[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: 7CFR1965.89]

[Page 391]
 
                          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.  1965.89  Equity take-out for loans made after December 15, 1989.

    For initial loans made or insured pursuant to contracts entered into 
on or after December 15, 1989, equity loans may be guaranteed by FmHA or 
its successor agency under Public Law 103-354 after a 20-year period, 
from the date of the loan, has elapsed. The following steps will be 
followed when a borrower wishes to receive this equity:
    (a) Borrower submits a plan requesting an equity loan which ensures 
that the cost of amortizing the loan doesn't result in the displacement 
of very low-income tenants or substantially alter the income mix of the 
tenants in the project.
    (b) FmHA or its successor agency under Public Law 103-354 will 
determine whether the housing will continue to remain decent, safe, and 
sanitary and that the local housing market is such that the housing will 
continue to meet the needs of eligible tenants for the remaining life of 
the initial loan.
    (c) In accordance with the conditions outlined in subpart E of this 
part, FmHA or its successor agency under Public Law 103-354 will offer 
to guarantee an equity loan to the borrower which may be repaid from an 
occupancy surcharge account in accordance with subpart K of part 1951 of 
this chapter. In addition it must be determined that such an equity loan 
would not impose undue hardship on tenants or unreasonable cost to the 
Federal Government. The guaranteed loan will not exceed the lesser of:
    (1) The amount determined and calculated in accordance with the 
equity loan instructions contained in subpart E of this part or (2) 30 
percent of the appraised value of the project at the time of the initial 
loan as shown on the appraisal for that loan.
    (d) If the borrower indicates preliminary acceptance of the equity 
loan, an application will be completed in accordance with subpart E of 
part 1944 of this chapter and two appraisals will be conducted in the 
manner outlined in subpart E of part for loans to nonprofit 
organizations.
    (e) When the actual amount of the guaranteed equity loan is 
determined, the borrower will indicate acceptance of the loan.

[55 FR 29564, July 20, 1990, as amended at 56 FR 66964, Dec. 27, 1991; 
58 FR 38930, July 21, 1993]