[Code of Federal Regulations]
[Title 7, Volume 15]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR4279.30]

[Page 564]
 
                          TITLE 7--AGRICULTURE
 
  CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES 
                   SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 4279_GUARANTEED LOANMAKING--Table of Contents
 
                            Subpart A_General
 
Sec. 4279.30  Lenders' functions and responsibilities.

    (a) General. (1) Lenders have the primary responsibility for the 
successful delivery of the B&I loan program. All lenders obtaining or 
requesting a B&I loan guarantee are responsible for:
    (i) Processing applications for guaranteed loans,
    (ii) Developing and maintaining adequately documented loan files,
    (iii) Recommending only loan proposals that are eligible and 
financially feasible,
    (iv) Obtaining valid evidence of debt and collateral in accordance 
with sound lending practices,
    (v) Supervising construction
    (vi) Distribution of loan funds,
    (vii) Servicing guaranteed loans in a prudent manner, including 
liquidation if necessary,
    (viii) Following Agency regulations, and
    (ix) Obtaining Agency approvals or concurrence as required.
    (2) This subpart, along with subpart B of this part and subpart B of 
part 4287 of this chapter, contain the regulations for this program, 
including the lenders' responsibilities.
    (b) Credit evaluation. This is a key function of all lenders during 
the loan processing phase. The lender must analyze all credit factors 
associated with each proposed loan and apply its professional judgment 
to determine that the credit factors, considered in combination, ensure 
loan repayment. The lender must have an adequate underwriting process to 
ensure that loans are reviewed by other than the originating officer. 
There must be good credit documentation procedures.
    (c) Environmental responsibilities. Lenders have a responsibility to 
become familiar with Federal environmental requirements; to consider, in 
consultation with the prospective borrower, the potential environmental 
impacts of their proposals at the earliest planning stages; and to 
develop proposals that minimize the potential to adversely impact the 
environment. Lenders must alert the Agency to any controversial 
environmental issues related to a proposed project or items that may 
require extensive environmental review. Lenders must help the borrower 
prepare Form FmHA 1940-20, ``Request for Environmental Information'' 
(when required by subpart G of part 1940 of this title); assist in the 
collection of additional data when the Agency needs such data to 
complete its environmental review of the proposal; and assist in the 
resolution of environmental problems.
    (d) Loan closing. The lender will conduct loan closings.