[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: 7CFR1779.75]

[Page 1021-1022]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1779--WATER AND WASTE DISPOSAL PROGRAMS GUARANTEED LOANS--Table of Contents
 
Sec. 1779.75  Defaults by borrower.

    (a) Lender notification to Agency. The lender must notify the Agency 
when a borrower is 30 days past due on a payment, has not met its 
responsibilities of providing the required financial statements, or is 
otherwise in default. The lender will continue to keep the Agency 
informed on a bimonthly basis until such time as the loan is no longer 
in default. If a monetary default exceeds 60 days, the lender will 
arrange a meeting with the borrower to resolve the default. The lender 
will provide a summary of the meeting and any decisions or actions 
agreed upon.
    (b) Servicing options. In considering servicing options, the 
prospects for providing a permanent cure without adversely affecting the 
risks to the Agency and the lender must be the paramount objective. 
Temporary curative actions (such as payment deferments or collateral 
subordination) must strengthen the loan and be in the best financial 
interest of the lender and

[[Page 1022]]

the Agency. Some of these actions may require concurrence of the holder.
    (c) Multi-note. If the loan was closed with the multi-note option, 
the lender may need to possess all notes to take some servicing actions. 
In those situations when the Agency is holder of some of the notes, the 
Agency may endorse the notes back to the lender, provided a proper 
receipt is received from the lender which defines the reason for the 
transfer. Under no circumstances will the Agency endorse the original 
Loan Note Guarantee to the lender.