[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: 7CFR1965.31]

[Page 351]
 
                          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.  1965.31  Taking liens or real estate as additional security in servicing FmHA or its successor agency under Public Law 103-354 loans.

    Additional liens will not be taken for other loans on marginal land 
used for the production of softwood timber if the land is presently 
securing an ST loan.
    (a) Liens. When taking real estate as additional security, the best 
lien obtainable will be taken on any real estate owned by the borrower, 
including any real estate which already serves as security for another 
loan. Normally, the prior concurrence of the District Director will be 
obtained. Liens will be taken only when:
    (1) Present security for the loan is not adequate to protect the 
interests of the FmHA or its successor agency under Public Law 103-354, 
and
    (2) The borrower is delinquent, has substantial equity in the real 
estate to be mortgaged and it is determined that the taking of the 
mortgage will not prevent the making of an FmHA or its successor agency 
under Public Law 103-354 real estate loan, which might be needed in the 
foreseeable future.
    (b) Real estate. Before taking real estate as additional security 
for an FmHA or its successor agency under Public Law 103-354 loan the 
following items will be documented in the running record:
    (1) the facts which justify taking the real estate lien;
    (2) A conservative estimate of the present market value of the real 
estate to be mortgaged. (It will not be necessary to submit an appraisal 
of the property to be mortgaged.);
    (3) A brief description of any existing liens on the property, and 
the repayment terms and the unpaid balance on the debts secured by 
existing liens, unless this is accurately reflected on a recent 
financial statement; and
    (4) The name of the title holder and how title of the property is 
held. (Title evidence need not be required.)
    (c) Forms. Each real estate lien taken as additional security for 
the FmHA or its successor agency under Public Law 103-354 loans will be 
taken on Form FmHA or its successor agency under Public Law 103-354 
1927-1 (state), ``Real Estate Mortgage or Deed of Trust for ------
(Insured Loans to Individuals)'' unless a State supplement requires the 
use of a form of mortgage comparable to that which secures the existing 
loan(s) to be additionally secured. The notes evidencing the FmHA or its 
successor agency under Public Law 103-354 loans for which the additional 
security will be taken will be described in the same mortgage.

[51 FR 4140, Feb. 3, 1986, as amended at 52 FR 26139, July 13, 1987; 53 
FR 35798, Sept. 14, 1988; 56 FR 67484, Dec. 31, 1991; 58 FR 52655, Oct. 
12, 1993]