occupants to
the borrower. If it appears the tenant has knowingly misrepresented
income to the borrower, the District Director will look into the case to
determine the facts. If the District Director determines that income or
number of occupants was misrepresented, he/she will direct the
borrower-landlord to demand and to attempt to recoup improperly received
rental subsidy from the tenant. Money collected will be remitted to the
Finance Office according to the FMI for Form FmHA 1944-9. If the tenant
fails to make restitution, the District Director will refer the case to
the State Director who will request the advice of OGC on further
actions.
(iii) Unauthorized RA and/or IC paid due to borrower's error.
Whether unauthorized RA or IC was received by the borrower due to
miscalculation or oversight by the borrower or the borrower's management
agent, the borrower is required to make restitution to FmHA. This
restitution will not be charged to any tenant or to the project as any
part of the budget or operating expense. The restitution will be
handled as a refund according to the FMI for Form FmHA 1944-49. In the
case of a nonprofit or public body borrower, when funds from nonproject
sources are not available, the State Director may make an exception and
allow project income not required for approved operating budget items to
cover the cost of restitution.
(iv) Rental assistance assigned to wrong household. When the tenant
has correctly reported income and household size, but RA was assigned by
the borrower to the household in error, the tenant's RA benefit will be
cancelled and reassigned.
(A) Notification and cancellation. Before the borrower notifies the
tenant, the borrower or management agent will review the case with the
District Director. If the District Director verifies that an error was
made based on information available at the time the unit was assigned,
the tenant will be given 30 days written notice by the borrower or
management agent that the unit was assigned in error and that the RA
benefit will be cancelled effective on the next monthly rental payment
due after the end of the 30-day notice period. The written notice will
provide that:
(1) The tenant has the right to cancel the lease based on the loss of
subsidy benefit to the tenant.
(2) The RA granted in error will not be recaptured.
(3) The tenant may meet with management to discuss the cancellation
and the facts on which the decision was based. The borrower must give
the tenant appeal rights under subpart L or part 1944 of this chapter.
(B) Reassignment of RA. Rental assistance will be reassigned in
accordance with Paragraph XII of exhibit E to subpart C of part 1930 of
this chapter.
(v) Rental assistance in excess of contract. When rental assistance
is advanced in excess of the RA contract limit, the District Director
will send a report of the facts and a recommendation of proposed action
through the State Director to the Assistant Administrator, Housing. The
Assistant Administrator will determine the disposition of the case and
notify the State Director, who will instruct the District Director of
the required action.
(4) Unauthorized grant assistance. (i) When the recipient will repay
unauthorized grant assistance over a period of time, interest will be
charged at the rate specified in the grant agreement for default from
the date received until paid. Repayment will be scheduled over a period
consistent with the recipient's repayment ability but not to exceed 10
years. The District Director must maintain collection records as the
Finance Office cannot set upon an account for repayment of a grant. The
District Director will attempt to collect the monies due, and all
collections will be remitted with Form FmHA 451-2, ''Schedule of
Remittances,'' as a ''Miscellaneous Collection for Application to the
General Fund.'' For cases identified in OIG audits only, the District
Director will report quarterly to the State Office according to
1951.668 (a)(6).
(ii) If it is determined the recipient cannot repay unauthorized
grant assistance, the assistance may be left outstanding under the terms
of the grant agreement. In the case of committed funds not yet
disbursed, no further disbursements will be made without prior consent
of the Administrator.
(5) Cases where recipient has both authorized and unauthorized loans
outstanding. When a recipient has both authorized and unauthorized
loans outstanding, installments will be scheduled to be paid
concurrently on all loans. Each loan will be serviced according to the
loan servicing regulations in effect for an authorized loan of its type.
(b) Inactive borrower. When a borrower no longer has an outstanding
account in the records of the Finance Office, the following actions will
be taken:
(1) Have the recipient execute a promissory note in the amount of the
assistance determined to be unauthorized in the Exhibit A (available in
any FmHA office) letter according to 1951.657. This note will bear
interest at the rate which was in effect for the type loan associated
with the unauthorized assistance when it was approved. The term will
not exceed 10 years.
(2) Take the best mortgage obtainable to secure the note.
(50 FR 12996, Apr. 2, 1985, as amended at 51 FR 11563, Apr. 4, 1986)
1951.662 -- 1951.667 (Reserved)
07 CFR 1951.668 Servicing unauthorized assistance accounts.
When a final determination has been made that unauthorized assistance
has been granted, the Finance Office will be notifed of necessary
account adjustments as outlined in this section, depending upon whether
the case or unauthorized assistance was identified by OIG in an audit
report or by another means. The Finance Office will service the
accounts as prescribed in this section.
(a) Audit cases. Ony the cases of unauthorized assistance identified
by OIG will be reported to the Finance Office. Form FmHA 1951-12 will
be completed in accordance with the FMI, and the District Director will
prepare and submit Form FmHA 1951-52, ''MFH Record Adjustment -- Audit
Claim,'' according to the FMI to advise the Finance Office. The Finance
Office will flag the account for monitoring and reporting as required.
Each payment reversed will be reapplied as of the original date of
credit. ''Loan'' as used in this section refers to an account with an
active borrower unless specified as ''inactive.''
(1) Unauthorized loan. When the loan is unauthorized because the
recipient was not eligible or because the loan was approved for
unauthorized purposes, the Finance Office will be advised as follows:
(i) Repayment in full. If the recipient has arranged to repay the
unauthorized loan, the payment will be remitted with Form FmHA 1944-9,
in accordance with the FMI. Forms FmHA 1951-12 and 1951-52 will reflect
the amount and the Schedule Number from Form FmHA 1944-9.
(ii) Continuation with loan on existing terms. When continuation
with the loan on the existing terms is approved according to 1951.661
(a)(1)(ii), the District Director will submit Form FmHA 1951-52 to the
Finance Office to reflect this.
(2) Unauthorized subsidy benefits received through use of incorrect
interest rate. When the interest rate on an entire loan is changed,
Form FmHA 1951-52 will be submitted to notify the Finance Office of the
correct interest rate to be charged from the loan closing date.
Payments made will be reversed and reapplied at the corrected interest
rate, after which the unauthorized subsidy benefits will be reported to
OIG as resolved. The loan will thereafter be treated as an authorized
loan.
(3) Unauthorized interest credits and/or rental assistance.
Unauthorized rental assistance and/or interest credits will be recovered
according to the provisions of 1951.661. The District Director will
report to the State Office by the 1st of March, June, September, and
December of each year, the repayment of unauthorized rental assistance
and/or interest credits by account name, case number, account code,
audit report number, finding number, date of claim, amount of claim,
amount collected during period, and balance owed at end of reporting
period. The State Office will forward a consolidated report to the
Finance Office no later than the 15th of March, June, September, and
December of each year for inclusion in the OIG report.
(4) Liquidation pending. When liquidation is initiated under the
provisions of this subpart, Form FmHA 1951-52 will be submitted to
advise the Finance Office of the unauthorized assistance account to be
established. This account will be flagged ''FAP'' (Foreclosure Action
Pending) or ''CAP'' (Court Action Pending), as applicable. The account
status will also be amended in the MFH Information Tracking and
Retrieval System (MISTR) according to subpart G of part 2033 (available
in any FmHA State or District Office).
(5) Liquidation not initiated. Cases in which Liquidation has not
been initiated because of the provisions of 1951.658 (e)(1)(i)(A) or
(e)(1)(i)(B) will be adjusted according to 1951.661 and this section of
this subpart, and the adjustments will be reflected on Form FmHA
1951-52. In this instance only, account adjustments will be made even
though the recipient does not sign Form FmHA 1951-52 and any related
documents.
(6) Unauthorized grant assistance. When grant funds are to be repaid
as provided in 1951.661(a)(4) the District Director will report to the
State Office by the 1st of March, June, September, and December of each
year, the amount of collections by account name, case number, fund code,
audit report number, finding number, date of claim, original amount of
claim, amount collected during period, and the balance owed at end of
reporting period on the unauthorized grant assistance. The State Office
will submit a composite report to the Finance Office by the 15th of
March, June, September, and December of each year.
(7) Establishment of account for inactive borrower. When an inactive
borrower agrees to repay unauthorize assistance and executes documents
to evidence such an obligation, Forms FmHA 1951-12 and 1951-52 will be
completed according to the FMIs. The Finance Office will establish the
account according to the terms indicated on Form FmHA 1951-52.
(8) Reporting. At prescribed intervals, the Finance Office will
report to the OIG on the status of cases involving unauthorized
assistance which were identified by OIG in audit reports. The amounts
to be reported will be determined by the Finance Office after account
servicing actions have been completed. For reporting purposes, the
following applies:
(i) For an unauthorized loan account as provided in paragraph (a)(1)
or (a)(4) of this section, reporting will be as follows:
(A) When unauthorized assistance is paid in full, this will be
reported on the next scheduled report only.
(B) When continuation with the loan on existing terms is approved,
the case will be reported as resolved on the next scheduled report, and
no further reporting is required.
(ii) For unauthorized subsidy cases as provided in paragraph (a)(2)
or (a)(3) of this section, after the unauthorized amount has been repaid
or payments have been reversed and reapplied at the correct interest
rate, the unauthorized subsidy will be reported as resolved on the next
scheduled report. No further reporting is required.
(iii) When an account is established with liquidation action pending
as provided in paragraph (a)(4) of this section, the status will be
included on each scheduled report until the liquidation is completed or
the account is otherwise paid in full.
(iv) When liquidation is not initiated as provided in paragraph
(a)(5) of this section, this will be reported on the next scheduled
report (along with collectons, if any). No further reporting is
required.
(v) When unauthorized grant assistance is scheduled to be repaid, the
collections and status reported by the State Office to the Finance
Office by memorandum according to paragraph (a)(6) of this section will
be included in the OIG Report until the account is paid in full.
(vi) When an inactive borrower has agreed to repay unauthorized
assistance according to paragraph (a)(7) of this section, the account
will be reported initially, and collections and status will be included
in each scheduled report until the account is paid in full.
(b) Nonaudit cases. Basically, servicing is the same for audit and
nonaudit case; however, when receipt of unauthorized assistance is
identified by a means other than an OIG audit report, the Finance Office
will be notified only if adjustments to an active account or
reinstatement of an inactive account are necessary, or grant funds are
repaid. Once adjustments are made as provided in this paragraph, the
loan(s) will be treated as an authorized loan(s). Any payment reversed
will be reapplied as of the original date of credit. After payments are
reversed and reapplied, the District Director will receive Form FmHA
451-26, ''Transaction Record,'' from the Finance Office reflecting the
account status.
(1) Account adjustments will be handled as follows:
(i) When a change in interest rate retroactive to the date of loan
closing is necessary, Form FmHA 1951-13, ''Change in Interest Rate,''
will be completed according to the FMI and executed by the borrower.
Form FmHA 1951-521 will be submitted to the Finance Office. Payments
will be reversed and reapplied accordingly.
(ii) When an inactive borrower agrees to repay unauthorized
assistance and executes documents to evidence such an obligation, the
District Director will notify the Finance Office by memorandum,
attaching a copy of the promissory note. The Finance Office will
establish or reinstate the account according to the terms of the
promissory note.
(iii) If a loan is paid in full, the remittance will be handled in
the same manner as any other final payment.
(2) A delinquency created through reversal and reapplication of
payments to effect corrections outlined in paragraph (b)(1)(i) of this
section will be serviced according to subpart B of part 1965 of this
chapter.
07 CFR 1951.669 Exception authority.
The Administrator may in individual cases make an exception to any
requirement or provision of this subpart which is not inconsistent with
any applicable law or opinion of the Comptroller General, provided the
Administrator determines that application of the requirement or
provision would adversely affect the Government's interest. Requests
for exceptions must be made in writing by the State Director and
submitted through the Assistant Administrator, Housing. Requests will
be supported with documentation to explain the adverse effect on the
Government's interest, proposed alternative courses of action, and show
how the adverse effect will be eliminated or minimized if the exception
is granted.
1951.670 -- 1951.699 (Reserved)
07 CFR 1951.700 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0104.
07 CFR 1951.700 Subpart O -- Servicing Cases Where Unauthorized Loan(s)
or Other Financial Assistance Was Received -- Community and Insured
Business Programs
Source: 50 FR 13000, Apr. 2, 1985, unless otherwise noted.
07 CFR 1951.701 Purpose.
This subpart prescribes the policies and procedures for servicing
Community and Business Program loans and/or grants made by Farmers Home
Administration (FmHA) 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 the FmHA 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.
(52 FR 38908, Oct. 20, 1987)
07 CFR 1951.702 Definitions.
As used in this subpart, the following definitions apply:
(a) Active borrower. A borrower who has an outstanding account in
the records of the Finance Office, 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.
(b) Assistance. Finance assistance in the form of a loan, grant, or
subsidy received.
(c) Debt instrument. Used as a collective term to include promissory
note, assumption agreement, grant agreement agreement/resolution, or
bond.
(d) False information. Information, known to be incorrect, provided
with the intent to obtain benefits which would not have been obtainable
based on correct information.
(e) Inaccurate information. Incorrect information provided
inadvertently without intent to obtain benefits fraudulently.
(f) Inactive borrower. A former borrower whose loan(s) has (have)
been paid in full or assumed by another party(ies) and who does not have
an outstanding account in the records of the Finance Office.
(g) 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.
(h) Servicing official. For Community Programs, the servicing
official is the District Director, an Assistant District Director, or a
District Loan Specialist so designated. For Business Programs, the
servicing official is the State Director or Designee.
(i) Unauthorized assistance. Any loan, interest subsidy, grant, or
portion thereof received by a recipient for which there was no
regulatory authorization 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.
07 CFR 1951.703 Policy.
When unauthorized assistance has been received, an effort must be
made to collect from the recipient the sum which is determined to be
unauthorized, regardless of amount, unless any applicable Statute of
Limitation has expired.
1951.704 -- 1951.705 (Reserved)
07 CFR 1951.706 Initial determination that unauthorized assistance was
received.
Unauthorized assistance may be identified through audits conducted by
the Office of the Inspector General, USDA, (OIG); through reviews made
by FmHA personnel; or through other means such as information provided
by a private citizen which documents that unauthorized assistance has
been receive by a recipient of FmHA assistance. If the servicing
official has reason to believe unauthorized assistance was received, but
is unable to determine whether or not the assistance was in fact
unauthorized, the case file including the advice of the Regional Office
of the General Counsel (OGC) will be referred to the National Office for
review and comment. In every case where it is known or believed by FmHA
that the assistance was based on false information, investigation by the
OIG will be requested as provided for in FmHA Instruction 2012-B
(available in any FmHA office). If OIG conducts an investigation, the
actions outlined in 1951.707 will be deferred until the OIG
investigation is completed and the report is received. The reason(s)
for the unauthorized assistance being received by the recipient will be
well documented in the case file, and will specifically state whether it
was due to:
(a) Submission of inaccurate information by the recipient;
(b) Submission of false information by the recipient.
(c) Submission of inaccurate or false information by another
authorized party acting on the recipient's behalf including professionl
consultant such as engineers, architects, and attorneys, when the
recipient did not know the other part had submitted inaccurate or false
information;
(d) Error by FmHA personnel, either in making computations or failure
to follow published regulations or other agency issuances; or
(e) Error in preparation of a debt instrument which caused a loan to
be closed at an interest rate lower than the correct rate in effect when
the loan was approved.
07 CFR 1951.707 Notification to recipient.
(a) Collection efforts will be initiated by the servicing official by
a letter substantially similar to exhibit A of this subpart (available
in any FmHA office), and mailed to the recipient by ''Certified Mail,
Return Receipt Requested,'' with a copy to the State Director and, for a
case identifed in an OIG audit report, a copy to the OIG office which
conducted the audit and the Planning and Analysis Staff of the National
Office. This letter will be sent to all recipients who received
unauthorized assistance, regardless of amount. The letter will:
(1) Specify in detail the reason(s) the assistance was determined to
be unauthorized;
(2) State the amount of unauthorized assistance, including any
accrued interest to be repaid; and
(3) Establish an appointment for the recipient to discuss with the
servicing official the basis for FmHA's claim; and give the recipient
an opportunity to provide facts, figures, written records or other
information which might alter FmHA's determination that the assistance
received was unauthorized.
(b) If the recipient meets with the servicing official, the servicing
official 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 FmHA's findings. When requested by the
recipient, the servicing official may grant additional time for the
recipient to assemble documentation. When an extension is granted, the
servicing official will specify a definite number of days to be allowed
and establish the follow up necessary to assure that servicing of the
case continues without undue delay.
07 CFR 1951.708 Decision on servicing actions.
When the servicing official is the same individual who approved the
unauthorized assistance, the next-higher supervisory official must
review the case before further actions are taken by the servicing
official.
(a) Payment in full. If the recipient agrees with FmHA's
determination or will pay the amount in question, the servicing official
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 1951.711(a). the servicing official will remit
collections to the Finance Office according to the Forms Manual Insert
(FMI) for Form FmHA 451-2, ''Schedule of Remittances,'' as follows:
(1) In the case of a loan, for application to the borrower's account
as an extra payment.
(2) In the case of a grant, as a ''Miscellaneous Collection for
Application to the General Fund.''
(3) In the case of a loan or grant which was identified in an OIG
audit, the servicing official will report the repayment as outlined in
1951.711(b)(2) or 1951.715 as applicable.
(b) Continuation with recipient. If the recipient agrees with FmHA'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
will be taken provided all of the following conditions are met:
(1) The recipient did not provide false information as defined in
1951.702(d);
(2) It would be highly inequitable to require prompt repayment of the
unauthorized assistance; and
(3) Failure to collect the unauthorized assistance in full will not
adversely affect FmHA's financial interests.
(c) Notice of determination when agreement is not reached. If the
recipient does not agree with FmHA's determination, or if the recipient
fails to respond to the initial letter prescribed in 1951.707 within 30
days, the servicing official will notify the recipient by letter
substantially similar to exhibit B of this subpart (available in any
FmHA office) (sent by Certified Mail, Return Receipt Requested), with a
copy to the State Director, and for a case identified in an OIG audit
report, a copy to the OIG office which conducted the audit and the
Planning and Analysis Staff of the National Office. This letter will
include:
(1) The amount of assistance finally determined by FmHA to be
unauthorized including any accrued interest.
(2) A statement of further actions to be taken by FmHA as outlined in
paragraph (e)(1) or (e)(2) of this section; and
(3) The appeal rights as prescribed in exhibit B of this subpart
(available in any FmHA office).
(d) Appeals. Appeals resulting from the letter prescribed in
paragraph (c) of this section will be handled according to subpart B of
part 1900 of this chapter. All appeal provisions will be concluded
before proceeding with further actions. If the recipient does not
prevail in an appeal, or when an apeal is not made during the time
allowed, the servicing official will document the facts in the case file
and submit to State Director, if the servicing official is other than
State Director, who will proceed with the actions outlined in paragraph
(e) of this section, as applicable. If during the course of appeal the
appellant decides to agree with FmHA's findings or is willing to repay
the unauthorized assistance, the servicing official will proceed with
the actions outlined in paragraph (a), (b), or (e) of this section.
(e) 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 of the following actions will
be taken:
(1) Active borrower with a secured loan. (i) The servicing official
will attempt to have the recipient liquidate voluntarily. If the
recipient agrees to liquidate voluntarily, this will be documented in
the case file. Where real property is involved, a letter will be
prepared by the servicing official and signed by the recipient agreeing
to voluntary liquidation. A resolution of the governing body may be
required. 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, accrued interest, and any recoverable costs charged to the
account, is less than $1,000; or
(B) It can be clearly documented that it would not be in the best
financial interest of the Government to force liquidation. If the
servicing official wishes to make an exception to forced liquidation
under paragraph (e)(1)(i)(B) of this section, a request for an exception
under 951.716 will be made.
(ii) When all of the conditions of paragraph (a) or (b) of this
section are met, but the recipient does not repay or refuses to execute
documents to effect necessary account adjustments according of the
provisions of 1951.711, liquidation action will be initiated as
provided in paragraph (e)(1)(i) of this section.
(iii) When forced liquidation would be initiated except that the loan
is being handled under paragraph (e)(1)(i)(A) or (e)(1)(i)(B) of this
section, continuation with the loan on existing terms will be provided.
In these cases, the recipient will be notified by letter of the actions
taken.
(2) Grantee, inactive borrower, or active borrower with unsecured
loan (such as collection-only, or unsatisfied balance after
liquidation). The servicing official will document the facts in the
case file and submit it to the State Director, if the servicing official
is other than the State Director, who will request the advice of the OGC
on pursuing legal action to effect collection. The case file,
recommendation of State Director and OGC comments will be forwarded to
the National Office for review and authorization to implement
recommended servicing actions. The State Director will tell OGC what
assets, if any, are available from which to collect.
1951.709 -- 1951.710 (Reserved)
07 CFR 1951.711 Servicing options in lieu of liquidation or legal
action to collect.
When the conditions outlined in 1951.708(b) are met, the servicing
options outlined in this section will be considered. Accounts will be
serviced according to this section and 1951.715.
(a) Determination of unauthorized loan and/or grant assistance amount
-- (1) Unauthorized loan amount. The principal loan amount that was
unauthorized will be determined. The unauthorized amount will be the
unauthorized principal plus any accrued interest on the unauthorized
principal at the note interest rate until the date paid in accordance
with 1951.708(a), or until the date other satisfactory financial
arrangements are made in accordance with paragraph (b)(1) or (c) of this
section.
(2) Unauthorized grant amount. The unauthorized grant actually
expended will be determined. The unauthorized amount will be the
unauthorized grant with accrued interest at the interest rate stipulated
in the respective executed grant agreement for default cases until the
date paid in accordance with 1951.708(a), or until the date other
satisfactory financial arrangements are made in accordance with
paragraph (b)(2) or (c) of this section.
(b) 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. In each instance, the servicing
official will advise the Finance Office by memorandum of the actions
necessary to effect the account adjustment.
(1) Unauthorized loan. A loan for the unauthorized amount determined
according to paragraph (a)(1) of this section will be established 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 for a
period not to exceed 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 paragraph (a)(2) of this section will be converted to a
loan at the market interest rate for the respective Community and
Business Programs area in effect on the date the financial assistance
was provided, and will be amortized for a period not to exceed fifteen
(15) years. The recipient will be required to execute a debt instrument
to evidence this obligaton, and the best security position practicable
in a manner which will adequately protect the FmHA's interests during
the repayment period will be taken as security. When the recipient is
to repay grant assistance, the servicing official must maintain records
on the ''account'' as the Finance Office cannot set up an account for
repayment of a grant. The servicing official will attempt to collect
the monies due and all collections will be remitted with Form FmHA 451-2
to the Finance Office as ''Miscellaneous Collections for Application to
the General Fund.'' For cases identified in OIG audits only, the
servicing official will report by the 1st of March, June, September, and
December of each year the following information on cases of this type to
the State Director: Recipient's name, fund code, audit report number,
audit finding number, date of claim, amount of claim, amount collected
during the reporting period, and the balance owed on the unauthorized
grant assistance.
(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 outlined in
this paragraph. The recipient will be given the option to submit a
written request that the interest rate be adjusted to the lower of the
rate for which they were eligible that was in effect at the date of loan
approval or loan closing. (See exhibit C of this subpart for interest
rates (available in any FmHA office)). FmHA servicing officials will
make a concerted effort to collect all unauthorized subsidy benefits
from the recipient and will contact the Office of General Counsel in
each case for advice in accomplishing corrective actions.
(c) Continuation on existing terms. When the recipient does not have
the legal and/or financial capabilities for the options outlined in
paragraph (b)(1), (b)(2), or (b)(3) of this section, as appropriate, to
be exercised, the recipient may be allowed to continue to meet the
loan/grant obligations outlined in the existing loan/grant instruments.
Unless the unauthorized assistance was identified in an OIG audit, no
Finance Office notification or action is necessary. If identified by
OIG, the servicing official will advise the Finance Office by memorandum
of the determination to continue with the recipient on the existing
terms of the loan/grant.
(d) Reporting requirements to National Office. An annual report will
be submitted by the State Office to the Assistant Administrator,
Community and Business Programs, within 30 days following the end of the
Government's fiscal year for each case of unauthorized assistance or
subsidy benefits. The report will include for each case the account
name, case number, fund code, OIG audit number (if applicable), amount
collected during period, and the balance owed on the unauthorized
assistance. Each State Office is responsible for coordinating with the
servicing official's office so that this information can be accumulated
and consolidated by the State Office within the allotted time. A
negative report is required from States which have no unauthorized
assistance cases.
(50 FR 13000, Apr. 2, 1985, as amended at 51 FR 11563, Apr. 4, 1986;
54 FR 28020, July 5, 1989)
1951.712 -- 1951.714 (Reserved)
07 CFR 1951.715 Account adjustments and reporting requirement.
Cases of unauthorized assistance which require Finance Office
notification and action, regardless of whether they were identified in
an OIG audit or by other means, will be submitted to the Finance Office
by memorandum from the servicing official, as provided in applicable
paragraphs of 1951.711 of this subpart. Each memorandum should include
account (borrower) name, case number, audit report number (if
applicable), finding number (if applicable), fund code, loan number, and
an explanation of the actions to be taken. If the unauthorized
assistance was identified in an OIG audit report, the memorandum should
be clearly annotated ''Audit Claim for OIG Report'' as a part of the
subject. The explanation should provide sufficient details to allow the
Finance Office to properly adjust the account. The State Office will
forward a consolidated report on unauthorized grant assistance
identified in an OIG audit to the Finance Office by the 15th of March,
June, September, and December of each year reflecting the information
reported by servicing officials in accordance with 1951.711(b)(2) for
inclusion in the report to OIG.
(a) Entire loan unauthorized. When the entire loan is unauthorized
because the recipient was not eligible or because the loan was approved
for unauthorized purposes, the servicing official will advise the
Finance Office, by memorandum, which of the following servicing actions
will be taken.
(1) Repayment in full. If the recipient has arranged to repay the
unauthorized loan in full through refinancing or other available
resources, the payment will be remitted with Form FmHA 451-2 and the
schedule number will be included in the memorandum.
(2) Continuation with loan on existing or modified terms. When it is
determined, according to 1951.711 (b)(1) or (c), that continuation with
the loan on the existing or modified terms will be provided, the
servicing official will advise the Finance Office by memorandum of this
determination including an explanation of the terms, if modified.
(b) Portion of loan unauthorized. When only a portion of the loan
has been determined to be for unauthorized purposes, the servicing
official will advise the Finance Office, by memorandum, of the servicing
actions as follows:
(1) Repayment in full of unauthorized portion. If the recipient has
arranged to repay the unauthorized portion of the loan through
refinancing or other available resources, the remittance will be
submitted with Form FmHA 451-2, and the schedule number will be included
in the memorandum.
(2) Continuation with unauthorized portion of loan on existing or
modified terms. When it is determined, according to 1951.711 (b)(1) or
(c), that continuation with the unauthorized portion of the loan on the
existing or modified terms will be provided, the servicing official will
advise the Finance Office by memorandum of this determination, including
an explanation of the terms if modified. The authorized portion will
retain the original loan number with installments adjusted accordingly.
Payments previously made will not be reversed and reapplied. The
amortized unauthorized amount will be assigned the next available loan
number. Installments for the authorized and unauthorized loans will be
scheduled and paid concurrently.
(c) Unauthorized subsidy benefits received. The unauthorized subsidy
benefits received will be serviced according to 1951.711 (b)(3) or (c).
(d) Liquidation pending. When liquidation is initiated under the
provisions of this subpart, the servicing official will advise the
Finance Office, by memorandum, that an unauthorized assistance account
is to be established. This account will be flagged ''FAP'' (Foreclosure
Action Pending) or ''CAP'' (Court Action Pending), as applicable.
(e) Liquidation not initiated. Cases in which liquidation would
normally be initiated, but where it is not because of the provisions of
1951.708(e)(1), will be serviced in accordance with
1951.708(e)(1)(iii). If the unauthorized assistance was identified
through means other than an OIG audit report, the Finance Office will
not be notified and no action is necessary.
(f) Unauthorized grant assistance. A grant that is to be repaid will
be serviced according to 1951.711(b)(2). If the unauthorized assistance
was identified through means other than an OIG audit report and a
determination has been made not to recover, the Finance Office will not
be notified and no action is necessary.
(g) Reporting. At prescribed intervals, the Finance Office will
report to the OIG on the status of cases involving unauthorized
assistance which were identified by OIG in audit reports. The amounts
to be reported will be determined by the Finance Office after account
servicing actions have been completed. For reporting purposes, the
following applies:
(1) For an unauthorized loan account established as provided in
paragraph (a) or (b) of this section, reporting will be as follows:
(i) When unauthorized assistance is paid in full, this will be
reported on the next scheduled report only.
(ii) When continuation with the loan on existing or modified terms is
approved, this will be reported on the next scheduled report, and no
further reporting is required.
(2) For unauthorized subsidy cases as provided in paragraph (c) of
this section, once the interest rate has been appropriately adjusted,
the unauthorized subsidy will be reported as resolved on the next
scheduled report. No further reporting is required.
(3) When an account is established with liquidation action pending as
provided in paragraph (d) of this section, the status will be included
on each scheduled report until the liquidation is completed or the
account is otherwise paid in full.
(4) When liquidation is not initiated as provided in paragraph (e) of
this section, this will be reported on the next scheduled report. No
further reporting is required.
(5) When unauthorized grant assistance is scheduled to be repaid as
provided in paragraph (f) of this section, collections and status will
be included in the report to OIG until the amount is paid in full.
07 CFR 1951.716 Exception authority.
The Administrator may in individual cases make an exception to any
requirement or provision of this subpart which is not inconsistent with
any applicable law or opinion of the Comptroller General, provided the
Administrator determines that application of the requirement or
provision would adversely affect the Government's interest. Requests
for exceptions must be made in writing by the State Director and
submitted through the Assistant Administrator, Community and Business
Programs. Requests will be supported with documentation to explain the
adverse effect on the Government's interest, propose alternative courses
of action, and show how the adverse effect will be eliminated or
minimized if the exception is granted.
1951.717 -- 1951.749 (Reserved)
07 CFR 1951.750 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0103.
07 CFR 1951.750 Subparts P-Q -- (Reserved)
07 CFR 1951.750 Subpart R -- Rural Development Loan Servicing
Source: 53 FR 30656, Aug. 15, 1988, unless otherwise noted.
07 CFR 1951.851 Introduction.
(a) This subpart contains regulations for servicing or liquidating
loans made by the Farmers Home Administration (FmHA) under the
Intermediary Relending Program (IRP) to eligible IRP intermediaries and
applies to ultimate recipients and other involved parties. 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) The portion of this regulation pertaining to loanmaking applies
to RDLF intermediaries cited in 1951.851(b) which have RDLF funds from
HHS and have not fully utilized relending of those funds to ultimate
recipients at the date of these regulations. The loanmaking of all
other IRP loans serviced by this regulation is in accordance with part
1948, subpart C of this chapter.
(d) 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.
(e) The loan program is administered by the FmHA National Office.
The Director, Business and Industry Division, is the point of contact
for servicing activities unless otherwise delegated by the
Administrator.
07 CFR 1951.852 Definitions and abbreviations.
(a) General definitions. The following definitions are applicable to
the terms used in this subpart.
(1) Intermediary (Borrower). The entity receiving FmHA loan funds
for relending to ultimate recipients. FmHA becomes an intermediary in
the event it takes over loan servicing and/or liquidation.
(2) Loan Agreement. The signed agreement between FmHA 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 FmHA 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 meeting obligations
within the ordinary operating cycle of the business.
(b) Abbreviations. The following abbreviations are applicable:
(1) B&I -- Business and Industry
(2) CSA -- Community Services Administration
(3) EIS -- Environmental Impact Statement
(4) FmHA -- Farmers Home Administration
(5) HHS -- U.S. Department of Health and Human Services
(6) IRP -- Intermediary Relending Program
(7) OCS -- Office of Community Services
(8) OIG -- Office of Inspector General
(9) OGC -- Office of the General Counsel (10) RDLF -- Rural
Development Loan Fund
(11) USDA -- United States Department of Agriculture
07 CFR 1951.853 Loan purposes for undisbursed RDLF loan funds from HHS.
(a) RDLF Intermediaries. Rural Development Loan funds will be used
by the RDLF intermediary to provide loans to ultimate recipients in
accordance with paragraph (b) of this section. Interest income, service
fees, and other authorized financing charges received by RDLF
intermediaries operating relending programs may be used to pay for: The
costs of administering the RDLF relending program, the provision of
technical assistance to borrowers, the absorption of bad debts
associated with RDLF loans, and repayment of debt. All proceeds in
excess of those needed to cover authorized expenses, as described above,
must be returned to FmHA.
(b) Ultimate recipients.
(1) Financial assistance from the intermediary to the ultimate
recipient must be for business facilities and community development
projects in rural areas.
(2) Financial assistance involving Rural Development Loan funds from
the intermediary to the ultimate recipient may include but not be
limited to:
(i) Business acquisitions, construction, conversion, enlargement,
repair, modernization, or development cost.
(ii) Purchasing and development of land, easements, rights-of-way,
building, facilities, leases, or materials.
(iii) Purchasing of equipment, leasehold improvements, machinery or
supplies.
(iv) Pollution control and abatement.
(v) Transportation services.
(vi) Startup operating costs and working capital.
(vii) Interest (including interest on interim financing) during the
period before the facility becomes income producing, but not to exceed 3
years.
(viii) Feasibility studies.
(ix) Reasonable fees and charges only as specifically listed in this
subparagraph. Authorized fees include loan packaging fees,
environmental data collection fees, and other professional fees rendered
by professionals generally licensed by individual State or accreditation
associations, such as Engineers, Architects, Lawyers, Accountants, and
Appraisers. The amount of fee will be what is reasonable and customary
in the community or region where the project is located. Any such fees
are to be fully documented and justified as outlined in 1948.116(b) of
part 1948, subpart C.
(x) Aquaculture including conservation, development, and utilization
of water for aquaculture. Aquaculture means the culture or husbandry of
aquatic animals or plants by private industry for commercial purposes
including the culture and growing of fish by private industry for the
purpose of granting or augmenting publicly-owned or regulated stock of
fish.
07 CFR 1951.854 Ineligible assistance purposes.
(a) RDLF Intermediaries. RDLF loans may not be used by the
intermediary:
(1) For payment of the intermediary's own administrative costs or
expenses.
(2) To purchase goods or services or render assistance in excess of
what is needed to accomplish the purpose of the ultimate recipient
project.
(3) For distribution or payment to the owner, partners, shareholders,
or beneficiaries of the ultimate recipient or members of their families
when such persons will retain any portion of their equity in the
ultimate recipient.
(4) For charitable and educational institutions, churches,
organizations affiliated with or sponsored by churches, and fraternal
organizations.
(5) For assistance to government employees, military personnel, or
principals or employees of the intermediary who are directors, officers
or have major ownership (20 percent or more) in the ultimate recipient.
(6) For relending in a city with a population of twenty-five thousand
or more as determined by the latest decennial census.
(7) For a loan to an ultimate recipient which has applied or received
a loan from another intermediary unless FmHA provides prior written
approval for such loan.
(8) For any line of credit.
(9) To finance more than 75 percent of the total cost of a project by
the ultimate recipient. The total amount of RDLF loan funds requested
by the ultimate recipient plus the outstanding balance of any existing
RDLF loan(s) will not exceed $150,000. Other loans, grants, and/or
intermediary or ultimate recipient contributions or funds from other
sources must be used to make up the difference between the total cost
and the assistance provided with RDLF funds.
(10) For any investments in securities or certificates of deposit of
over 30-day duration without the concurrence of FmHA. If the RDLF funds
have been unused to make loans to ultimate recipients for 6 months or
more, those funds will be returned to FmHA unless FmHA provides an
exception to the RDLF intermediary. Any exception would be based on
evidence satisfactory to FmHA that every effort is being made by the
intermediary to utilize the RDLF funding in conformance with program
objectives.
(b) Ultimate recipients. Ultimate recipients may not use assistance
received from RDLF intermediaries involving RDLF funds:
(1) For agricultural production, which means the cultivation,
production (growing), harvesting, either directly or through integrated
operations, of agricultural products (crops, animals, birds and marine
life, either for fiber or food for human consumption, and disposal or
marketing thereof, the raising, housing, feeding, breeding, hatching,
control and/or management of farm and domestic animals). Exceptions to
this definition are:
(i) Aquaculture as identified under eligible purposes.
(ii) Commercial nurseries primarily engaged in the production of
ornamental plants and trees and other nursery products such as bulbs,
florists' greens, flowers, shrubbery, flower and vegetable seeds, sod,
the growing of vegetables from seed to the transplant stage.
(iii) Forestry, which includes establishments primarily engaged in
the operation of timber tracts, tree farms, forest nurseries, and
related activities such as reforestation.
(iv) Financial assistance for livestock and poultry processing as
identified under eligible purposes.
(v) The growing of mushrooms or hydroponics.
(2) For the transfer of ownership unless the loan will keep the
business from closing, or prevent the loss of employment opportunities
in the area, or provide expanded job opportunities.
(3) For community antenna television services or facilities.
(4) For any legitimate business activity when more than 10 percent of
the annual gross revenue is derived from legalized gambling activity.
(5) For any illegal activity.
(6) For any otherwide eligible project that is in violation of either
a Federal, State or local environmental protection law or regulation or
an enforceable land use restriction unless the financial assistance
required will result in curing or removing the violation.
(7) For any hotels, motels, tourist homes, or convention centers.
(8) For any tourist, recreation, or amusement centers.
1951.855 -- 1951.858 (Reserved)
07 CFR 1951.859 Term of loans.
(a) No loans shall be extended for a period exceeding 30 years.
Principal payments on loans will be made at least annually. The initial
principal payment may be deferred not more than 3 years.
(b) The terms of loan repayment will be those stipulated in the loan
agreement and/or promissory note.
07 CFR 1951.860 Interest on loans.
(a) RDLF intermediaries: When the RDLF loan portfolio was
transferred from HHS to USDA as required under Pub. L. 99-198, section
1323 of the Food Security Act of 1985, there were provisions that
affected the interest rates on those loans.
(1) Those loans made in 1980 and 1981 carried an original note rate
of 1 percent interest when they were first issued. The legislation
provides for those loans made in 1980 and 1981 to have a permanent
interest rate reduction to 1 percent effective December 23, 1985, to
maturity. However, the interest rates on the loans made in 1983 and
1984 may remain the same as the original note rate.
(2) Loans made in 1983 and 1984 do not automatically qualify for a
lower rate than the level of interest rates when the notes were first
issued. Section 407 of Pub. L. 99-425 provides for a weighted average
requirement that would affect those loans made in 1983 and 1984 to
intermediary borrowers.
(3) In those cases where loans were made in RDLF intermediaries and
the weighted average of all loans made by the RDLF intermediary after
December 31, 1982, does not exceed the sum of 6 percent plus the
interest rate to the intermediary (7 percent), the interest rate to be
charged the RDLF intermediary will be the rate charged on such loans
made in 1980, or 1 percent. Should the weighted average exceed 7
percent, the note rate will control.
(i) In order for FmHA to determine the weighted average of the loan
portfolio, the RDLF intermediary will be required to complete a weighted
loan average rate on its outstanding portfolio. The schedule prepared
for FmHA's review should include:
(A) Calculations of the interest amount scheduled to accrue on each
loan outstanding over a 1-year period based on the current interest rate
of each ultimate recipient's loan.
(B) The sum total of interest on each individual loan will be added
together to determine the total interest amount scheduled to accrue over
a 1-year period.
(C) Divide the total of paragraph (a)(2) of this section by the total
principal outstanding to determine the average interest percent yield in
the intermediary's loan portfolio.
(D) The loans to be included in determining the weighted interest
average will be those made from January 1, 1983, forward.
(E) FmHA will use the anniversary date of October 1 of each year to
request the intermediary to complete a weighted interest average to
determine the interest rate on its RDLF loan for the coming calendar
year, January 1 through December 31. All loans made in 1980 and 1981
have had the interest rate permanently reduced by legislation to 1
percent, effective December 25, 1985.
(F) The weighted loan average interest rate on the outstanding loan
portfolio as referenced in this section will be forwarded to FmHA along
with sufficient documentation which should include calculations, list of
outstanding loans, current interest rate being charged on the loan, etc.
(b) Interest rates charged by intermediaries to the ultimate
recipients shall be at rates negotiated by those parties.
Intermediaries are encouraged to make loans to ultimate recipients at
the lowest possible rate, taking into account the cost of the loan funds
to the intermediary and the cost of administering the loan portfolio.
1951.861 -- 1951.865 (Reserved)
07 CFR 1951.866 Security.
(a) Loans from RDLF intermediaries to ultimate recipients. Security
requirements for loans from intermediaries to ultimate recipients will
be negotiated between the intermediaries and ultimate recipients. FmHA
concurrence in the intermediary's security proposal is required only
when security for the loan from the intermediary to the ultimate
recipient will also serve as security for the FmHA loan.
(b) Additional security. The FmHA may require additional security at
any time during the term of a loan to an intermediary if, after review
and monitoring, an assessment indicates the need for such security.
(c) Appraisals. Real property serving as security for all loans to
intermediaries and for loans to ultimate recipients serving as security
for loans to intermediaries will be appraised by a qualified appraiser.
For all other types of property, a valuation shall be made using any
recognized, standard technique for the type of property involved
(including standard reference manuals), and this valuation shall be
described in the loan file.
07 CFR 1951.867 Conflict of interest.
The intermediary will, for each proposed loan to an ultimate
recipient, inform FmHA in writing and furnish such additional evidence
as FmHA requests as to whether and the extent to which the intermediary
or its principal officers (including immediate family) hold any legal or
financial interest or influence in the ultimate recipient or the
ultimate recipient or any of its principal officers (including immediate
family) holds any legal or financial interest or influence in the
intermediary. FmHA shall determine whether such ownership, influence or
financial interest is sufficient to create potential conflict of
interest. In the event FmHA determines there is a conflict of interest,
the intermediary's assistance to the ultimate recipient will not be
approved until such conflict is eliminated.
1951.868 -- 1951.870 (Reserved)
07 CFR 1951.871 Post award requirements.
(a) RDLF intermediaries with undisbursed RDLF loan funds shall be
governed by these regulations, the loan agreement, the approved work
program, security interests, and other conditions which FmHA may require
in awarding a loan.
(b) Unless otherwise specifically agreed to in writing by the FmHA,
any loan funds held by an intermediary and any funds obtained from
loaning FmHA-derived funds and recollecting them that are not
immediately needed by the intermediary for an ultimate recipient should
be deposited in an interest-bearing account in a bank or other financial
institution which will be covered by a form of Federal deposit
insurance. Any interest or income earned as a result of such deposits
shall be used by the intermediary only for purposes authorized by FmHA.
(c) Intermediaries operating relending programs must maintain
separate ledgers and segregated accounts for RDLF funds at all times.
(d) Reporting requirements shall be those delineated in the loan
agreement between the United States and the intermediary and such
subsequent requirements as FmHA deems appropriate. The intermediaries
must document periodically the extent to which increased employment,
income and ownership opportunities are provided to rural residents for
each loan made by such intermediary.
(e) No intermediary may make a loan to an ultimate recipient who has
applied for or received a loan from another intermediary unless FmHA
provides prior written approval for such loan.
(f) All loan payments that are due on RDLF loans will be made payable
to the Farmers Home Administration, using the number assigned, and
mailed directly to: Farmers Home Administration, Finance Office, FC 35,
1520 Market Street, St. Louis, Missouri 63103.
07 CFR 1951.872 Other regulatory requirements.
(a) Intergovenmental consultation. The RDLF program is subject to
the provisions of Executive Order 12372 which requires intergovernmental
consultation with State and local officials. For each ultimate
recipient to be assisted with a loan under this subpart and for which
the State in which the ultimate recipient is to be located has elected
to review the program under their intergovernmental review process, the
State Point of Contact must be notified. Notification, in the form of a
project description, can be initiated by the intermediary or the
ultimate recipient. Any comments from the State must be included with
the intermediary's request to use the loan funds for the ultimate
recipient. Prior to FmHA's decision on the request, compliance with the
requirements of intergovernmental consultation must be demonstrated for
each ultimate recipient. These requirements should be carried out in
accordance with FmHA Instruction 1940-J, ''Intergovernmental Review of
Farmers Home Administration Programs and Activities,'' available in any
FmHA office.
(b) Environmental requirements. (1) Unless specifically modified by
this section, the requirements of subpart G of part 1940 of this chapter
apply to this subpart. FmHA will give particular emphasis to ensuring
compliance with the environmental policies contained in 1940.303 and
1940.304 in subpart G of part 1940 of this chapter. Intermediaries and
ultimate recipients of loans must consider the potential environmental
impacts of their projects at the earliest planning stages and develop
plans to minimize the potential to adversely impact the environment.
(2) As part of the intermediary's request to FmHA for concurrence to
make a loan to an ultimate recipient, the intermediary will include for
the ultimate recipient a properly completed Form FmHA 1940-20, ''Request
for Environmental Information,'' if it is classified as a Class I or
Class II action. FmHA will complete the environmental review required
by subpart G of part 1940 of this chapter. The results of this review
will be used by FmHA in making its decision on the request.
(c) Equal opportunity and nondiscrimination requirements.
(1) In accordance with Title V of Pub. L. 93-495, the Equal Credit
Opportunity Act, neither the intermediary nor FmHA will discriminate
against any applicant on the basis of race, color, religion, national
origin, age, physical or mental handicap (provided that the applicant
has the capacity to enter into a binding contract), sex or marital
status with respect to any aspect of a credit transaction anytime
Federal funds are involved.
(2) The regulations contained in part 1901, subpart E of this chapter
apply to loans made under this program.
(3) The Administrator will assure that equal opportunity and
nondiscrimination requirements are met in accordance with Title VI of
the Civil Rights Act of 1964, ''Nondiscrimination in Federally Assisted
Programs,'' 42 U.S.C. 2000d-2000d-4. If there is indication of
noncompliance with these requirements, such facts will be reported in
writing to the Administrator, ATTN: Equal Opportunity Officer.
1951.873 -- 1951.876 (Reserved)
07 CFR 1951.877 Loan agreements.
(a) A loan agreement will have been executed by the RDLF intermediary
and OCS or HHS for each loan. The loan agreement ordinarily would
contain the following provisions:
(1) The amount of the loan.
(2) The interest rate.
(3) The term and repayment schedule.
(4) The provisions for late charges.
(5) Provisions regarding default.
(6) Disbursement procedure.
(7) Insurance requirements.
(i) Hazard insurance with a standard mortgage clause naming the
intermediary as beneficiary will be required on every ultimate recipient
in an amount that is at least the lesser of the depreciated replacement
value of the property being insured or the amount of the loan. Hazard
insurance includes fire, windstorm, lightning, hail, business
interruption, explosion, riot, civil commotion, aircraft, vehicle,
marine, smoke, builder's risk, public liability, property damage, flood
or mudslide, or any other hazard insurance that may be required to
protect the security. The RDLF intermediary's interest in the insurance
ordinarily will be assigned to the FmHA.
(ii) Ordinarily, life insurance, which may be decreasing term
insurance, is required for the principals and key employees of the
ultimate recipient and will be assigned or pledged to the RDLF
intermediary and subsequently to FmHA. A schedule of life insurance
available for the benefit of the loan will be included as part of the
application.
(iii) Workmen's compensation insurance on ultimate recipients is
required in accordance with State law.
(iv) The RDLF intermediary is responsible for determining if an
ultimate recipient is located in a special flood or mudslide hazard area
anytime Federal funds are involved. If the ultimate recipient is in a
flood or mudslide area, then flood or mudslide insurance must be
provided.
(b) The RDLF intermediary will agree:
(i) Not to make any changes in the RDLF intermediary's articles of
incorporation, charter or bylaws without the concurrence of FmHA.
(ii) Not to make a loan commitment to an ultimate recipient without
first receiving FmHA's written concurrence in the proposed use of loan
funds.
1951.878 -- 1951.880 (Reserved)
07 CFR 1951.881 Loan servicing.
(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.
preexisting 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.
(b) Each intermediary will be monitored by FmHA 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 FmHA Finance Office approximately 15 days in
advance of the due date of the payments. A copy of the notice will be
sent to the FmHA Administrator 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 amounts
or interest accruals are to be capitalized, the loan documents will
prevail.
(1) A per diem amount will be shown on the late notice sent to the
intermediary. The Finance Office will send this notice to the
Administrator or designee 30 days after the past due notice has been
sent to the intermediary and the account remains delinquent.
Thereafter, further notices by FmHA designee will be sent to the
intermediary on the late payments or any further payments until the
account is in a current status.
(2) The Finance Office will notify the Administrator or designee on
any payments due from the delinquent intermediary. It will be the
responsibility of the Administrator or designee to follow up on
delinquent payments to bring the account to a current status.
(3) A copy of any correspondence or notice generated by the
Administrator or designee on any delinquent loan will be sent to the
Finance Office.
(4) Interest will be computed on a 365-day basis unless legal
documents state otherwise.
(f) It is the responsibility of the Finance Office to maintain
complete accounting records for each intermediary. The Finance Office
will:
(1) Coordinate with the Administrator or designee to assure that
interest and principal payments received are in accordance with the
promissory notes and its companion documents, and the effective
amortization schedule. If the payments received appear to be incorrect,
the Finance Office will advise the Administrator or designee. The
Adminstrator or designee will take the necessary action to clear the
issue and promptly advise the Finance Office of the proper accounting
procedure.
(2) Send monthly statements to the National Office reflecting all
payments received to date on each borrower.
(3) Send to the Administrator or designee a monthly summary of all
intermediary loans as follows:
(i) Number and amount of all loans.
(ii) Total advanced on all loans.
(iii) Total interest and principal received on the loans.
(iv) Total outstanding balance on all loans.
(4) Prepare reamortization schedules needed as a reault of
restructuring any loans and send to the Administrator or designee.
(5) Furnish in writing to the Administrator or designee a per diem
amount on the actual interest amount due when requested by the
Administrator.
(g) It is the responsibility of the Administrator or designee to:
(1) Review and analyze the semiannual report of the intermediaries
and reconcile same to the annual audits.
(2) Review the annual audits of intermediaries.
(3) Review the semiannual reports of the intermediaries and take
appropriate action when necessary.
(4) Follow up on delinquent intermediaries to bring the account
current.
(5) Notify the Finance Office in writing when a loan is determined to
be uncollectible in order for the Finance Office to make provisions for
an appropriate timely entry to the loss account.
(6) Furnish to the Finance Office the necessary information to
produce reamortization schedules.
(7) Provide the Finance Office a copy of any correspondence in regard
to the restructuring of the loans.
(8) Review reamortization schedules, the schedule will then be
forwarded to the intermediary.
(9) Confirm account balances. Payment history of loans and any other
related matter will be furnished to the requesting party, (i.e. third
party auditing firms) if warranted and proper. If there are
discrepancies in any loan balances being confirmed, the Finance Office
should be consulted before the Administrator or designee writes the
requested parties.
(10) Furnish upon request by the Finance Office, the information
necessary to help reconcile account balances, obtain evidence of
payments made by the borrower, and any other related data necessary to
keep the financial records correct and in balance.
(11) Answer Congressional and other correspondence.
(12) Review intermediary's plans, cash flow projections, balance
sheets, and operating statements.
07 CFR 1951.882 Field visits.
(a) During or in preparation for field visits to RDLF/IRP
intermediaries by FmHA personnel, the following loan servicing
activities are to be performed:
(1) Review what is being done to inform eligible applicants of the
program's existence.
(2) Obtain current and proper financial information and analyze for
trends on all RDLF/IRP intermediaries. Also determine if there is a
sufficient interest rate spread between the interest rate charged the
intermediary and the interest rate charged the ultimate recipients to
cover the administrative costs, including bad debts of operating the
program.
(3) Include in the writeups of the field visit any issues or problems
not resolved from the last visitation in the agenda.
(4) Review credit elsewhere information (has the ultimate recipient
been refused funds by other sources?) to determine if this information
is in the files.
(5) Observe collateral and its condition, maintenance, protection and
utilization by the intermediary or ultimate recipient.
(6) Review the process for handling loan proceeds to assure they are
deposited in an interest-bearing account or time deposit in a bank or
other financial institution fully protected by Federal or State
insurance.
(7) Review materials to determine if the purpose of the program is
being fulfilled; i.e., loan funds are being used in accordance with
FmHA policies, procedures, the approved work plan and the Loan
Agreement.
(8) A report of the visit will be made on ''RDLF/IRP Review Summary
Sheet,'' or otherwise documented and included in the loan file in the
format of the ''RDLF/IRP Review Summary Sheet.'' The report should
include an opinion on the financial condition of the intermediary based
upon the review of the annual audited financial statement, periodic
financial statements, and observations made during the visit and other
sources.
(9) Determine if the ultimate recipients' files are complete,
organized, and current.
(10) Any instructions, directions, or corrective action should be
confirmed by letter to the intermediaries.
(b) All intermediaries are required to provide an annual audited
financial statement as well as a summary sheet of their lending program
on each ultimate recipient receiving Federal funds. The summary sheet
of their lending program on each ultimate recipient should include but
not be limited to: the borrower's name and address, type of business,
use of loan funds, loan amount, date of note, outstanding balance, date
of final payment, interest rate, amount and type of collateral,
insurance information, loan status, and the date of FmHA approval, if
applicable.
(c) The intermediary should perform an analysis on its ultimate
recipients and follow up in writing on any servicing action required. A
copy of the analysis will be provided to FmHA for those ultimate
recipients having Federal funds.
07 CFR 1951.883 Reporting requirements.
(a) Intermediaries are to provide FmHA with reports as required in
their respective loan agreements, applicable statutes and as required by
FmHA. 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. FmHA
does not require an unqualified audit opinion as a result of the audit.
Compilations or reviews do not satisfy the audit requirement.
(2) Quarterly reports for periods ending March 31, June 30, September
30, and December 31 (due 30 days after the end of the period). FmHA at
its option may change this requirement to semiannual reports. These
reports shall contain information only on the RDLF/IRP loan funds, or if
other funds are included, the RDLF/IRP loan program portion shall be
segregated from the others; and in the casw ehre the intermediary has
more than one RDLF/IRP loan, from FmHA, a separate report shall be made
for each of these RDLF/IRP loans. The reports will include:
(i) Form FmHA 1951-4, ''Report of IRP/RDLF Lending Activity''
(available in the FmHA National Office). This report will include
information on the intermediary's lending activity, income and expenses,
and financial condition and a summary of names and characteristics of
the ultimate recipients the intermediary has financed.
(ii) Project Progress Review Narrative.
(3) An annual report on the extent to which increased employment
income and ownership opportunities are provided to low-income persons,
farm families, and displaced farm families for each loan made by such
intermediary.
(4) Proposed budget for the following year.
(5) Other reports as FmHA may require from time to time.
(b) Intermediaries shall report to FmHA whenever an ultimate
recipient is more than 90 days in arrears in the repayment of principal
or interest.
07 CFR 1951.884 Non-Federal funds.
Once all the FmHA-derived loan funds have been utilized by the
intermediary for assistance to ultimate recipients according to the
provisions of these regulations and the loan agreement, assistance to
new ultimate recipients financed thereafter from the intermediary's
revolving loan fund shall not be considered as being derived from
Federal funds and the requirements of these regulations will not be
imposed on those new ultimate recipients. Ultimate recipients assisted
by the intermediary with FmHA-derived loan funds shall be required to
comply with the provisions of these regulations and/or loan agreement.
07 CFR 1951.885 Loan classifications.
All loans to intermediaries in the FmHA portfolio will be classified
by FmHA 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 FmHA. 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 FmHA 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 FmHA regulations, and
are not considered to pose a credit risk to FmHA. 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 FmHA to a sufficient degree of risk
to warrant a Substandard classification but do possess credit
deficiencies deserving FmHA's close attention because the failure to
correct these deficiencies could result in greater risk in the future.
This classification would include loans that may be high quality, but
which FmHA is unable to supervise properly because of an inadequate loan
agreement, the condition or lack of control over the collateral, failure
to obtain proper documentation or any other deviations from prudent
lending practices. Adverse trends in the intermediary's operation or an
imbalanced position in the balance sheet which has not reached a point
that jeopardizes the repayment of the loan should be assigned to this
classification. Loans in which actual, not potential, weaknesses are
evident and significant should be considered for a Substandard
classification.
(d) Substandard classification. This classification includes loans
which are inadequately protected by the current sound worth and paying
capacity of the obligor or of the collateral pledged, if any. Loans in
this classification must have a well defined weakness or weaknesses that
jeopardize the payment in full of the debt. If the deficiencies are not
corrected, there is a distinct possibility that FmHA will sustain some
loss.
(e) Doubtful classification. This classification includes those
loans which have all the weaknesses inherent in those classified
Substandard with the added characteristic that the weaknesses make
collection or liquidation in full, based on currently known facts,
conditions and values, highly questionable and improbable.
(f) Loss classification. This classification includes those loans
which are considered uncollectible and of such little value that their
continuance as loans is not warranted. Even though partial recovery may
be effected in the future, it is not practical or desirable to defer
writing off these basically worthless loans.
1951.886 -- 1951.888 (Reserved)
07 CFR 1951.889 Transfer and assumption.
(a) All transfers and assumptions must be approved in advance in
writing by FmHA. 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 FmHA's
review prior to the transfer and assumption.
(d) The transferee will provide FmHA 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 FmHA deems necessary for its review.
(e) The assumption agreement will contain the FmHA 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.
07 CFR 1951.890 Office of Inspector General and Office of General
Counsel referrals.
When facts or circumstances indicate that criminal violations, civil
fraud, misrepresentations, or regulatory violations may have been
committed by an applicant or an intermediary, FmHA will refer the case
to the appropriate Regional Inspector General for Investigations, OIG,
USDA, in accordance with FmHA Instruction 2012-B (available in any FmHA
office) for criminal investigation. Any questions as to whether a
matter should be referred will be resolved through consultation with OIG
and FmHA 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, FmHA
staff must coordinate with OIG in advance regarding routine servicing
actions on existing loans.
07 CFR 1951.891 Liquidation; default.
(a) In the event that FmHA 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 the FmHA determine
that it is necessary or desirable to take action to protect or further
the interests of FmHA in connection with any default or breach of
conditions under any loan made hereunder, the FmHA 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 FmHA shall determine to be reasonable, any evidence of debt,
contract, claim, personal or real property or security assigned to or
held by the FmHA 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 FmHA 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 FmHA 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 will promptly be
informed in writing of the consequences of failing to comply with loan
covenant(s).
(e) Protective advances to the intermediary will not be made in lieu
of additional loans, in particular working capital loans. Protective
advances are advances made by FmHA for the purpose of preserving and
protecting the collateral where the intermediary has failed to and will
not or cannot meet its obligations. The Administrator or designee must
approve in writing all protective advances.
(f) In the event of bankruptcy by the intermediary and/or ultimate
recipient, FmHA is responsible for protecting the interests of the
Government. All bankruptcy cases should be reported immediately to the
Regional Attorney. The Administrator must approve in advance and in
writing the estimated liquidation expenses on loans in liquidation
backruptcy. These expenses must be considered by FmHA to be reasonable
and customary.
(g) Liquidation, management, and disposal of inventory property will
be handled in accordance with subparts A, B, and C of part 1955 of this
chapter.
1951.892 -- 1951.893 (Reserved)
07 CFR 1951.894 Debt settlement.
Debt settlement of all claims will be handled in accordance with the
Federal Claims Collection Standards (4 CFR parts 101-105).
1951.895 (Reserved)
07 CFR 1951.896 Appeals.
Any appealable adverse decision made by FmHA which affects the
borrower may be appealed upon written request of the aggrieved party in
accordance with subpart B of part 1900 of this chapter.
07 CFR 1951.897 Exception authority.
The Administrator may, in individual cases, grant an exception to any
requirement or provision of this subpart which is not inconsistent with
an applicable law or opinion of the Comptroller General, provided the
Administrator determines that application of the requirement or
provision would adversely affect the Government's interest. The basis
for this exception will be fully documented. The documentation will:
demonstrate the adverse impact; identify the particular requirement
involved; and show how the adverse impact will be eliminated.
1951.898 -- 1951.899 (Reserved)
07 CFR 1951.900 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
Control Number 0575.0131. In accordance with 5 CFR part 1320, summarized
below is the annualized public reporting burden for this regulation.
07 CFR 1951.900 Subpart S -- Farmer Programs Account Servicing Policies
Source: 53 FR 35718, Sept. 14, 1988, unless otherwise noted.
07 CFR 1951.901 Purpose.
This subpart describes the policies and procedures that Farmers Home
Administration (FmHA) will use in servicing most Farmer Program loans.
The loans include Operating (OL) Loan, Farm Ownership Loan (FO), Soil
and Water Loan (SW), Softwood Timber Loan (ST), Emergency Loan (EM),
Economic Emergency Loan (EE), Special Livestock Loan (SL), Economic
Opportunity Loan (EO), Recreation Loan (RL), and Rural Housing Loan for
Farm service buildings (RHF) accounts. Cases involving unauthorized
assistance will be serviced as described in subparts L and N of this
part. For the purposes of subpart L of this part, when it has been
determined that all the conditions outlined in 1951.558(b) of subpart L
of this part have been met, the loan will be treated as an authorized
loan and may be serviced under this subpart. Cases involving graduation
of borrowers to other sources of credit will be serviced as described in
subpart F of this part. This subpart does not apply to Farmer Program
Non-Program (NP) loans. Examples of primary loan service actions that
FmHA may take are: consolidation, rescheduling and/or reamortization,
deferral of principal and interest payments (including softwood timber
loans) reducing interest rate on the loan, write-down of debt (including
conservation set-aside easements) or a combination of these actions.
Examples of preservation loan service actions that FmHA may take are
leaseback/buyback and/or homestead protection. Exhibit A provides the
Notice of Availability of Primary and Preservation Loan Service Programs
for delinquent Farmer Program borrowers. Exhibit B provides a noncash
credit for Farmer Program loan(s) when establishing recapture of debt
write down. Attachment 1 of Exhibit A is the summary of Primary and
Preservation Loan Service Programs. Attachments 2 through 10 are the
various notices and response forms borrowers will use after the initial
notice is sent. Exhibit C provides for a net recovery buyout recapture
agreement. Exhibit D provides for a shared appreciation agreement when
debt is written down. Exhibit E provides for notification of borrowers
that FmHA will request mediation or a meeting of creditors. Exhibit F
provides notification to the borrower that FmHA is offering to
restructure. Exhibit G provides policies and procedures for a deferral,
reamortization, and reclassification of distressed Farmer Programs (FP)
Loans, including Softwood Timber Production (ST) Loans under this
subpart. Exhibit H provides policies and procedures for a Primary Loan
Service Program (Farm Debt Restructure and Conservation Set-Aside
Easement) under this subpart. Exhibit I provides Net Recovery Value
Determinations. Exhibit J provides an explanation of the Debt and Loan
Restructuring System (DALR$). Exhibit K provides notification to the
borrower that FmHA is considering them for Preservation Loan Service
Programs. Exhibit L provides for a Homestead Protection Program
Agreement. Exhibit M provides for notification of the Homestead
Protection Program to the borrower after the real estate property has
been taken into Government inventory. Exhibit N provides for a
Leaseback/Buyback Agreement. Exhibit O provides notification to former
owner of the availability of Leaseback/Buyback. Exhibit P provides for
notification of former operator of the real estate of leaseback/buyback.
Exhibit Q provides a waiver of Leaseback/Buyback rights when the former
owner/operator is not interested in Leaseback/Buyback.
07 CFR 1951.902 Policy.
(a) To have a complete understanding of FmHA's servicing policy, the
following policy statement is being published in the regulations. Any
Farmer Program borrower may request Primary or Preservation Loan Service
Programs. However, borrowers must be unable to pay their debt as
scheduled before FmHA will use Primary or Preservation Loan Service
Programs. The County Supervisor will use an FmHA computer program
(DALR$) to assist in identifying, combining, and documenting the loan
service programs that will keep the farmer on the farm and provide the
best net recovery to the Government. Servicing is a continuing process,
not a single event. It begins the day a farmer comes into the FmHA
supervised credit program. Servicing has two objectives:
(1) To help the farmers manage credit so they can return to private
sector credit sources, and
(2) To minimize costs to the Government of providing this opportunity
to farmers in financial difficulty. Borrowers' accounts must be managed
with an overall objective of keeping the farmer in business and at the
same time, minimizing loan costs and losses. The tools are rescheduling
and/or reamortization, lower interest rates, deferments, and write-down
of debt. FmHA can also use Conservation Easement and Softwood Timber
Programs where and when applicable. To establish an effective servicing
policy, it is necessary to include the borrower whose loan payments with
FmHA are current. This can be called Phase I. FmHA's servicing
objective is to keep the borrower in business, paying at regular rates
and on regular terms with graduation being the primary objective. The
servicing tools available to keep a borrower in Phase I are rescheduling
and/or reamortization. These tools must be used before an account gets
behind schedule and must be considered before lower interest rates and
deferrals. In order for servicing to be effective, all farmer program
loans, must be reviewed annually, prior to the date the annual payments
are due. This is necessary in order to determine what, if any,
servicing action needs to be taken to keep an account from becoming
delinquent. However, indiscriminate and careless use of the servicing
tools ultimately increases borrower failures and program losses. When
it becomes evident that FmHA cannot keep a borrower in business, paying
regular rates and after having extended terms to the maximum extent
allowable, the borrower is considered to be in Phase II where FmHA has
more debt management tools available. These additional tools are lower
interest rates and deferrals. The objective is still the same, keep the
borrower farming and minimize loan costs and losses to the Government.
Depending upon the reasons the borrower entered Phase II, it is
reasonable to expect, with proper servicing, along with normal
production and marketing conditions, recovery and return to Phase I.
However, some borrowers may stay in Phase II as long as they are
indebted to FmHA. Here again, servicing should be used to prudently
avoid delinquency rather than try to remove it. When it becomes
impossible to keep an account from being delinquent and such delinquency
exists for 180 days, the borrower is considered in Phase III. The
borrower receives the Notice of Availability of Primary and Preservation
Loan Service Programs for Delinquent Farmer Program borrowers. This
phase begins the complicated process of determining if keeping the
farmer on the farm will provide the best net recovery to the Government
or whether liquidation offers the best net recovery. FmHA also will
automatically considered the Preservation Loan Service Programs in this
phase when it is determined that the Primary Loan Service Programs will
not keep the farmer on the farm. FmHA's primary servicing tools in this
phase include consolidation, rescheduling, reamortization, deferral,
softwood timber loans, conservation easements, and write-down of a
borrower's debt. The procedure, at this point, requires an appraisal of
all collateral and a sound and accurate determination as to whether or
not the best net recovery to the Government exists in write-down of debt
and continuation of the farming operation, or in liquidation of the
collateral securing the FmHA debt. The debt must be written down to a
level at which a feasible plan can be developed. The write-down can go
down to an amount that will provide a return to the Government equal to
net recovery from an involuntary liquidation. FmHA will continue with
the borrower if net recovery from loan payments on the debt after debt
write-down equals or exceeds net recovery from liquidation. Once it has
been determined that a borrower is not eligible for the Primary Loan
Service Programs, every effort must be made to keep the farmer in
business, using mediation if necessary and available, in an attempt to
get other creditors to restructure their debt if that is what is needed
to develop a feasible plan. If it is determined that FmHA cannot
restructure the borrower's debt, a Notice of Intent to Accelerate will
be sent to the borrower. This Notice will advise the borrower of the
right to a meeting with FmHA, an appeal, request an independent
appraisal and buy out the FmHA debt at net recovery value. If none of
the rights offered in the Notice of Intent to Accelerate provide a
favorable solution to the determination that the account cannot be
restructured and the borrower does not buy out at net recovery value,
FmHA will automatically consider the borrower/owner for the Preservation
Loan Service Programs. If the borrower/owner is eligible for the
Preservation Loan Service Program, FmHA expects to enter into a contract
with the borrower wherein FmHA determines the borrower will receive a
leaseback/buyback and/or homestead protection upon conveyance of the
real estate and chattels securing the debt. It is expected that the
transaction of conveyance from the borrower(s) and reconveyance by FmHA
to the borrower(s) take place at one sitting, similar to a loan closing.
This means that all documents necessary to complete this transaction
must be prepared in advance and be ready for appropriate signature, etc.
(b) When making an adverse decision on the borrower's loan servicing
request or before accelerating the loan account, the borrower must be
notified of the adverse decision and of the opportunity to appeal. When
a borrower's debts cannot be restructured or Preservation Loan Service
Programs cannot be used by the borrower/owner, liquidation is required.
FmHA will consider the borrower in Phase IV at this point. Both before
and after acceleration the borrower can sell the property for market
value or voluntary convey, to FmHA. If FmHA takes the property into
inventory, the farmer is now in Phase V and has the opportunity, along
with spouse and children to once again be considered for the
Preservation Loan Service Programs. The farmer also may elect to use
the Homestead Protection Program rather than leaseback/buyback which
also can provide a base for farming operations. Leaseback/buyback
rights are available in Phase V to spouse and children and family-size
operators. Homestead rights are available to only the former owner. In
summary, the loan servicing policy is this:
(1) Use rescheduling and/or reamortization at regular interest rates
to keep a borrower in Phase I if at all possible. If that is not
possible, go to Phase II.
(2) In Phase II, use rescheduling and/or reamortization at limited
resource interest rates and consider deferral, including softwood timber
loans, if necessary, to keep a borrower from becoming delinquent. When
a borrower's loans cannot be restructured using any or all combinations
of consolidation, rescheduling, reamortization, deferral, and softwood
timber programs where applicable, and with limited resource rates, begin
Phase III. The borrower can apply for debt write down and conservation
easements before the borrower is 180 days delinquent. Remember that
when a loan is 180 days delinquent, FmHA must send Exhibit A with
Attachments 1 and 2 of this subpart.
(3) In Phase III, FmHA calculates whether or not the best net
recovery to the Government is by keeping the farmer on the farm by using
the Primary and Preservation Loan Service Programs or through
liquidation. At this point, the borrower is considered for a debt
write-down. The value of the restructured debt will be based on the
present value of payments the borrower would make to the FmHA using any
combination of Primary Loan Service Programs that will provide a
feasible plan. Present value is a calculation concept which assigns a
lower current value to dollars received in later years than to dollars
received at the present time using a specific discount rate. FmHA will
use a discount rate based on the 90-day Treasury bill rate. FmHA will
analyze the costs of involuntary liquidation to determine the net
recovery value of the collateral securing the debt as if it was
involuntarily acquired and disposed of under the normal FmHA inventory
property disposal process. The County Supervisor will determine the
current market value of the collateral in accordance with subpart A of
part 1809 of this chapter (FmHA Instruction 422.1) for real estate
property, and on Form FmHA 440-21, ''Appraisal of Chattel Property.'' If
the calculations show that the value of the restructured debt is greater
than or equal to the net recovery value of the collateral, FmHA will
restructure the debt if the borrower accepts the offer within 45 days
after written notice. The Phase III process may include mediation if an
approved State Mediation Program is available or, when an approved State
Mediation Program is not available, an effort must be made by FmHA to
get under-secured creditors and the borrower together with a mediator
where mediators are available, when the other creditor's debt is the
reason a feasible plan cannot be developed. FmHA State Directors will
develop a State supplement that outlines how the mediation program for
their geographic jurisdiction will be administered. State Directors
will work with the Administrator of the Certified State Agricultural
Mediation System, farm groups, and the Attorney General's office in
those states in which mediation exists in order to develop a reasonable
and comprehensive policy on how the federal regulations and the State
Mediation Programs will coincide. When an approved State mediation
program is not available, FmHA will attempt to get undersecured
creditors involved in negotiating a restructuring plan. If trained
mediators are available, State Directors may contract with them to
facilitate the negotiations of debt adjustment with undersecured
creditors. If undersecured creditors agree to restructure debts owed to
them, so that the borrower can develop a feasible plan of operation,
FmHA will restructure the borrowers debt to FmHA. If undersecured
creditors will not participate in negotiations to restructure debts,
FmHA will make the determination that a feasible plan of operation
cannot be developed and will proceed with appropriate action to
liquidate the borrower's accounts after the borrower has the opportunity
to appeal the FmHA decision. If a feasible plan cannot be developed,
the borrower has the opportunity to retain the security property by
paying FmHA the net recovery value. Credit will not be provided by FmHA
for this transaction. When all or any combination of these servicing
tools show that the best net recovery to the Government is keeping the
farmer on the farm, the debts will be restructured. The borrower cannot
pay off FmHA at net recovery value if a feasible plan can be developed
with debt restructuring.
(4) When all or any combination of Phase III servicing tools have
been fully and carefully considered and it is determined that the best
net recovery to the Government is in liquidation, the borrower will be
considered in Phase IV which is the liquidation process. If write down
will not work, FmHA automatically considers the Preservation Servicing
Program application. Before acceleration, FmHA will offer Preservation
Loan Service Programs to borrowers. Both before and after acceleration,
the borrower can apply for debt settlement when conveying the property,
either by sale at market value or voluntary conveyance to FmHA. The
normal debt settlement procedures will be followed.
(5) After liquidation, the borrower is considered in Phase V. This
last phase is when the property securing the loans passes into FmHA
inventory. In this phase, once again, Preservation Loan Service
Programs must be offered to the borrower. The objective is to try to
keep the farmer on the farm. The borrower/owner's spouse and/or
children are now considered in the priority for leaseback/buyback. This
will be done with the Leaseback/Buyback Program for the farm or through
the Homestead Protection Program for the home and 10 acres. The
borrower/owner's spouse and/or children are not eligible for homestead
protection. The former borrower/owner or immediate family must meet the
eligibility requirements which are set forth in the regulations for
leaseback/buyback.
(6) The borrower will have the opportunity to appeal all FmHA adverse
decisions.
07 CFR 1951.903 Authorities and responsibilities.
(a) Responsibilities. County Supervisors will make full use of the
automated tracking system to track and manage the Farmer Program primary
and preservation loan servicing programs.
(b) Authorities. All loan servicing decisions will be made by the
County Supervisor except write-down of a borrower's debt. County
Supervisors are authorized to accept a buyout when the borrower(s) pay
the net recovery value of the FmHA security set forth in 1951.909.
Only State Directors are authorized to approve write-down of a
borrower's debt. This includes debt written down when buy out at net
recovery value takes place. Write-down of a borrower's debts will be
processed in accordance with 1951.909 of this subpart. County
Supervisors are authorized to consolidate and reschedule/reamortize
loans one time. If subsequent reschedulings/reamortizations are
necessary, approval must be in writing by the District Director.
1951.904 -- 1951.905 (Reserved)
07 CFR 1951.906 Definitions.
As used in this subpart, the following definitions apply:
Borrower. An individual or entity which has or is presently operating
the farm and has outstanding obligations to the Farmers Home
Administration (FmHA) under any Farmer Program loan(s), without regard
to whether the loan has been accelerated, but does not include any such
debtor all of whose loans and accounts have been foreclosed or
liquidated, voluntarily or otherwise. Collection-only borrowers are
considered borrowers.
Child. The son or daughter of a previous owner of property that has
been acquired by FmHA and who is of legal age to enter into a binding
contract.
CONACT or CONACT property. Property which collateralized a loan made
or insured under the Consolidated Farm and Rural Development Act.
Within this subpart, it shall also be construed to cover property which
collateralized other Farmer Programs loans.
Delinquent borrower. A borrower who has failed to make all or part
of a payment which is due for 30 or more calendar days after the due
date.
Entity. A corporation, partnership, joint operation, or cooperative.
Entity members. For purposes of leaseback-buyback, entity members
are stockholders of a corporation, partners of a partnership, joint
operators of a joint operation and members of a cooperative, provided
that the shareholders of the corporation, partners of the partnership,
joint operators of a joint operation or members of a cooperative must be
exclusively members of the same family. To be considered members of the
same family, the members of an entity must be related by blood or
marriage.
Farmer Program loans. This refers to Farm Ownership (FO), Soil and
Water (SW), Recreation (RL), Economic Opportunity (EO), Operating (OL),
Emergency (EM), Economic Emergency (EE), Special Livestock (SL),
Softwood Timber (ST) loans, and Rural Housing loans for farm service
buildings (RHF).
Farm plan. Form FmHA 431-2, ''Farm and Home Plan,'' or other plans
or documents acceptable to FmHA that will accurately reflect the
production and financial management of the farming operation for one
production cycle. FmHA will not require the use of consolidated
financial statements.
Feasible plan. A feasible plan is a plan based upon the
applicant/borrowers' records that show the farming operations actual
production and expenses. These records will be used along with
realistic anticipated prices, including farm program payments when
available, to determine that the income from the farming operation,
along with any other reliable off farm income, will provide the income
necessary for an applicant/borrower to at least be able to:
(a) Pay all operating expenses and all taxes which are due during the
projected farm budget period.
(b) Meet scheduled payments on all debts, except as provided in
1941.14 of subpart A of part 1941 of this chapter, for annual production
loans or subordinations made to delinquent borrowers.
(c) Provide living expenses for the family members of an individual
borrower or a wage for the farm operator in the case of a cooperative,
corporation, partnership, or joint operation borrower which is in
accordance with the essential family needs. Family members include the
individual borrower or farm operator in the case of an entity, and the
immediate members of the family which reside in the same household.
Foreclosed. The completed act of selling security either under the
''power of sale'' in the security instrument or through court
proceedings.
Homestead Protection. This refers to the right of a former owner to
lease with an option to purchase the Homestead Protection property, not
to exceed 10 acres.
Homestead Protection property. This refers to a borrower's principal
residence which collateralized a Farmer Program loan.
Indian Reservation. Indian reservation means all land located within
the limits of any Indian reservation under the jurisdiction of the
United States, notwithstanding the issuance of any patent, and including
rights-of-way running through the reservation; trust or restricted land
located within the boundaries of a former reservation of a federally
recognized Indian tribe in the State of Oklahoma; or all Indian
allotments the Indian titles to which have not been extinguished if such
allotments are subject to the jurisdiction of a Federally recognized
Indian Tribe.
Leaseback/Buyback Property. Real farm and ranch property and any off
the farm principal residence(s) of the operator(s) which secured a
Farmer Programs loan. Any off farm principal residence(s) of the former
borrower(s) and/or owner(s), who are not the operator(s) of the farm or
ranch property, are not considered leaseback/buyback property.
Liquidated. The completed act of voluntarily selling security
property to end the obligation for the debt, or involuntarily as the
result of a completed civil suit against a borrower to recover
collateral against the debt. The filing of a claim in a bankruptcy
action is not a complete liquidation of the borrower's accounts.
Collection only accounts are not considered liquidated.
Loan service program. Loan Service Program means a Primary Loan
Service Program or a Preservation Loan Service Program for farmer
program borrowers.
Nonprogram (NP) loan. A NP loan results when loan(s) are made to
ineligible applicants and/or transferees in connection with loan
assumptions and sale of surplus inventory properties at ineligible terms
after first being offered for public sale by sealed bid or auction. A
borrower is not considered to have a nonprogram loan if the borrower is
found to be ineligible after receiving the loan when the reason the
borrower was originally determined eligible by FmHA or, by a court of
law, was due to a mistake on FmHA's part.
Owner. An individual or an entity which held the fee title to the
security but who may or may not have operated the farm at the time it
was taken in to inventory. The owner need not have been an FmHA
borrower in the sense that the owner was personally obligated on a loan
from FmHA, but the owner must have pledged the farm as security for a
CONACT loan.
Preservation loan service program. Preservation loan service program
means:
(a) Homestead protection as described in 1951.911 of this subpart,
and
(b) Leaseback or buyback of farm land as described in 1951.911 of
this subpart.
Previous operator. An individual or an entity who leased the farm
which collateralized a CONACT loan and conducted the day to day business
at the time the farm was taken into inventory. The previous operator
does not need to be an FmHA borrower.
Primary loan service program. Primary loan service program means:
(a) Loan consolidation, rescheduling, or reamortization;
(b) Interest rate reduction, including use of the limited resource
program;
(c) Loan restructuring, including deferral, or writing down of the
principal or accumulated interest charges, or both, of the loan; or
(d) Any combination of actions listed in the paragraphs (a), (b), and
(c) of this definition.
(1) Consolidate. Consolidate means to combine and reschedule the
rates and terms of two or more notes of the same type of OL or EO loans,
EE operating-type loans or EM loans.
(2) Deferral. Deferral is an approved delay in making regularly
scheduled payments, including (ST) loan.
(3) Limited Resource Program. The limited resource program is a
reduction of interest rates for both operating loans (OL) and farm
ownership loan (FO).
(4) Reamortization. Reamortization means to rearrange the
installment payments of a real estate loan and may include changing the
interest rate and terms of the loan made for Subtitle A purposes.
(5) Reschedule. Reschedule means to rewrite the rates and/or terms
of OL, SL, EO loans, EE operating-type loans or EM loans made for
Subtitle B purposes.
(6) Write-down. For purposes of this part, write-down is reducing a
borrower's debt in an amount that will result in a feasible plan of
operation. This includes Farm Debt Restructure and Conservation
Set-Aside Easements as set forth in Exhibit H.
Security or security property. This refers to the real property
which secures a CONACT loan.
(53 FR 35718, Sept. 14, 1988, as amended at 56 FR 29402, June 27,
1991)
07 CFR 1951.907 Notice of Loan Service Programs.
(a) Notification of Farmer Programs Borrower(s) Whose FmHA Loan
Accounts Were Accelerated Between November 1, 1985 and May 7, 1987. All
Farmer Program borrowers whose accounts have been accelerated but not
foreclosed or liquidated will be sent Exhibit A with Attachments 1 and
2, certified mail, return receipt requested. A cover letter for Exhibit
A and Attachments 1 and 2 will be issued by AN. (available in any FmHA
office) The cover letter will inform accelerated borrowers who requested
income release as provided for in unnumbered letters dated January 25,
1988, and February 2, 1988, entitled ''Reinstatement of Releases for
Accelerated Borrowers,'' that they must complete their application for
Primary and Preservation Loan Programs within 45 days. A priority will
be given to processing of completed applications for Primary and
Preservation Loan Servicing for those borrowers who were accelerated
between November 1, 1985, and May 7, 1987, who requested income
releases. If a borrower, whose account was accelerated, does not
respond to Attachment 1 of Exhibit A, within 45 days, Attachments 7 and
8 of Exhibit A to this subpart, will be sent to the borrower certified
mail return receipt requested. If the entire payment is not received
within 30 days after receipt of the borrower's response to Attachments 7
and 8 or a voluntary conveyance or sale equal to the market value of the
property is not requested, the account will be liquidated in accordance
with 1955.15 (e) of subpart A of part 1955 of this chapter.
(b) Notification of all other Farmer Program borrowers whose FmHA
loan accounts have been accelerated. Farmer Program borrowers whose
FmHA loan accounts have been accelerated, but not foreclosed or
liquidated, will be provided with Exhibit A and Attachments 1 and 2 of
Exhibit A by certified mail, return receipt requested. If these
borrowers do not respond within 45 days, they will be sent Attachments 7
and 8 of Exhibit A by certified mail, return receipt requested. If the
entire payment is not received within 30 days after receipt of the
borrower's response to Attachments 7 and 8 or a voluntary conveyance or
sale equal to the market value of the property is not requested, the
account will be liquidated in accordance with 1955.15 (e) of subpart A
of part 1955 of this chapter.
(c) Notification of borrowers with bankruptcies pending on January 6,
1988 whose accounts have not been foreclosed or liquidated. The
attorney of borrowers with Chapter 7, 11, 12, or 13 bankruptcies pending
on January 6, 1988, will be sent Exhibit D of subpart A of part 1962 of
this chapter and Attachments 1 and 2 of Exhibit A of this subpart. The
account will be serviced in accordance with instructions from the
Regional Office of General Counsel (OGC), and in accordance with
1962.47 of subpart A of part 1962 of this chapter.
(d) Notification of borrowers who have been discharged or who had
plans confirmed in bankruptcy prior to January 6, 1988, and who have not
been foreclosed or liquidated prior to January 6, 1988. The attorneys
of borrowers who have been discharged in Chapter 7 bankruptcy prior to
January 6, 1988, will not be sent Attachments 1 and 2 of Exhibit A
unless they have reaffirmed their FmHA debt and are 180 days delinquent.
However, the attorney of all other borrowers with confirmed Chapter 11,
12 or 13 plans who are 180 days delinquent will be sent Exhibit D of
subpart A of part 1962 of this chapter and Attachments 1 and 2 of
Exhibit A of this subpart. If the borrower has filed bankruptcy the
account will be serviced in accordance with instructions from the
Regional Office General Counsel (OGC) and in accordance with 1962.47 of
subpart A of part 1962 of this chapter.
(e) Notification of borrowers less than 180 days delinquent. The
County Supervisor will contact a delinquent farmer program borrower
within 30 days after the borrower's account becomes delinquent and will,
within 10 days, schedule a meeting to determine the reasons for the
delinquency. A record of this contact will be placed in the borrower's
loan file. If the borrower does not have the resources to bring the
account current, the County Supervisor will use the FmHA computer
program, Debt and Loan Restructuring System (DALRS) to consider the
Primary Loan Service program authorized by 1951.909 of this subpart in
accordance with the order of processing established by 1951.902 of this
subpart. If the County Supervisor determines that the use of the
Primary Service Programs will not assist the borrower in being able to
develop a feasible plan, the County Supervisor will give the borrower
Attachment 1 only of Exhibit A of this subpart. The County Office case
file will be documented to provide a record that the borrower was
provided a copy of Attachment 1 of Exhibit A of this subpart. If at the
initial conference it is determined that write-down is the only
alternative to keep the borrower in farming, the borrower's account will
be processed in accordance with 1951.909 of this subpart. Delinquent
accounts will not need to be 180 days delinquent in order to consider
writing down the debt.
(f) Notification of borrowers 180 days delinquent. Farmer Program
borrowers who are 180 days delinquent, and in financial distress which
exists because a borrower cannot develop a feasible plan by using
rescheduling, reamortization, limited resource rates or deferral at
maximum terms, will be sent Exhibit A with Attachments 1 and 2, ''Notice
of the Availability of Loan Service Programs,'' by certified mail,
return receipt requested. Borrowers who are 180 days delinquent and
have also violated their loan agreements with FmHA will be handled in
accordance with paragraph (g) of this section. Exhibit D of subpart A
of part 1962 of this chapter with Attachments 1 and 2, of Exhibit A of
this subpart will be sent to the borrower's attorney if the borrower has
filed bankruptcy. In addition to the requirements set forth above, FmHA
County Supervisors will provide Exhibit A with Attachments 1 and 2 of
this subpart to all Farmer Program borrowers, as follows:
(1) At the time an application is made for participation in an FmHA
loan service program, unless such application is the result of the
notice provided to the borrower in accordance with this section.
(2) On written request of any Farmer Program borrower, whether
delinquent or not, and
(3) If a borrower has not previously received Exhibit A with
Attachments 1 and 2 of this subpart, such Exhibit and Attachments will
be provided before the earliest of:
(i) Initiating any FmHA liquidation action,
(ii) Accepting a voluntary conveyance of security property, or the
borrower requesting permission to sell security property,
(iii) Accelerating payments on the loan,
(iv) Repossessing the borrower's property,
(v) Foreclosing on property, or
(vi) Taking any other collection action.
(g) Notification of borrowers in non-monetary default or for
delinquent borrowers also in non-monetary default or when a prior or
junior lienholder is foreclosing and FmHA is notifed of the foreclosure.
Farmer Program borrowers who are in non-monetary default will be sent
Attachments 1, 3, and 4 of Exhibit A of this subpart. If any problems
are encountered, OGC may be contacted for advice. If a case is in the
hands of the U.S. Attorneys, no loan servicing action will be taken
without the U.S. Attorneys' concurrence as set forth in 1962.40 of
subpart A of part 1962 of this chapter, or 1965.26 of subpart A of part
1965 of this chapter, as appropriate. Attachments 1, 3, and 4 of
Exhibit A will be sent by certified mail, return receipt requested. If
the borrower has filed bankruptcy the account will be serviced in
accordance with instructions from OGC. Any servicing request will be
processed as indicated in 1951.909 of this subpart. The account will
not be liquidated until the borrower has the opportunity to appeal any
adverse decision. After any final FmHA appeal decision, that does not
result in a resolution on the loan defaults, the account will be
accelerated as set forth in 1955.15 of part 1955 of this chapter.
(h) Request for primary or preservation loan service programs.
Farmer Program borrowers who are sent Exhibit A, with Attachments 1, 2
or Attachments 1, 3, and 4 must, within 45 days after receiving this
exhibit and attachments, request consideration for Primary Preservation
Loan Service programs by completing Attachment 2 or Attachment 4, as
appropriate, and returning to the FmHA County Supervisor with the
required forms completed. FmHA will proceed with liquidation action if
the borrower's request (Attachment 2 or Attachment 4) is not received
within 45 days or the borrower is sent Attachments 3 and 4 and does not
request a hearing within 30 days. If a borrower has moved and left a
forwarding address, the certified mail will be forwarded. If no
forwarding address is given, the mail will be returned to the County
Office unsigned. The 45 days response period will begin with the date
the Post Office stamps the return receipt indicating the letter cannot
be delivered to the borrower.
(1) An application for loan service programs will include the
following forms (available in FmHA County Office):
(i) Form FmHA 410-1, ''Application for FmHA Services,'' including a
current (within 90 days) financial statement of all individuals and
entities personally liable for the FmHA debt.
(ii) Form FmHA 410-8, ''Applicant Reference Letter.''
(iii) Form FmHA 410-9, ''Statement Required by the Privacy Act.''
(iv) Form FmHA 431-2, ''Farm and Home Plan,'' or any other plan
acceptable to FmHA that sets forth a plan of operation.
(v) Form(s) FmHA 440-32, ''Request for Statement of Debts and
Collateral.''
(vi) Form(s) FmHA 1910-5, ''Request for Verification of Employment.''
(vii) Form FmHA 1924-1, ''Development Plan,'' if development is
planned. Complete plans, specifications, and cost estimates must be
attached to Form FmHA 1924-1. When development is required to comply
with ''Highly Erodible and Wetland'' requirements, estimated costs and
the conservation plan developed by SCS will be used to satisfy this
requirement.
(viii) Form AD-1026, ''Highly Erodible Land and Wetland
Certification,'' is included as part of the complete application after
being completed by SCS. (This is available at SCS County Offices.)
(ix) Form SCS CPA-26, ''Highly Erodible Land and Wetland
Determination,'' if not previously on file with FmHA for the farm
operation(s). This form is included as part of the complete application
after being completed by SCS. (This form is available at SCS County
Offices.)
(x) An ASCS photo of the farm, on which the applicant must show the
homestead site to be considered in processing a request for Homestead
Protection. This information does not need to be provided if the
applicant does not want to be considered for homestead protection.
(xi) An ASCS photo of the farm, on which the applicant must show that
portion of the farm and approximate acres to be considered in a request
for debt restructuring provided for in the Farm Debt Restructure and
Conservation Easement program. This information does not need to be
provided if the applicant does not want to be considered for
conservation easement.
(2) The FmHA County Supervisor will provide the borrower with copies
of the above forms and forms manual insert (FMI) with each form when
Exhibit A is forwarded to farmer program borrowers. When requested by
the borrower, copies of FmHA regulations will be provided within 10 days
of the request. The borrower's County Office case file will be
documented to provide a record that the FmHA regulations were sent.
Borrowers who were sent Exhibit A and Attachments 1 and 2 (borrowers who
were 180 days delinquent) but not previously accelerated will be sent
Attachments 9 and 10 of Exhibit A if they fail to respond within 45 days
after they were sent Exhibit A and Attachments 1 and 2. If the borrower
has filed for bankruptcy, the account will be serviced in accordance
with instructions from OGC. The account will not be accelerated until
any appeal has been concluded.
(3) No more than one 45 day period will be provided to a borrower to
respond to the notice of loan service programs. Subsequent notices as
provided for in 1951.907 (f) and (g) of this subsection will not be
issued until the first notice is resolved.
1951.908 (Reserved)
07 CFR 1951.909 Processing Primary Loan Service Programs Requests.
(a) FmHA responsibilities. Within 60 days after receipt of
Attachment 2 or 4 and a completed application, the County Supervisor
will consider all Primary Service Programs options in this subpart. The
County Supervisor must use the FmHA computer program, Exhibit J, ''Debt
and Loan Restructuring System (DALR$),'' to attempt to find the
combination of loan service programs that will result in a feasible plan
for the borrower. Borrowers requests for loan servicing who have
disposed of all FmHA security property will be processed in accordance
with subpart B of part 1956 of this chapter. If the borrower's
completed application for Primary Loan Servicing includes a request for
the Farm Debt Restructure and Conservation Set-Aside Easement Program,
as indicated by the borrowers submission of the information required in
1951.907(h)(1)(xi) of this subpart; the County Supervisor will
determine if the borrower is eligible based on criteria as set forth in
Exhibit H of this subpart. If the borrower is eligible, the County
Supervisor will make an estimate of the inputs needed to permit the
DALR$ Computer Program to make the calculations of feasibility of the
Conservation Set-Aside Easement. The assumptions used to establish the
estimates will be documented in the borrower's case file and will be
based on the County Supervior's knowledge of the borrower's farm, land
values, the borrower's repayment ability, and the proposed easement
acreage. When the DALR$ calculations for restructuring are completed,
the borrower will be notified as set forth in paragraph (i) of this
section.
(b) Adverse determination. If the County Supervisor or approval
official determines that the borrower is not eligible for any of the
Primary Loan Service Programs or restructuring is not feasible because
of debt held by other lenders, the borrower will be advised of mediation
or meeting of creditors as provided in 1951.912 of this subpart. If
mediation or the meeting of creditors does not result in a feasible
plan, the borrower will be sent the Notice of Intent to Accelerate or to
continue acceleration by using Attachments 5 and 6 of Exhibit A of this
subpart. This will list and explain the options available to the
borrower. The notice advises the borrower of the right to a meeting,
right to appeal, right to an independent appraisal, and opportunity to
buy the loans at net recovery value. The appeal, if any, will be
completed before FmHA begins any further processing of the borrowers
Preservation Loan Service Programs request. Once the appeal is
concluded and the adverse decision on restructuring is upheld, and if
the borrower has been determined eligible for the preservation programs,
FmHA will complete the processing of the borrower's application for
either Homestead Protection, Leaseback/Buyback, or both in accordance
with 1951.911 of this subpart. No acceleration or foreclosure will
occur until the appeal process has been completed for both Primary and
Preservation Loan Service Programs.
(c) Eligibility. The County Supervisor or approval official
authorized by 1951.903(b) of this subpart must find that the borrower
who has applied for Primary Loan Service Programs meets all of the
following requirements:
(1) The delinquency or financial stress does exist and any
delinquency is due to circumstances beyond the control of the borrower
due to a reduction in income which reduces the operator's cash flow to a
point where outflows exceed inflows and which causes the need for
Primary Loan Service Programs. A reduction of income does not by itself
mean that the borrower is eligible. Acceptable reasons for reductions
of income which could make a borrower eligible for Primary Loan Service
Programs include:
(i) The reduction in essential income from a non-farm job due to
unemployment or underemployment of the borrower-operator or spouse
caused by circumstances beyond the borrower's control; or
(ii) Illness, injury, or death of an individual borrower,
stockholder, member or partner who operates the farm; or
(iii) Natural disasters, an outbreak of uncontrollable disease,
and/or uncontrollable insect damage which caused severe loss of
agricultural production that reduced the repayment ability of the
borrower so that scheduled payment cannot be made; or
(iv) Economic factors that are widespread and not limited to an
individual case, such as high interest rates or loan market prices for
agricultural commodities as compared to production costs, that reduce
the repayment ability of the borrower so that the scheduled payments
cannot be made.
(2) The borrower has acted in good faith by demonstrating sincerity
and honesty in meeting agreements set forth on Form FmHA 1962-1,
''Agreement for the Use of Proceeds/Release of Chattel Security,'' and
agreements made with FmHA. Any allegations of fraud, waste, and
conversion used in order to deny borrowers' requests for Primary Loan
Service Programs will be substantiated by FmHA, with a written legal
opinion from the Office of General Counsel, before denying the
borrower's requests for such programs.
(3) All applications received from borrowers who apply for Primary
Loan Servicing, even though they are not eligible, must be processed to
determine whether or not a feasible plan of operation can be developed.
Borrowers who do not meet the eligibility criteria as set forth in
paragraphs (c) (1) and (2) of this section, must be processed in the
same manner as a borrower who does not meet the feasibility
requirements. See 1951.909(h)(3)(ii) of this subpart.
(d) FmHA's feasibility determinations. The County Supervisor must
determine that the borrower will be able to:
(1) Meet the necessary family living and farm operating expense; and
(2) Service all debts, including those of the loans restructured;
and
(3) Except for the establishment of a conservation easement under
Exhibit H of this subpart, the loan, if restructured, must result in a
net recovery to the Government, during the term of the loan as
restructured, that would be more than or equal to the net recovery to
the Government from an involuntary liquidation or foreclosure on the
property securing the loan(s). A comparison to net recovery to the
Government will not be made when using conservation easements.
(e) Primary Loan Service Programs. Any Farmer Program borrower may
request Primary Loan Service Programs described in this subpart at any
time. However, borrowers must show that they are not able to pay their
debt as scheduled before FmHA will approve Primary Loan Service
Programs. Rescheduling, reamortization, consolidation, or deferral may
be utilized for any eligible borrower. Debt write-down will only be
used for delinquent borrowers who cannot develop feasible plans of
operations without debt write-down.
(1) Consolidation and rescheduling of OL, SL, and EO loans, EE
operating-type loans and EM loans made for Subtitle B purposes including
EM loss loans. This subsection explains how to consolidate and/or
reschedule existing loans, providing the borrower agrees to such
actions. When the County Supervisor determines that consolidation
and/or rescheduling will assist in the orderly collection of the loan,
the County Supervisor should take such action provided all of the
following conditions exist:
(i) The borrower meets the eligibility requirements in 1951.909(c)
of this subpart;
(ii) Such action is not taken to circumvent FmHA's graduation
requirements;
(iii) The borrower's account is not being serviced by the Office of
the General Counsel (OGC) or the U.S. Attorney and there are no FmHA
plans to have the account serviced by either of these offices in the
near future;
(iv) Loans may be rescheduled or reamortized, as appropriate, to
bring the account current or to keep the account from becoming
delinquent. A sufficient number of notes including all delinquent notes
will be rescheduled to permit the development of a feasible plan of
operation.
(v) The borrower will comply with the highly Erodible Land and
Wetland Conservation provisions of Exhibit M of subpart G of part 1940
of this chapter.
(vi) Loans secured by real estate will not be consolidated and/or
rescheduled, until the County Supervisor reviews the Government's real
estate lien priority and value of security and decides that such an
action will be in the best interest of the Government and the borrower.
If there are any liens which were not in existence at the time the note
was signed, the County Supervisor will ask the Office of the General
Counsel (OGC) for an opinion as to what lien position the Government
will have if a new note is taken.
(vii) Only loans of the same type and interest rate will be
consolidated.
(viii) EM actual loss and SL loans will not be consolidated.
(ix) The County Supervisor will not consolidate a loan serviced under
subpart L of this part with another loan.
(x) Loans that have been deferred under this section will not be
consolidated and/or rescheduled during the deferral period.
(xi) If loans with a debt set-aside are to be rescheduled, the debt
set-aside must be cancelled at the time the consolidation and/or
rescheduling is granted. The borrower must agree in writing to
cancellation of the debt set-aside if the consolidation and/rescheduling
is to be approved. If the set-aside portion is not cancelled, then only
the non set-aside portion will be rescheduled.
(xii) Terms of consolidated and/or rescheduled loans are as follows:
(A) Consolidated and/or rescheduled loans will be repaid according to
the borrower's repayment ability, but will not exceed 15 years from the
date of the consolidation and/or rescheduling action, except:
(B) Repayment of loans solely for recreation and/or nonfarm
enterprise purposes may not exceed seven years from the date of the
consolidation and/or rescheduling action (the date of the new note is
signed).
(C) Repayment of EE loans may not exceed 20 years from the date of
the original note.
(xiii) Interest rates of consolidated and/or rescheduled loans will
be as follows:
(A) The interest rate for consoldiated and/or rescheduled loans will
be the lesser of the current interest rate for that type of loan or the
lowest original loan note rate on any of the original notes being
consolidated and/or rescheduled. In the case of an OL-limited resource
loan, it will be the lesser of the current limited resource OL loan rate
or the original note rate. The interest rate for loans rescheduled but
not consolidated will be the lesser of the current interest rate for
that type of loan or the original loan note rate.
(B) Limited Resource Rate. At the time of the consolidation and/or
rescheduling action, OL loans may be assigned a limited resource rate
if: (1) The borrower meets the requirements for the limited resource
interest rate, and (2) a feasible plan cannot be developed at regular
interest rates and maximum terms permitted in this section.
(xiv) The original (old) note(s) will be marked ''Rescheduled'' and
stapled to the new rescheduled promissory note and will be filed in the
operation file. Copy(ies) for the borrower(s) case file should be
marked and stapled the same and filed in position 2 of the case file.
If a transfer is involved, assumption agreement(s) will be marked and
stapled with the note(s) and copies are filed as indicated above. If
part of a note is written down, the written down note will be marked
''Rescheduled with Debt Write Down,'' and will be filed as indicated
above in this paragraph.
(xv) The amount of outstanding accrued interest more than 90 days
overdue and any outstanding credit advances made on the loan will be
added to the principal at the time of consolidation and/or rescheduling
(the date the new note is signed by the borrower). See Section II E of
Exhibit J of this subpart for an explanation of how to schedule payment
of interest not more than 90 days overdue.
(2) Reamortization of FO, SW, RL, RHF, EE, or EM loans made for real
estate purposes. This subsection explains how the FmHA County
Supervisor can reamortize existing loans. Farmer program non-program
(NP) loan debtors are not eligible to receive any program benefits
including reamortization (see 1965.34 of subpart A of part 1965 of this
chapter). When the County Supervisor determines that a reamortization
action will assist in the orderly collection of the loan, the County
Supervisor should take such action, provided:
(i) The borrower meets the eligibility requirements of 1951.909(c)
of this subpart;
(ii) Such actions is not taken to circumvent FmHA's graduation
requirements;
(iii) The borrower's account is not being serviced by the Office of
the General Counsel (OGC) or the U.S. Attorney, and there are not plans
to have the account serviced by either of these offices in the
foreseeable future;
(iv) A feasible plan for the borrower cannot be developed with the
existing repayment schedule. A sufficient number of notes including all
delinquent notes will be reamortized to permit the development of a
feasible plan of operation;
(v) The borrower will comply with the Highly Erodible Land and
Wetland Conservation requirements of Exhibit M of subpart G of part 1940
of this chapter.
(vi) Loans that have been deferred in this subpart will not be
reamortized during the deferral period.
(vii) If loans with debt set-aside provisions are to be reamortized,
the debt set-aside will be cancelled. If the set-aside portion of the
loan(s) is not cancelled, then only the non set-aside portion will be
reamortized.
(viii) Terms of repayment of reamortized loans are as follows:
(A) Reamortized installments usually will be scheduled for repayment
within the remaining time period of the note or assumption agreement
being reamortized. If repayment terms are extended, the new repayment
period may not exceed 40 years from the date of the original note or
assumption agreement or the useful life of the security, whichever is
less. RHF loans may not exceed 33 years from the date of the original
note or assumption agreement.
(B) The FmHA's lien priority may be affected if the final due date of
the original loan is extended. A State supplement will be issued to
provide instructions on the effect that a change in the final due date
has on security instruments and the actions necessary to retain the
Government's lien priority. The State supplement will also include
instructions for releasing the original security instrument when a new
one is obtained.
(C) The amount of accured interest more than 90 days overdue and any
advances charged to the borrower's account will be added to the
principal at the time of the reamortization action (the date the new
note is signed by the borrower). If there are not deferred
installments, the first installment payment under the reamortization
will be at least equal to the interest amount which will accrue on the
new principle between the date the Form FmHA 1940-17 is processed and
the next installment due date. See Section II E of Exhibit J of this
subpart for an explanation of how to schedule payments of interest not
more than 90 days overdue.
(ix) Interest.
(A) The interest rate will be the current interest rate in effect on
the date of reamortization (the date the new note is signed by the
borrower), or the interest rate on the original Promissory Note to be
reamortized, whichever is less. In the case of a limited resource loan,
it will be limited resource FO loan rate or the original loan note rate;
whichever is less.
(B) At the time of the reamortization, an FO loan may be changed to a
limited resource interest rate if: (1) The borrower meets the
requirements for a limited resource interest rate, and (2) a feasible
plan cannot be developed at regular interest rates and at the maximum
terms permitted in this section.
(x) The amount of outstanding accrued interest more than 90 days
overdue and any outstanding credit advances made on the loan will be
added to the principal at the time of reamortization (the date the new
note is signed by the borrower). See Section II E of Exhibit J of this
subpart for an explanation of how to schedule payment of interest not
over 90 days overdue.
(xi) The original (old) note(s) will be marked ''Reamortized'' and
will be stapled to the new promissory note and filed in the operational
file. Copies for the borrower(s) case file should be marked and stapled
the same and filed in position 2 of the case file. If a transfer is
involved, assumption agreement(s) will be marked and stapled with the
note(s) and copies filed as indicated above. If a part of a note is
written down, the written down note will be marked ''Reamortized with
Debt write Down'' and will be filed as indicated above in this
paragraph.
(3) Deferral of existing OL, FO, SW, RL, EM, EO, SL, RHF, and EE
loans.
(i) Loan deferrals. Deferrals will be considered by FmHA only after
it has been determined that consolidation, rescheduling, and
reamortization, in accordance with this subpart, will not provide a
feasible plan.
(ii) Conditions. In order to be considered for a deferral, the
borrower must meet all of the following conditions:
(A) The need for the deferral must be temporary. To be ''temporary''
means that the borrower will be able to show to the satisfaction of FmHA
that they will be able to resume payment on the debt by the end of the
deferral period, or the new payments, as established by using
consolidation, rescheduling, or reamortization can be resumed at the end
of the deferral period.
(B) Continuation of loan payments as presently scheduled without
change, will unduly impair the borrower's standard of living. An unduly
impaired standard of living is a condition whereby the borrower, due to
circumstances beyond the borrower's control, is unable to pay essential
family living expenses (partnerships, joint operators, corporations, and
cooperatives do not have family living expenses), pay normal farm
operating expenses, including reasonable and customary hired labor
and/or salary paid to the operator(s) of a partnership, a joint
operation, a corporation, or a cooperative, maintain essential chattels
and real estate, and meet the schedule payments of all debts.
(iii) FmHA's determinations. The FmHA approval official must:
(A) Determine that the borrower meets the eligible requirements of
1951.909(c) of the subpart;
(B) Determine that a deferral of payments is necessary and
appropriately document the conditions causing the need for deferral;
(C) If a feasible plan cannot be developed after consideration of a
deferral, the County Supervisior will inform the borrower about the
Softwood Timber (ST) loan program authorized by Exhibit G of this
subpart by sending Attachment 1 of Exhibit G of this subpart by
certified mail, return receipt requested, within 5 days after the
adverse deferral determination. If the borrower requests the County
Supervison to determine that an ST loan may allow the borrower to
continue to farm, within 15 days of the borrower's receipt of Attachment
1, the County, Supervisor will determine if the borrower is eligible,
based on criteria as set forth in Exhibit G of this subpart. If the
borrower is eligible the County Supervisor will help the borrower to
develop a plan to determine if a feasible operation can be developed
utilizing this program. The discussion will be documented in the
borrower's case file.
(iv) FmHA loan deferral considerations.
(A) A sufficient number of loans must be considered for deferral to
permit the borrower to have a feasible plan.
(B) A deferral plan may include a reorganization of the farming
operation, including the use of new enterprises, to overcome existing
financial, economic or other limitations of the operation. If the
proposed restructuring requires capital expenditures, a subordination or
additional loan will be considered. Deferral of additional loan
installments beyond those needed to allow the borrower to develop a
feasible plan will not be used to create additional cash reserve for
capital purchases. Such purchases are not considered operating
expenses.
(C) A typical year during the deferral period is a year which most
closely represented the borrower's operation for the entire deferral
period. There may be no typical year for farming or ranching operations
undergoing a major reorganization. If there is no typical year, then it
will be necessary to develop a plan of operation for each year of the
deferral.
(D) The deferral of loan installments is not intended to create a
high net cash reserve where revenue substantially exceeds expenses. If
the deferral of a complete note would cause a high net cash reserve
during the entire deferral period, a full deferral should not be
granted. In such a case, a partial, deferral should be considered to
obtain a feasible plan of operation. The same approach should be used
for situations in which there is no typical year and debt payments must
vary throughout the deferral period.
(E) The borrower must submit feasible plans of operation to support
any deferral request. Plans of operation in conjunction with loan
deferrals must be realistic and supported by the borrower's actual
records.
(v) Additional and subsequent deferrals. If, during the period of
the initial deferral, the borrower is unable to make the scheduled
payments, the borrower may again request Primary Loan Service actions.
It may be necessary to cancel existing deferrals or to defer additional
loans to develop a feasible plan in such cases. If it is necessary to
defer additional loans, such action will be taken if the deferral will
result in a greater net recovery to the Government than debt write-down.
Borrowers may obtain subsequent deferrals after the deferral period
provided the conditions of this subsection are met.
(vi) Special debt set-aside loans. If a borrower desires a deferral
for a loan that has a portion of the debt set-aside, the set-aside
portion will be cancelled at the time the deferral is granted. The
borrower may retain the set-aside loan and request a deferral on other
loans. A borrower who desires a deferral of a set-aside loan must first
agree in writing to the cancellation of the set-aside if the deferral is
approved.
(vii) Term and interest rate. A deferral period will not exceed five
(5) annual installments. Deferral interest rates will be determined as
specified in 1951.909(e)(1)(xiii) and 1951.909(e)(2)(ix) of this
subpart.
(A) All loans being deferred will be consolidated, rescheduled or
reamortized, as applicable. The promissory note rescheduled,
reamortized or consolidated for the deferral will show ''zero'' as the
installments due during the period of the deferral if the whole note is
deferred and will not be changed during the deferral period unless the
conditions of of 1951.909(e)(3)(v) of this subpart are met. The County
Supervisor will determine the amount of interest that will accrue, if
any, during the deferred period. This interest will be repaid in equal
amortized installment during the term of the loan remaining after the
deferral period. The calculated installments will be added to the
remaining installments for the remaining principal balance and inserted
on the promissory note as a scheduled installment for the remaining
period of the loan. The Finance Office will apply the payments made on
the note in accordance with this subpart. The amount of outstanding
accrued interest more than 90 days overdue and any outstanding credit
advances made on the loan will be added to the principal at the time of
the deferral (the date the new note is signed by the borrower). See
Section II E of Exhibit J of this subpart for an explanation of how to
schedule payment of interest not over 90 days overdue.
(B) The FmHA field office will process the reamortization,
reschedule, or consolidation via the FmHA field office terminal system
in accordance wtih Form FmHA 1940-17. The FmHA Finance Office will
remove the borrower's name from the delinquency report.
(C) If a deferral is approved, the borrower's name and the date of
approval will be recorded and maintained in accordance with subpart A of
part 1905 of this chapter (available in any FmHA office). The Finance
Office will provide the County Office with a quarterly status report for
each borrower who has received a deferral.
(D) Six months prior to the end of the deferral period the County
Supervisor will notify the borrower in writing of the expiration of the
deferral and the amount and date of the borrower's first upcoming
installment of the FmHA debt.
(E) The County Supervisor must notify the Finance Office of any
cancellation of a deferral by letter.
(viii) Increase in repayment ability. At the time the County
Supervisor makes the analysis required by 1924.60 of subpart B of part
1924 of this chapter, the County Supervisor will determine whether the
borrower has had an increase in income and repayment ability. If an
income increase is substantial enough to enable the borrower to
graduate, the case will be handled in accordance with subpart F of part
1951 of this chapter. If an increase would enable the borrower to make
some payments during the deferral period, the County Supervisor will, in
writing, ask the borrower to sign a Form FmHA 440-9, ''Supplementary
Payment Agreement,'' within 30 days of the date of the written request.
The letter will provide the borrower with the right to appeal as set
forth in subpart B of part 1900 of this chapter. When doing the
analysis to determine whether there is a substantial increase in income
and repayment ability, the County Supervisor will determine whether this
increase exists by comparing it to the original plan developed in the
deferral application and also to plans developed for the current
operating year to determine that the excess income is not needed for
essential living and operating expenses or scheduled debt payment. If
the borrower does not sign a Form FmHA 440-9 or appeal the request for a
supplement payment within the required time, and/or does not honor the
terms and conditions of the repayment agreement, such actions will be
considered abuse of the program. The borrower's account will be handled
as set forth in 1951.907(g) of this subpart.
(4) Special debt set-aside provision for a portion of the insured
loan indebtedness of farmer program borrowers (NOT AVAILABLE AFTER
SEPTEMBER 30, 1985).
(i) Period of time available. The authorities contained in this
section were available to financially stressed FmHA farmer program
borrowers (OL, FO, EO, SW, EE, EM, RL, but not association recreation
loans and/or only those rural housing (RH) loans which were made for
farm service buildings) until September 30, 1985. The County Supervisor
will maintain a record of approval special set-aside amounts, in
accordance with subpart A of part 1905 (available in any FmHA office),
and establish the set-aside portion of the debt as a separate account,
in accordance with the FMI for Form FmHA 1951-6. The FmHA field office
will establish the descriptive code via the FmHA field office terminal
system.
(ii) Agency Finance Office Actions are as follows:
(A) The Finance Office will provide each county office with a
quarterly status report for each borrower receiving a set-aside.
(B) Six months prior to the end of the set-aside period, the Finance
Office will notify the County Supervisor of the amount of the borrower's
upcoming installment(s) due date.
(C) The interest rate on the set-aside portion of the note, after the
set-aside period has passed, will be the same rate as on the
non-set-aside portion of the note.
(iii) Cancellation of special set-aside agreements may take place
under the following circumstances:
(A) Borrowers who incur debt or purchase items not planned for in the
Farm and Home Plan without the County Supervisor's approval, violate any
of the covenants contained in any security instruments, loan agreements,
or cease farming will have their set-aside cancelled by the County
Supervisor.
(B) The County Supervisor will send written notice by certified mail,
return receipt requested, to the borrower of FmHA's intention to cancel
the set-aside. This notification will set forth the specific facts
requiring cancellation and inform the borrower of appeal rights in
accordance with subpart B of part 1900 of this chapter. If the borrower
does not appeal or if the FmHA decision to cancel is upheld in an
appeal, the borrower will be notified in writing of cancellation date of
the set-aside. The actual cancellation action is not appealable.
(C) The County Office will be responsible for the cancellation action
by processing Form FmHA 1951-6 in accordance with the FMI. The FmHA
field office will remove the descriptive code via the FmHA field office
terminal system.
(iv) Requirements for servicing set-aside loans are as follows:
(A) Loan notes which are rescheduled and contain set-aside provisions
in accordance with this section will not be consolidated during the
set-aside period unless the borrower agrees in writing to the
cancellation of the set-aside if consolidation is approved.
(B) Loan notes which are rescheduled and do not contain set-aside
provisions in accordance with this section may be rescheduled or
reamortized in accordance with this subpart during the set-aside period.
The rescheduling or reamortization action may be the limited resource
rate, if applicable. The set-aside amount will stay in effect, but will
not be increased or intensified beyond the original five-year term. The
County Office will forward to the Finance Office Exhibit B of subpart A
of part 1951, any time the interest rate is changed on a note during the
set-aside period. The top of the form will be marked in red ''Interest
Change in Set-Aside.''
(v) Deficiency judgements. Interest will begin to accrue (at the
higher of the current interest rate or the judgement interest rate) on
the set-aside portion if FmHA receives a deficiency judgement.
(5) Write-down of FmHA loans. Priority consideration will be given
to writing down farmer program loans whenever such write-down will
facilitate keeping the farmer on the farm or ranching operation. The
following conditions shall be met for write-down of FmHA loans:
(i) No other Primary Loan Service Program nor any combination thereof
will produce a feasible plan that will allow the borrower to continue
the operation;
(ii) A feasible plan must be developed that will result in a net
recovery to the Government which is equal to or more than a net recovery
from an involuntary liquidation or foreclosure;
(iii) The borrower must present a preliminary plan that demonstrates
that the borrower will be able to:
(A) Meet the necessary family living and farm operating expenses, and
(B) Service all existing and planned debts, and
(C) Comply with the Highly Erodible Land and Wetland Conservation
requirements of Exhibit M of subpart G of part 1940 of this chapter, if
applicable, and
(D) Borrower must agree to a Shared Appreciation Agreement if the
loan(s) is secured by real estate.
(iv) The borrower should participate in a meeting with creditors if
it is necessary that the borrower's creditors make some debt adjustments
that will permit the development of a feasible plan. This meeting may
be in a Certified State Agricultural Mediation Program or a meeting of
creditors arranged by FmHA, the borrower, or other creditor. Failure by
the borrower to participate in meetings with FmHA and other creditors
will be noted in the case file. Failure to participate will be listed
as a reason for the intended adverse action on Attachment 5 Exhibit A of
this subpart.
(v) Rates and Terms. Remaining debt after restructuring with the
Primary Loan Servicing Programs will be rescheduled, reamortized, or
deferred in accordance with paragraph (e) of this section. The borrower
must agree in writing to the cancellation of a fully or partially
set-aside portion of the loan(s) if a write-down is approved.
(f) Determining value of net recovery from involuntary liquidation.
Within 60 days of the County Supervisor's receipt of a complete
application which requests Primary and Preservation Loan Service
Programs, the County Supervisor must make the calculations required in
this section.
(1) The County Supervisor will determine the net recovery to the
Federal Government equivalent to involuntary liquidation of the
collateral securing the FmHA debt in accordance with Exhibit J, ''Debt
and Loan Restructuring System,'' and will follow the guidance provided
by State supplements and Exhibit I, ''Guidance for Determining
Adjustments for Net Recovery Value of Collateral.'' The County
Supervisor will determine the current market value of the collateral
including tangible and intangible property in existence and of record in
accordance with subpart A of part 1809 of this chapter (FmHA Instruction
422.1) for real estate property, and on Form FmHA 440-21, ''Appraisal of
Chattel Property (available in any FmHA office).'' Collateral may
include real estate, chattels, and tangible or intangible property.
Chattels include machinery, equipment, livestock, growing crops, and
crops in storage. Tangible or intangible property may include accounts
receivable, Government Payments. From the current market value of the
collateral, the following adjustments will be made:
(i) Subtract the amount which would be required to pay prior liens on
the collateral property;
(ii) Subtract taxes and assessments, depreciation, management costs,
and interest cost to the Government based on the 90-day Treasury Bills
(published in Exhibit B of FmHA Instruction 440.1, available in any FmHA
office). Taxes and assessments, depreciation, management costs, as well
as interest costs will be calculated on the current market value of the
property for the average inventory holding period. The holding period
for suitable inventory farm property, will be established by each State
as of July 1 each year.
(iii) Adjust the current market value for estimated increases or
decreases in value of the property for the holding period specified in
paragraph (f)(2) of this section.
(iv) Subtract resale expenses, such as repairs, commissions, and
advertising;
(v) Other administrative and attorney's expenses; and
(vi) Add income which will be received after acquisition.
(2) Determining costs of involuntary liquidation of collateral for
farm loans. The State Directors will analyze the costs of involuntary
liquidation within the geographic areas of their jurisdiction and issue
a State supplement of estimated costs and average holding time to be
used as guidelines by County Supervisors in making calculations of net
recovery value under this subsection. Exhibit I, ''Net Recovery Value
Determination,'' will be used in establishing the guidelines contained
in the State supplement. Such costs analyses will be carried out in
July of each year. State Directors will consult with State Directors of
adjoining States, other lenders, real estate agents, auctioneers, and
others in the community to gather and analyze the information specified
in this subpart.
(g) Determining net recovery value resulting from primary servicing.
The value of the restructured debt will be based on the present value of
payments the borrower would make to the FmHA using any combination of
primary loan service programs that will provide a feasible plan.
Present value is a calculation concept which assigns a lower current
value to dollars received in later years than to dollars received at the
present time. County Supervisors will use a discount rate based on
90-day Treasury Bills as of the date the borrower files the application
for restructuring. The National Office will publish the 90-day Treasury
Bill rate in Exhibit B of FmHA Instruction 440.1 (available in any FmHA
office).
(h) Notification requirements. (1) If the calculations show that the
value of the restructured debt is greater than or equal to the net
recovery value of the collateral securing the debt, the County
Supervisor will forward to the State Director the borrower's Farm and
Home Plan and the original printout of the DALR$ calculations. The
County Supervisor will certify that the borrower meets all requirements
for debt restructuring with the write-down amount specified on the
printout. The State Director's authorization to the County Supervisor
to proceed with the write-down will be evidenced by the State Director's
signature affixed to the original copy of the DALR$ printout returned to
the County Supervisor. Within 60 days after receiving a complete
application the County Supervisor will notify the borrower of the
results of the calculations by sending Exhibit F of this subpart,
certified mail, return receipt requested and offer to restructure the
debt. A printout of the DALR$ calculations will be attached to Exhibit
F, ''Notifications of Approval Offer to Debt Restructure.'' Exhibit F
will inform the borrower(s) of FmHA's offer to restructure the debt. If
the borrower accepts the offer, within 45 days of the borrowers receipt
of Exhibit F, the County Supervisor will restructure the debt within 45
days after receipt of the written notice of the borrower's acceptance of
FmHA's offer to restructure the debt. If the borrower, both accelerated
and nonaccelerated, do not respond to Exhibit F within 45 days, or
declines FmHA's offer to restructure the debt, the County Supervisor
will send Attachments 9 and 10 of Exhibit A of this subpart. If
Attachment 10 is not returned within 30 days of the borrower's receipt
of the attachments, the account will be accelerated or foreclosed in
accordance with 1955.15 of subpart A of part 1955 of this chapter.
(2) If the borrower previously returned Attachment 2 or 4 to Exhibit
A of this subpart within 45 days, requesting a Farm Debt Restructure and
Conservation Set-Aside Easement Program, by submitting an ASCS photo of
the farm showing the portion of the farm and approximate acres to be
considered in their request, the County Supervisor will proceed with
processing the request for debt relief. The request will be processed
as set forth in Exhibit H of this subpart.
(3) If the DALR$ calculations indicate a feasible plan of operation
cannot be developed considering all Primary Loan Service Programs,
Softwood Timber, or Conservation Set-Aside Easement Programs, the County
Supervisor will take the following actions within 15 days from the date
of the determination that the borrower's debt cannot be restructured as
requested.
(i) When the borrower has creditors other than FmHA, and a feasible
plan of operation cannot be developed after consideration of Primary
Loan Service, Softwood Timber and Farm Debt Restructure and Conservation
Set-Aside Easement Programs, the borrower will be sent Exhibit E,
''Notification of Request for Mediation or Meetings of Creditors,'' of
this subpart, certified mail, return receipt requested. A printout of
the DALR$ calculations will be attached to Exhibit E. Exhibit E will
inform the borrower that FmHA is requesting mediation or a meeting with
the borrower's undersecured creditors holding a substantial portion of
the borrowers debt, in an effort to obtain a debt adjustment agreement
with such creditors which may permit the development of a feasible plan
of operation. If the borrower does not respond to Exhibit E within 30
days (a response is only required in States without a certified
mediation program), the County Supervisor will send Attachments 5 and 6
of Exhibit A of this subpart, certified mail, return receipt requested.
(ii) If mediation or the voluntary meeting of creditors is not
successful, the borrower will be sent Attachments 5 and 6 of Exhibit A
of this subpart, certified mail, return receipt requested, within 15
days of the unsuccessful mediation or meeting. The DALR$ computer
printout will be attached to Attachment 5 of Exhibit A. Attachment 5 of
Exhibit A will inform the borrower of further rights. This section also
applies to borrowers whose accounts were accelerated between November 1,
1985, and May 7, 1987, and other accelerated borrowers whose accounts
have not been foreclosed or liquidated.
(iii) As stated in Attachment 5, the borrower will have 45 days after
the receipt of the notification of ineligibility to purchase the
security property at net recovery value, provided the value of the
restructured loan is less than the recovery value. FmHA will not
provide credit for this transaction.
(iv) Prior to the buy out at net recovery value, the borrower must,
as a condition of the sale, enter into written agreement by executing
Exhibit C, ''Net Recovery Buyout Recapture Agreement,'' of this subpart.
The County Supervisor will process the net recovery buyout payment and
will input the information to establish the recapture receivable account
via the multi-function workstation. A new mortgage or deed of trust
will be taken for the best lien obtainable. The new mortgage or deed of
trust will describe Exhibit C and enter the amount due under the net
recovery buyout recapture agreement. The new mortgage or deed of trust
will secure repayment of the net recovery buyout recapture agreement.
The old mortgage or deed of trust will be released in accordance with
1951.909(k) of this subpart.
(i) Administrative appeals. (1) If the borrower appeals the decision
to deny Primary Loan Service Programs, the 45 day period for the
borrower to pay FmHA net recovery value of the collateral will start on
the day the borrower receives the final appeal or review upholding the
initial decision. Such decision letter will be sent to the borrower by
the Hearing Officer or Review Officer certified mail, return receipt
requested. The return receipt is to be sent to the address of the
County Office by the Hearing and/or Review officers.
(2) If the administrative appeal process results in a determination
that the borrower is eligible for debt write-down, the County Supervisor
will write-down the loan in accordance with this subpart, taking into
consideration the write-down recommendations, if any, of the Appeal
Officer. If the administrative appeal process results in a
determination that the borrower is ineligible for debt write-down, the
borrower will be sent Exhibit K and Attachment 1 of Exhibit K, advising
the borrower of FmHA's intent to continue processing the application for
Preservation Loan Service Programs as set forth in 1951.911 of this
subpart. If the borrower does not return Attachment 1 of Exhibit K
within 15 days of the date that Exhibit K is sent, the County Supervisor
will continue to process the borrower preservation loan service request
in accordance with 1951.911(a)(5) of this subpart. The account will
not be accelerated or forclosure will not continue, until the borrower
has the opportunity to appeal any denial of the Preservation Loan
Service request. If the borrower returns Attachment 1 of Exhibit K
within 15 days of the date Exhibit K is sent, the account will be
accelerated or foreclosure will proceed in accordance with 1955.15 of
subpart A of part 1955 of this chapter. When the account is accelerated
the borrower will not be considered for further loan assistance under
1941.14 of subpart A of part 1941 of this chapter.
(3) If the borrower appeals the current market appraisal completed by
FmHA, the borrower may obtain an appraisal by an independent appraiser
selected from a list provided by FmHA in accordance with 1900.57(l) of
subpart B of part 1900 of this chapter. The borrower does not have to
exclusively appeal the current market appraisal in order to be entitled
to the independent appraisal, but simply must appeal the denial of
Primary Loan Service Programs in which the appraisal, as part of the net
recovery value calculation, is relevant. The cost of the appraisal must
be paid by the borrower. The independent appraisal will be considered
by the appeal officer. The independent appraiser must meet at least one
of the following qualifications as determined by the FmHA County
Supervisor:
(i) Certification by a National or State Appraisal Society.
(ii) If a certified appraiser is not available the appraiser may be
one who meets the criteria for certification in a National or State
appraisal society.
(iii) The appraiser has recent, relevant documented appraisal
experience or training, or other factors clearly establishing the
appraisers qualifications.
(j) Processing of write-down. Borrowers who are eligible for Primary
Loan Service Programs with write-down will have their loans rescheduled
or reamortized in accordance with this subpart. All loan servicing
actions approved in connection with the write-down must take place
simultaneously. The borrower and County Supervisor will complete
Exhibit D to this subpart, ''Shared Appreciation Agreement.'' Exhibit D
provides for recapture as specified in 1951.914 of this subpart of a
portion of any appreciation in the value of the real property securing
the debt remaining after the write-down. The FmHA DALR$ computer
program will be used to determine the notes to be written down.
(1) A separate Form FmHA 1940-17, ''Promissory Note,'' will be used
for each note or assumption agreement being reamortized.
(2) A Form FmHA 1940-17 will be completed, signed, and distributed as
provided in the FMI.
(3) The loan servicing action date of approval is also the date that
will be inserted on the rescheduled or reamortized Form FmHA 1940-17 and
on Exhibit B of this subpart, ''Noncash Credit for Farmer Program Loans
When Establishing Recapture Receivable.''
(4) A Form FmHA 1940-17 may be processed provided the County Office
has possession of the original note being reamortized. If the County
Office does not have possession of the original note, the County
Supervisor will ask the FmHA Finance Office to return the original note
so it is in the County Office before Form FmHA 1040-17 is processed.
(5) The FmHA field office will process the reamortization or
consolidation via the FmHA field office terminal system in accordance
with Form FmHA 1940-17, and complete Exhibit D of this subpart.
(6) The original (old) note(s) will be marked ''Rescheduled or
Reamortized with Writedown Debt'' and stapled to the new rescheduled or
reamortized promissory note(s) and will be filed in the promissory note
file in the operation file. Copies for the borrower(s) case file should
be marked and stapled the same and filed in position 2 of the case file.
If a transfer is involved, assumption agreement(s) will be marked and
stapled with the note(s) and copies will be filed as indicated above.
(k) Real estate liens. If the write-down of the borrower's real
estate debt results in all debts to FmHA being written down, FmHA real
estate liens will be maintained and will not be subordinated to increase
the amount of the prior liens during the shared appreciation period.
Shared appreciation agreements will be serviced in accordance with
1951.914 of this subpart. Upon payment by the borrower of net recovery
in a buy out, the original mortgage or deed of trust will be released on
real estate for the FmHA loans bought out. The notes will be marked
''satisfied at net recovery value'' and returned to the debtor or the
debtor's legal representative. Net recovery buyout recapture agreements
will be serviced in accordance with 1951.913 of this subpart.
(l) Non real estate liens. If a borrower does not own any real
estate there will be no recapture and the borrower will not be required
to enter into a recapture agreement. Upon payment by the borrower of
Net Recovery Value in a buy out, the original security instruments will
be released on chattel security for the FmHA loans bought out. The
notes will be marked ''satisfied at net recovery value'' and returned to
the debtor or the debtor's legal representative.
(m) Notes. Notes evidencing debts written off as a result of Primary
Servicing debt write-down or buy-out at net recovery value will be
returned to the debtor or to the debtor's legal representative. The
notes will be returned at the end of any recapture period. If there is
no recapture period, the notes will be returned when the County Office
verifies that the transaction has been recorded in the Finance Office.
For a buyout, the original and copies of the notes will be marked
''satisfied by approved net recovery buyout.'' For write-down, the
original and copies of the notes will be marked ''satisfied by approved
debt write-down.'' If a note is only partially written-down, the note
will be returned to the debtor or debtor's legal representative when the
note is paid in full. The original and copies of such notes will marked
''satisfied by approved partial write-down.''
(53 FR 35718, Sept. 14, 1988, as amended at 55 FR 35295, Aug. 29,
1990; 56 FR 3396, Jan. 30, 1991; 56 FR 10147, Mar. 11, 1991)
1951.910 (Reserved)