[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: 7CFR1965.88]

[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.  1965.88  Obtaining additional security for inadequately secured loans.

    (a) General policies. As a general policy, additional security for 
multiple housing loans should not be needed or taken to protect the 
interest of FmHA or its successor agency under Public Law 103-354. 
However, the State Director may authorize taking additional security in 
the form of real estate or other security as described in Sec.  
1965.87(b) of this subpart when the additional security is needed to 
enhance the chances that the FmHA or its successor agency under Public 
Law 103-354 will not suffer a loss and any of the following conditions 
exist:
    (1) The account is behind schedule.
    (2) The property has not been properly managed or maintained.
    (3) There is serious doubt that the borrower can carry out the 
objectives of the loan.
    (b) Conditions of approval. In cases where the District Director 
determines that the conditions as stated in paragraph (a) of this 
section exist, the borrower's case file will be forwarded to the State 
Director with a memorandum providing the following information:
    (1) The facts which justify the taking of additional security.
    (2) A conservative estimate of the market value of any real estate 
to be mortgaged; however, it will not be necessary to make a formal 
appraisal of the property to be mortgaged unless determined necessary by 
the State Director.
    (3) A brief description of any existing liens on the additional 
security including the repayment terms and the unpaid balance.
    (4) The name of the title holder and how title to the property is 
held. Title evidence need not be required.
    (5) A plan for servicing the additional security to be taken.
    (6) A description of the other servicing alternatives available to 
assure that the objectives of the loan will be met and to protect the 
Government from loss.
    (c) Processing. The guidance and assistance of OGC will be obtained 
whenever additional security is taken. The highest quality security 
available will be taken whenever additional security is considered.

[49 FR 49590, Dec. 21, 1984. Redesignated at 55 FR 29564, July 20, 1990]

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