[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: 7CFR1965.81]

[Page 386]
 
                          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 B--Security Servicing for Multiple Housing Loans
 
Sec.  1965.81  Severance agreements.

    (a) General policies. Severance agreements or other instruments of 
similar effect under which a borrower may acquire through other credit, 
items such as laundry equipment, air conditioning units, and basic 
household furnishings that will not become part of real estate security, 
may be approved by the State Director, provided:
    (1) The transaction will not adversely effect the FmHA or its 
successor agency under Public Law 103-354's security position and any 
additional obligations incurred will be within the borrower's repayment 
ability.
    (2) The items covered by the severance agreement are needed in the 
successful operation of the security property.
    (3) The financing arrangements are otherwise sound and proper.
    (b) Handling requests. Requests will be made on Form FmHA or its 
successor agency under Public Law 103-354 465-1. The District Director 
will forward to the State Director a properly completed and executed 
Form FmHA or its successor agency under Public Law 103-354 465-1, any 
proposed severance agreement, the case file, and specific 
recommendations regarding the request.
    (c) Consent and approval. The State Director will indicate approval 
or disapproval on Form FmHA or its successor agency under Public Law 
103-354 465-1. The OGC will be requested to prepare or approve the form 
of severance agreement and issue any special instructions when 
necessary.

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