[Code of Federal Regulations]
[Title 7, Volume 14]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1965.24]

[Page 334]
 
                          TITLE 7--AGRICULTURE
 
   CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS--COOPERATIVE 
SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT OF 
                         AGRICULTURE (CONTINUED)
 
PART 1965--REAL PROPERTY--Table of Contents
 
  Subpart A--Servicing of Real Estate Security for Farm Loan Programs 
                    Loans and Certain Note-Only Cases
 
Sec.  1965.24  Servicing note-only cases.

    Each loan made on a note-only basis without real estate security 
will be serviced in a manner consistent with the best interests of the 
FmHA or its successor agency under Public Law 103-354.
    (a) Sale of real property on which improvements were made with note-
only FmHA or its successor agency under Public Law 103-354 funds. Any 
loan evidenced only by an unsecured note will be collected by voluntary 
means at the time of the sale of the property, if possible. If 
collection is not possible, the loan may be assumed by the purchaser of 
the property on the terms of the note if the assumption is determined to 
be in the FmHA or its successor agency under Public Law 103-354's best 
financial interest. If collection or assumption cannot be effected, 
consideration should be given to settling the account in accordance with 
Subpart B of Part 1956 of this chapter, if it is eligible, obtaining 
judgment, or classifying it as collection-only. In case of a judgment 
sale, the State Director with the advice of OGC and the U.S. Attorney, 
will authorize an employee to attend the sale and if appropriate, enter 
a bid on behalf of the Government under Subpart A of Part 1955 of this 
chapter.
    (b) Assumption of note-only when real property securing another FmHA 
or its successor agency under Public Law 103-354 loan is involved. When 
a borrower has an FmHA or its successor agency under Public Law 103-354 
loan secured by real estate and another FmHA or its successor agency 
under Public Law 103-354 loan evidenced only by a note and the real 
estate is to be transferred and the entire secured real estate debt is 
to be assumed, all or a part of the unsecured note up to the present 
market value of the property in excess of existing liens must also be 
assumed.

[51 FR 4140, Feb. 3, 1986, as amended at 51 FR 45439, Dec. 18, 1986]