[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: 7CFR1965.25]

[Page 334-335]
 
                          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.  1965.25  Release of FmHA or its successor agency under Public Law 103-354 mortgage without monetary consideration in certain cases.

    (a) Additional real estate security owned by an entity member(s). 
Real estate owned by a member(s) of an entity-borrower, which was taken 
as additional security for a loan secured by real estate, may be 
released if it is needed for the entity member(s) to finance a separate 
operation and the remaining real estate adequately secures the entity 
loan(s). A release will not be

[[Page 335]]

considered if a subordination can be approved for the same purpose. The 
County Supervisor will document in the case file why a subordination is 
not feasible.
    (b) Release of real estate from mortgage because of mutual mistake. 
Land or buildings included in the mortgage through mutual mistake, when 
substantiated by the facts of the situation, may be released from the 
mortgage by the State Director. The release is contingent on a 
determination of the State Director, with the advice of the OGC, that a 
mutual error existed at the time such property was included in the 
Government's mortgage.
    (c) No evidence of indebtedness. The FmHA or its successor agency 
under Public Law 103-354 mortgage may be released by the County 
Supervisor in situations where there is no evidence of an existing 
indebtedness secured by the mortgage in the records of the FmHA or its 
successor agency under Public Law 103-354 County, State, and Finance 
Offices.
    (d) Release of valueless liens. State Directors are authorized to 
release FmHA or its successor agency under Public Law 103-354 mortgages 
or other liens when the mortgages or liens have no present or 
prospective value or when their enforcement would likely be ineffectual 
or uneconomical. This includes release of a junior lien on the 
borrower's dwelling financed with an SFH loan and located on a nonfarm 
tract when the junior lien was taken as additional security for a Farmer 
Program loan(s). This authority does not extend to valueless judgment 
liens or valueless statutory redemption rights except with the consent 
of the OGC. The following information will be obtained in determining 
present or prospective value:
    (1) Appraisal report. A market value appraisal report on the 
security prepared by an FmHA or its successor agency under Public Law 
103-354 employee authorized to appraise under Sec.  761.7 of this title.
    (2) Lienholders. The names of the holders of prior liens on the 
property, the amount secured by each lien which is prior to the FmHA or 
its successor agency under Public Law 103-354, the amount of taxes or 
assessments, and other items which might constitute a prior claim. This 
information will be recorded in the running case record of the 
borrower's County Office case folder and submitted to the State Director 
for review.

[51 FR 4140, Feb. 3, 1986, as amended at 53 FR 35795, Sept. 14, 1988; 56 
FR 15830, Apr. 18, 1991; 57 FR 18681, Apr. 30, 1992; 58 FR 44752, Aug. 
25, 1993; 64 FR 62569, Nov. 17, 1999]