[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: 7CFR4279.75]

[Page 569]
 
                          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. 4279.75  Sale or assignment of guaranteed loan.

    The lender may sell all or part of the guaranteed portion of the 
loan on the secondary market or retain the entire loan. The lender shall 
not sell or participate any amount of the guaranteed or unguaranteed 
portion of the loan to the borrower or members of the borrower's 
immediate families, officers, directors, stockholders, other owners, or 
a parent, subsidiary or affiliate. If the lender desires to market all 
or part of the guaranteed portion of the loan at or subsequent to loan 
closing, such loan must not be in default. Loans made with the proceeds 
of any obligation the interest on which is excludable from income under 
26 U.S.C. 103 (interest on State and local banks) or any successor 
section will not be guaranteed.
    (a) Single note system. The entire loan is evidenced by one note, 
and one Loan Note Guarantee is issued. The lender may assign all or part 
of the guaranteed portion of the loan to one or more holders by using 
the Agency's Assignment Guarantee Agreement. The holder, upon written 
notice to the lender and the Agency, may reassign the unpaid guaranteed 
portion of the loan sold under the Assignment Guarantee Agreement. Upon 
notification and completion of the assignment through the use of Form 
4279-6, the assignee shall succeed to all rights and obligations of the 
holder thereunder. If this option is selected, the lender may not at a 
later date cause any additional notes to be issued.
    (b) Multinote system. Under this option the lender may provide one 
note for the unguaranteed portion of the loan and no more than 10 notes 
for the guaranteed portion. When this option is selected by the lender, 
the holder will receive one of the borrower's executed notes and a Loan 
Note Guarantee. The Agency will issue a Loan Note Guarantee for each 
note, including the unguaranteed note, to be attached to the note. An 
Assignment Guarantee Agreement will not be used when the multinote 
option is utilized.
    (c) After loan closing. If a loan is closed using the multinote 
option and at a later date additional notes are desired, the lender may 
cause a series of new notes, so that the total number of notes issued 
does not exceed the total number provided for in paragraph (b) of this 
section, to be issued as replacement for previously issued guaranteed 
notes, provided:
    (1) Written approval of the Agency is obtained;
    (2) The borrower agrees and executes the new notes;
    (3) The interest rate does not exceed the interest rate in effect 
when the loan was closed;
    (4) The maturity date of the loan is not changed;
    (5) The Agency will not bear or guarantee any expenses that may be 
incurred in reference to such reissuances of notes;
    (6) There is adequate collateral securing the notes;
    (7) No intervening liens have arisen or have been perfected and the 
secured lien priority is better or remains the same; and
    (8) All holders agree.
    (d) Termination of lender servicing fee. The lender's servicing fee 
will stop when the Agency purchases the guaranteed portion of the loan 
from the secondary market. No such servicing fee may be charged to the 
Agency and all loan payments and collateral proceeds received will be 
applied first to the guaranteed loan and, when applied to the guaranteed 
loan, will be applied on a pro rata basis.