[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1779.48]

[Page 1017]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1779--WATER AND WASTE DISPOSAL PROGRAMS GUARANTEED LOANS--Table of Contents
 
Sec. 1779.48  Collateral.

    (a) Lender responsibility. The lender is responsible for obtaining 
and maintaining proper and adequate collateral to protect the interest 
of the lender, the holder, and the Government.
    (b) Type of collateral. Collateral must be of such a nature that 
repayment of the loan is reasonably ensured when considered with the 
integrity and ability of project management, soundness of the project, 
and the borrower's prospective earnings. The collateral may include, but 
is not limited to, the following: General obligation bonds, revenue 
bonds, pledge of taxes or assessments, assignment of facility revenue, 
land, easements, rights-of-way, water rights, buildings, machinery, 
equipment, accounts receivable, contracts, cash, or other accounts or 
assignments of leases or leasehold interest.
    (c) Separate collateral. All collateral must secure the entire loan. 
The lender will not take separate security to secure only the 
unguaranteed portion of the loan. The lender will not require 
compensating balances or certificates of deposit as a means of 
eliminating the lender's exposure on the unguaranteed portion of the 
loan.