[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: 7CFR1965.87]

[Page 390]
 
                          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.  1965.87  Miscellaneous security.

    (a) Membership liability agreements. As a loan approval requirement, 
some borrowers may have special agreements with members of the 
organization for the purchase of shares of stock or for the payment of a 
pro rata share of the loan in the event of default, or they may have 
instruments which are commonly referred to as individual liability 
agreements which are usually assigned to and held by the FmHA or its 
successor agency under Public Law 103-354 as additional security for the 
loan. In other cases the borrower's note may be endorsed by individuals. 
These security and liability instruments will be serviced in a manner 
indicated by the agreements to adequately protect the interest of the 
FmHA or its successor agency under Public Law 103-354. The State 
Director will develop servicing actions with the assistance of OGC.
    (b) Other security. Other security such as collateral assignments, 
assignments of rents, Housing Assistance Payments Contracts, and notices 
of lienholder interest will be serviced according to acceptable 
practices in the respective states. The State Director should develop 
any special servicing actions with the assistance of OGC to protect the 
interest of FmHA or its successor agency under Public Law 103-354. 
Evidence of the security will be filed in the loan docket in the 
District Office. A notation will be made on the Management System Card 
showing that the security has been retained. When other security is 
taken, a plan for servicing it should be developed by the approval 
official and included as an approval condition at the outset.