[Federal Register: September 4, 2003 (Volume 68, Number 171)]
[Notices]
[Page 52557-52562]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04se03-27]
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DEPARTMENT OF AGRICULTURE
Farm Service Agency
Beginning Farmer and Rancher Land Contract Guarantee Pilot
Program--Notice of Funds Availability (NOFA)
AGENCY: Farm Service Agency, USDA.
ACTION: Notice.
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SUMMARY: This notice announces the availability of funding to implement
the Beginning Farmer and Rancher Land Contract Guarantee Pilot Program
as required by section 310 F of the Consolidated Farm and Rural
Development Act (Act). This section directs the Secretary to establish
a pilot program to provide guarantees of loans made by private sellers
of a farm or ranch on a contract land sale basis to qualified beginning
farmers or ranchers.
This notice describes the eligibility and application requirements
for the pilot program and the criteria that the Farm Service Agency
(FSA) will consider in evaluating requests for guarantees under the
program. The notice also describes actions that FSA will take if a
buyer fails to pay on the contract.
DATES: FSA will begin accepting applications on September 4, 2003.
Comments on the information collection associated with this notice must
be received on or before November 3, 2003, to be given full
consideration.
ADDRESSES: General information and the application form may be obtained
from the FSA Web site at http://www.fsa.usda.gov or the USDA, FSA
office listed in your local telephone directory.
FOR FURTHER INFORMATION CONTACT: Kathy Zeidler, Senior Loan Officer, or
Galen VanVleet, Senior Loan Officer, USDA, FSA, Farm Loan Programs Loan
Making Division, STOP 0522, 1400 Independence Avenue, SW., Washington,
DC 20250-0522; telephone (202) 720-5199; e-mail: kathy--
zeidler@usda.gov or galen.vanvleet@usda.gov. Persons with disabilities
who require alternative means for communication (Braille, large print,
audio tape, etc.) should contact the USDA Target Center at (202) 720-
2600 (voice and TDD).
SUPPLEMENTARY INFORMATION:
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372, which requires intergovernmental consultation with State and
local officials.
Environmental Review
The environmental impacts of this notice have been considered in
accordance with the provisions of the National Environmental Policy Act
of 1969 (NEPA), 42 U.S.C. 4321, et seq., the regulations of the Council
on Environmental Quality (40 CFR parts 1500-1508), and the FSA
regulations for compliance with NEPA, 7 CFR parts 799, and 1940,
subpart G. FSA has completed an environmental evaluation and concluded
that the notice requires no further environmental review. No
extraordinary circumstances or other unforeseeable factors exist which
would require preparation of an environmental assessment or
environmental impact statement. A copy of the environmental evaluation
is available for inspection and review upon request.
Paperwork Reduction Act
A request for emergency clearance of the information collections
associated with this notice was submitted to the Office of Management
and Budget (OMB) per 5 CFR 1320.13(a)(2)(iii). The Agency's information
collection requirements, currently approved under OMB control numbers
0560-0154, 0560-0155, 0560-0166, 0560-0178, and 0575-0147, are not
affected by this notice.
In accordance with the Paperwork Reduction Act of 1995, FSA will
provide a regular submission of the information collection package to
OMB at the end of the comment period announced in this notice:
Title: Beginning Farmer and Rancher Land Contract Guarantee Pilot
Program.
OMB Control Number: 0560-NEW.
Type of Request: New Information Collection.
Abstract: The collection of the information required by this notice
is necessary to certify that applicants for
[[Page 52558]]
guarantees (sellers) are eligible to receive benefits. The information
will be collected from applicants and prospective buyers in paper form
by Agency loan approval officials. The information will be used and
evaluated by the loan approval official to determine if the buyer and
the sales transaction meet the criteria established by the Agency. The
information may be viewed, used, and monitored by other Agency or USDA
officials, and may be released in accordance with the Privacy Act or
Freedom of Information Act. The information will be collected on an as
needed basis. Failure to collect this information may result in persons
receiving benefits other than intended program beneficiaries.
Estimate of Burden: Public reporting for this collection of
information is estimated to average .75 hours per response.
Respondents: Farms, individuals, and businesses.
Estimated number of respondents: 480.
Estimated number of responses per respondent: 2.6.
Estimated total annual burden on respondents: 857 hours.
Comments are invited on (a) whether the collection of information
is necessary for the proper performance of the functions of the Agency,
including whether the information will have practical utility; (b) the
accuracy of the Agency's estimate of burden; (c) ways to enhance the
quality, utility, and clarity of the information to be collected; (d)
ways to minimize the burden collection on those who are to respond,
including through use of appropriate automated, electronic, mechanical,
or other technological collection techniques or other forms of
information technology. These comments should be addressed to Kathy
Zeidler, Senior Loan Officer, USDA, FSA, Farm Loan Programs Loan Making
Division, STOP 0522, 1400 Independence Avenue, SW., Washington, DC
20250-0522. A comment is best assured of having its full effect if OMB
receives it within 60 days of publication of this notice. Comments
received after that date will be considered to the extent practicable.
All comments received in response to this notice, including names and
addresses, will be a matter of public record. Copies of the submission
may be obtained from Kathy Zeidler by calling (202) 720-5199.
General Information
During FY 2003-2007 limited funds will be available for the
Beginning Farmer and Rancher Land Contract Guarantee Pilot Program. The
pilot program will be implemented in the following States: Indiana,
North Dakota, Oregon, Pennsylvania, Wisconsin, and Iowa. In each of
fiscal years 2003 through 2007, depending on the availability of
appropriations, up to five loans made by a private seller of a farm or
ranch to a qualified beginning farmer or rancher on a land contract
basis will be guaranteed in each of the pilot States. The intent of the
pilot program is to determine if land contracts are a viable
alternative for facilitating land transfers to beginning farmers and
ranchers.
To the extent possible, the underwriting criteria of FSA's
guaranteed loan program have been adopted. However, the structure of
the loan guarantee under the pilot program is significantly different
from FSA's existing guaranteed loan program, which compensates lenders
for a percentage of the total loss of principal and interest suffered.
Loss claim payments under the existing guaranteed program are made
following liquidation of the loan and all collateral. The Beginning
Farmer and Rancher Land Contract Guarantee Pilot Program will be
structured to provide the seller of the land a ``prompt payment''
guarantee of the sale to the beginning farmer or rancher (buyer). FSA
will provide a 10-year guarantee of two amortized annual installments,
or an amount up to the total monetary amount of two amortized annual
installments, on a land contract (e.g., if a buyer pays only part of an
installment over several years, the Agency's guarantee will cover the
remainder of the installments up to an amount equal to two amortized
annual installments). The guarantee will also cover the amount of two
years' taxes and insurance.
In the event that the buyer does not pay an annual installment due
on the contract, or pays only part of an installment on the contract,
the seller must take immediate action to enforce the terms of the
contract and collect the defaulted amount from the buyer. At a minimum,
the seller must make written demand on the buyer for payment of the
defaulted amount. In the event that the buyer does not pay the
defaulted amount within 30 days of the seller's written demand, the
seller will make demand upon the Agency to pay the defaulted amount.
The Agency will remit payment to the seller via the escrow agent and
pursue collection of the defaulted installment amount from the buyer
using all available means, including establishing repayment terms and
administrative and Department of Treasury offset.
The guarantee will terminate if (1) the contract is paid in full;
(2) the Agency pays two annual installments, or the total monetary
amount of two installments; (3) the seller fails to seek payment of a
defaulted installment from the buyer or does not otherwise enforce the
terms of the contract; or (4) the seller terminates the contract. If
none of these events occur, the guarantee will automatically terminate
10 years from the effective date of the guarantee.
I. Definitions
Agency is the Farm Service Agency, its employees, and any successor
agency.
Annual installment is the total amortized amount of principal and
interest due to the seller on a land contract every 12 months.
Beginning farmer or rancher is an individual or entity who:
(a) Has not operated a farm or ranch or who has operated a farm or
ranch for not more than 10 years. This requirement also applies to all
entity members;
(b) will materially and substantially participate in the operation
of the farm or ranch.
(c) In the case of a loan made to an individual, individually or
with the immediate family, material and substantial participation
requires that the individual provide substantial day-to-day labor and
management of the farm or ranch, consistent with the practices in the
county or State where the farm is located.
(d) In the case of a loan to an entity, all members must materially
and substantially participate in the operation of the farm or ranch.
Material and substantial participation requires that the members
provide some amount of the management, or labor and management,
necessary for day-to-day activities, such that if the members did not
provide these inputs, operation of the farm or ranch would be seriously
impaired;
(e) agrees to participate in any loan assessment and financial
management programs required by the Agency;
(f) does not own real farm or ranch property or who, directly or
through interests in family farm entities, own real farm or ranch
property, the aggregate acreage of which does not exceed 30 percent of
the average farm or ranch acreage of the farms or ranches in the county
where the property is located. If the farm is located in more than one
county, the average farm acreage of the county where the buyer's
residence is located will be used in the calculation. If the buyer's
residence is not located on the farm, or if the buyer is an entity, the
average farm acreage of the county where the major portion of
[[Page 52559]]
the farm is located will be used. The average county farm or ranch
acreage will be determined from the most recent Census of Agriculture;
(g) demonstrates that the available resources of the buyer and
spouse (if any) are not sufficient to enable the buyer to enter or
continue farming or ranching on a viable scale;
(h) in the case of an entity, all the members are related by blood
or marriage and all of the stockholders in a corporation are qualified
beginning farmers or ranchers.
Buyer is an individual or entity who is participating in the
Beginning Farmer and Rancher Land Contract Guarantee Pilot Program in
order to purchase a farm or ranch on land contract.
Cash flow budget is a projection listing all anticipated cash
inflows (including all farm income, nonfarm income and all loan
advances) and all cash outflows (including all farm and nonfarm debt
service and other expenses) to be incurred by the buyer during the
period of the budget. A cash flow budget may be completed either for a
12-month period or a typical production cycle, as appropriate.
Entity is a cooperative, corporation, partnership, joint operation,
trust, or limited liability company.
Escrow agent is a bonded commercial lending institution, registered
and authorized to provide escrow collection services in the State in
which the real estate is located, that handles financial transactions
between the buyer and seller, e.g., a bank.
Family farm is a farm which produces agricultural commodities for
sale in sufficient quantities so that it is recognized in the community
as a farm rather than a rural residence; provides enough agricultural
income by itself, including rented land, or together with any other
dependable income, to enable the buyer to pay necessary family living
and farm operating expenses, maintain essential chattel and real
property, and pay debts; is managed by the buyer or the buyer's entity
members; has a substantial amount of the labor requirement for the farm
provided by the buyer and the buyer's immediate family or the entity
members and their immediate families; and may use a reasonable amount
of full-time hired labor and seasonal labor during peak load periods.
Feasible plan is a cash flow budget that indicates that there is
sufficient cash inflow to pay all cash outflow each year during the
term of the contract.
Land contract is an installment contract drawn between a buyer and
a seller for the sale of real property, in which complete fee title
ownership of the property is not transferred until all payments under
the contract have been made.
Participated in the business operations of a farm or ranch means
that the buyer has:
(a) Been the owner, manager or operator of a farm business for the
year's complete production and marketing cycle as evidenced by tax
returns, FSA farm records or similar documentation;
(b) been employed as a farm manager or farm management consultant
for the year's complete production and marketing cycle; or
(c) participated in the operation of a farm by virtue of being
raised on a farm or worked on a farm with significant responsibility
for the day-to-day decisions for the year's complete production and
marketing cycle.
Pilot State is any of the six States participating in the Beginning
Farmer and Rancher Land Contract Guarantee Pilot Program. Those States
are Indiana, Iowa, North Dakota, Oregon, Pennsylvania, and Wisconsin.
Seller is an individual or entity who applies for a guarantee under
the Beginning Farmer and Rancher Land Contract Guarantee Pilot Program
in order to sell a farm or ranch on land contract in a pilot State.
United States is 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.
II. Appeals
Buyers and sellers can appeal adverse decisions made by the Agency
in accordance with 7 CFR part 11.
III. Application
(a) Sellers who contact FSA with an interest in a guarantee under
the pilot program will be sent a letter outlining specific program
details and benefits. To formally request a guarantee on their proposed
land contract, sellers must sign and date this letter and return it to
FSA. The signed and dated letter will be considered the seller's
application for guarantee. FSA also may require the seller to submit
other information necessary to process the guarantee.
(b) The prospective buyer must submit the following items to FSA:
(1) A completed form FSA-1980-25, ``Application for Guarantee.''
(2) A brief written description of the buyer's farm training and/or
experience.
(3) Income tax or other financial records acceptable to FSA from
the past three years.
(4) Three years of production history immediately preceding the
year of application, or the number of years available if the applicant
has been farming less than three years.
(5) A brief written description of the proposed operation.
(6) Verification of off-farm employment and other non-farm income,
if any. This will be required only when the buyer is relying on off-
farm income to develop a feasible plan.
(7) Projected production, income and expenses, financial statement,
and plan of operation, which may be submitted on Form FSA-431-2, ``Farm
and Home Plan,'' or other similar plan of operation acceptable to FSA.
The buyer may request Agency assistance in completing the plan.
(8) Applicable items required in 7 CFR part 1940, subpart G or its
successor regulation.
(9) A copy of the proposed land contract to be entered into with
the seller.
(10) Form FSA-440-32, ``Request for Statement of Debts and
Collateral,'' or similar documentation, for all debts in excess of
$1000.00.
(11) A credit report fee.
(12) Entity applicants must submit additional information for each
entity member. The application must contain each entity member's name,
address, Social Security number, percent ownership interest in the
entity, and a current balance sheet.
(13) Any other documents required by the Agency and needed to
process the application.
(c) If the buyer or seller propose to use a particular escrow agent
for the land contract sale, they will provide the agent's name,
address, and telephone number to the Agency.
(d) All forms listed are available at any FSA office or on the FSA
Web site at http://www.fsa.usda.gov. The Agency will not consider an
application complete until all required information is received from
both the seller and the prospective buyer. The Agency will assist the
buyer, when necessary, in completing the required FSA forms.
IV. Eligibility
(a) Buyers must meet the following requirements to be eligible:
(1) The buyer must be a beginning farmer or rancher and must be the
owner and operator of a family farm after the contract is completed.
See paragraph IV. (b) for owner and operator requirements for entity
buyers.
(2) The buyer must have participated in the business operations of
a farm or ranch for at least three years.
(3) The buyer and anyone who will execute the Loan Payment
Guarantee Agreement and Contract Modification
[[Page 52560]]
(Agreement) as the buyer cannot have caused the Agency a loss by
receiving debt forgiveness on more than three occasions on or prior to
April 4, 1996, or on any occasion after April 4, 1996, on all or a
portion of any direct or guaranteed loan made under the authority of
the CONACT as amended, by debt write-down or write-off; compromise,
adjustment, reduction, or charge-off under the provisions of section
331 of the CONACT; discharge in bankruptcy; or through payment of a
guaranteed loss claim.
(4) When the guarantee is issued, the buyer and anyone who will
execute the Agreement as the buyer must not be delinquent on any
Federal debt, other than a debt under the Internal Revenue Code of
1986, nor be a Federal judgment debtor on a non-tax debt.
(5) The buyer must be a citizen of the United States, United States
non-citizen national, or a qualified alien under applicable Federal
immigration laws. If the buyer is an entity, the majority of the entity
must be owned by members meeting the citizenship test.
(6) The buyer and anyone who will execute the Agreement as the
buyer must possess the legal capacity to enter into a legally binding
agreement.
(7) The buyer, in past or present dealings with the Agency, must
not have provided the Agency with false or misleading documents or
statements.
(8) The buyer and anyone who will execute the Agreement as the
buyer must not have been convicted of planting, cultivating, growing,
producing, harvesting, or storing a controlled substance under Federal
or State law within the last five crop years. ``Controlled substance''
is defined at 21 CFR 1308. Buyers must certify on the application that
the buyer has not been convicted of such a crime within the relevant
period.
(9) The buyer and anyone who will execute the Agreement as the
buyer must have an acceptable credit history demonstrated by
satisfactory debt repayment. A history of failures to repay past debts
as they came due (including debts to the Internal Revenue Service) when
the ability to repay was within their control will demonstrate an
unacceptable credit history. Unacceptable credit history will not
include isolated instances of late payments (which do not represent a
pattern and were clearly beyond their control) or the lack of a credit
history.
(10) The buyer must be unable to obtain sufficient credit elsewhere
without a guarantee to finance actual needs at reasonable rates and
terms.
(b) For entity buyers, the following additional eligibility
criteria apply:
(1) The collective ownership interest of all entity members may
exceed the family farm definition limits only if all of the entity
members are related by blood or marriage, all of the entity members are
or will be operators of the farm, and the majority interest holders
meet the above requirements relating to citizenship, false or
misleading information, credit history, and operation and ownership of
the farm or ranch.
(2) Each entity member's ownership interest may not exceed the
family farm definition.
(3) The entity must be controlled by farmers or ranchers engaged
primarily and directly in farming or ranching in the United States
after the guarantee is issued; and
(4) The entity members can not be entities themselves.
(5) The entity must be authorized to own and operate a farm in the
State(s) in which the farm is located.
(6) If the entity members holding a majority interest are related
by blood or marriage, at least one member of the entity also must
operate the family farm and at least one member of the entity must own
the family farm.
(7) If the entity members holding a majority interest are not
related by blood or marriage, the entity members holding a majority
interest must operate the family farm and entity members holding a
majority interest or the entity must own the family farm.
V. Financial Feasibility
(a) The proposed operation described on Form FSA-431-2 or similar
plan acceptable to FSA must project a feasible plan. The projected
income and expenses of the buyer and operation used to determine a
feasible plan must be based on the buyer's proven record of production
and financial management. For those farmers without a proven history, a
combination of any actual history and any other reliable source of
information which is agreeable to the buyer and the Agency will be
used. The cash flow budget analyzed to determine a feasible plan must
represent the projected cash flow of the operating cycle for the farm
or ranch operation.
(b) The buyer must use the best sources of information available
for estimating production when developing cash flow budgets. Deviations
from historical performance may be acceptable, if the deviations are
the direct result of specific changes in the operation, are reasonable,
adequately justified, and acceptable to the Agency. For existing
farmers, actual production for the past three years will be utilized.
For those farmers without a proven history, a combination of any actual
history and any other reliable source of information that is agreeable
to the buyer and the Agency will be used. When the production of a
growing commodity can be estimated, it must be considered when
projecting yields.
(c) When the buyer's production history has been so severely
affected by a declared disaster that an accurate projection cannot be
made, the following applies:
(1) County average yields are used for the disaster year if the
buyer's disaster year yields are less than the county average yields.
If county average yields are not available, State average yields are
used. Adjustments can be made, provided there is factual evidence to
demonstrate that the yield used in the farm plan is the most probable
to be realized.
(2) To calculate a historical yield, the crop year with the lowest
actual or county average yield may be excluded, provided the buyer's
yields were affected by disasters at least two of the previous five
consecutive years.
(d) Buyers must use price forecasts that are reasonable,
defensible, and historically supportable. Sources must be documented by
the buyer and be acceptable to the Agency. When a feasible plan depends
on income from other sources in addition to income from owned land, the
income must be dependable and likely to continue throughout the term of
the guarantee.
VI. Eligible Purpose
The guarantee may only be used for financing the purchase of a farm
or ranch on a land contract basis. The farm or ranch land to be
purchased must be located in a pilot State. Guarantees will only be
provided on new contracts. Existing contracts are not eligible for a
guarantee under the pilot program.
VII. Maximum Purchase Price
(a) The purchase price of the farm or ranch to be acquired cannot
exceed the lesser of:
(1) $500,000 and
(2) its current market value as determined by Agency appraisal or
estimate.
(b) The buyer must provide a cash downpayment of at least five
percent of the purchase price of the farm or ranch being acquired on
land contract.
VIII. Maximum Payment and Term of Guarantee
The guarantee will be in effect for 10 years commencing with its
stated effective date. The guarantee will cover two amortized annual
installments, or an amount up to the total monetary
[[Page 52561]]
amount of two amortized annual installments, on the land contract. The
guarantee will also cover the amount of two years of taxes and
insurance. Under no circumstance will the amount outstanding to the
Agency be more than the amount of two amortized annual installments,
plus two years of real estate taxes and hazard insurance.
IX. Loan Rates and Terms
The interest rate charged by the seller for the 10-year term of the
guarantee must be fixed at a rate not to exceed FSA's direct farm
ownership (FO) loan interest rate in effect at the time the guarantee
is issued, plus three percentage points (Interest rates are available
in any FSA office). The seller and buyer may renegotiate the interest
rate for the remaining term of the contract following expiration of the
guarantee. The contract payments must be amortized for a minimum of 20
years. Balloon payments are prohibited during the 10-year term of the
guarantee, and payments on the contract must be of equal amounts during
the term of the guarantee.
X. Appraisal Requirements
The Agency may require an appraisal prior to, or as a condition of,
approval of the guarantee. Any such appraisal will be obtained at the
Agency's sole option and expense.
XI. Requesting Title Service
The buyer will obtain title clearance as provided in 7 CFR part
1927, subpart B, or its successor regulation prior to contract
settlement and issuance of the guarantee.
XII. Environmental Compliance
The environmental and historic preservation requirements contained
in 7 CFR part 1940, subpart G or its successor regulation must be met
prior to approval of any guarantee request.
XIII. Processing and Approving Applications and Executing the Guarantee
(a) Requests for guarantee will be processed based on the date the
Agency receives a complete application as defined above. Each pilot
State may approve up to five loan guarantees each fiscal year of the
pilot program. Approval is also subject to the availability of
guaranteed FO loan funds and the participation of an approved escrow
agent.
(b) After a request for guarantee is approved, all parties to the
guarantee (buyer, seller, escrow agent, and the Agency) will execute
the Loan Payment Guarantee Agreement and Contract Modification. This
Agreement will describe the conditions of the guarantee and the process
for payment of claims. It will also outline the covenants and
agreements of the buyer, seller, escrow agent, and the Agency.
XIV. Escrow Agent Responsibilities
Use of a third party escrow agent approved by the Agency is
required. The buyer or seller, as applicable, will provide the Agency a
copy of any escrow agreement executed by the parties. The escrow agent
will:
(a) handle transactions relating to the land contract between the
buyer and seller;
(b) receive contract installments and remit them to the seller;
(c) notify FSA and the seller in the event of default by the buyer;
(d) remit to the seller any defaulted installment amount paid by
the Agency under the guarantee;
(e) notify FSA and the seller semi-annually of the outstanding
balance on the contract and the status of payment;
(f) send a notice of payment due to the buyer at least 30 days
prior to the installment due date; and
(g) perform other duties as required by State law and as agreed to
by the buyer and the seller.
XV. Routine Servicing and Contract Modification
(a) At the Agency's request, the buyer will supply the Agency with
a current balance sheet, income statement, cash flow budget, and any
additional information needed to analyze the buyer's financial
condition annually.
(b) With the Agency's prior written approval, the seller and buyer
may modify the land contract provided that, in addition to a feasible
plan for the upcoming operating cycle, a feasible plan can be
reasonably projected throughout the remaining term of the guarantee. If
a contract is modified, the seller must provide the Agency and escrow
agent with a copy of the revised contract.
XVI. Collection of Defaulted Installment Amounts
If the buyer fails to pay an annual amortized installment on the
contract, or a portion of an installment on the contract, the escrow
agent will notify the seller and the Agency in writing of the default.
The seller must then take immediate action to enforce the terms of the
contract and collect the defaulted amount from the buyer. At a minimum,
the seller must make written demand on the buyer for payment of the
defaulted amount, with a copy of the demand letter to the Agency. In
the event that the buyer does not pay the defaulted amount within 30
days of the seller's written demand, the seller will make demand upon
the Agency to pay the defaulted amount. The seller must make written
demand upon the Agency within 90 days from the date the amount was due.
XVII. Delinquent Servicing
(a) When FSA has made a payment under this guarantee on behalf of
the buyer, the amount paid will become immediately due and payable by
the buyer. The unpaid balance of the amount paid on behalf of the buyer
will bear interest from the date of advance by the Agency at the
established Farm Loan Programs Nonprogram Credit Sales Real Property
loan rate (available in any FSA office) in effect at that time. The
Agency will notify the buyer of the available options for repaying the
debt. At the Agency's discretion, a missed or partially missed
amortized contract installment, delinquent real estate taxes, or
insurance payments may be structured to be repaid consistent with the
buyer's repayment ability not to exceed 7 years, or the termination
date of the guarantee, whichever occurs first. Before any repayment
plan can be approved, the buyer must provide the Agency with the best
lien obtainable on all of the buyer's assets, including the buyer's
interest in the real estate under contract. When the buyer is an
entity, the best lien obtainable will be taken on all of the entity's
assets, and all assets owned by the members of the entity, including
their interest in the real estate under contract.
(b) Any amounts paid by the Agency on account of liabilities of the
buyer will constitute a Federal debt owing to the Agency that is
immediately due and payable by the buyer. If the debt is not
restructured into a repayment plan or the delinquency otherwise cured,
the Agency may use all remedies available to it, including offset under
the Debt Collection Improvement Act of 1996, to collect the debt from
the buyer.
(c) Buyers with an Agency-approved repayment plan will supply the
Agency, upon request, with a current balance sheet, income statement,
cash flow budget, complete copy of their Federal income tax returns,
and any additional information needed to analyze the buyer's financial
condition annually.
(d) If the buyer fails to perform under an Agency-approved
repayment plan, the debt will be treated as a non-program loan debt,
and servicing will proceed in accordance with 7 CFR 1951 section
1951.468, or its successor regulation. In such case, the Agency may use
all remedies available to it,
[[Page 52562]]
including offset under the Debt Collection Improvement Act of 1996, to
collect the debt from the buyer.
XVIII. Terminating the Guarantee
The guarantee and the Agency's obligations under it will terminate
under the following circumstances:
(a) Full payment of the land contract;
(b) payment by the Agency of two annual installments on the
contract, or an amount equal to two annual installments, if not repaid
in full by the buyer. (An Agency-approved repayment plan will not
constitute payment in full until such time as the entire amount due
under the Agency-approved repayment plan is paid in full);
(c) the seller fails to seek payment of a delinquent installment
from the buyer or otherwise does not enforce the terms of the land
contract; or
(d) the seller terminates the land contract.
If none of these events occur, the guarantee will automatically
terminate, without notice, 10 years from the effective date of the
guarantee.
Signed in Washington, DC, on August 15, 2003.
James R. Little,
Administrator, Farm Service Agency.
[FR Doc. 03-22519 Filed 9-3-03; 8:45 am]
BILLING CODE 3410-05-P