[Code of Federal Regulations]

[Title 7, Volume 7]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR762.105]



[Page 133-134]

 

                          TITLE 7--AGRICULTURE

 

       CHAPTER VII--FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

 

PART 762_GUARANTEED FARM LOANS--Table of Contents

 

Sec. 762.105  Eligibility and substitution of lenders.



    (a) General. To participate in FSA guaranteed farm loan programs, a 

lender must meet the eligibility criteria in



[[Page 134]]



this part. The standard eligible lender must demonstrate eligibility and 

provide such evidence as the Agency may request.

    (b) Standard eligible lender eligibility criteria. (1) A lender must 

have experience in making and servicing agricultural loans and have the 

capability to make and service the loan for which a guarantee is 

requested;

    (2) The lenders must not have losses or deficiencies in processing 

and servicing guaranteed loans above a level which would indicate an 

inability to properly process and service a guaranteed agricultural 

loan.

    (3) A lender must be subject to credit examination and supervision 

by an acceptable State or Federal regulatory agency;

    (4) The lender must maintain an office near enough to the 

collateral's location so it can properly and efficiently discharge its 

loan making and loan servicing responsibilities or use Agency approved 

agents, correspondents, branches, or other institutions or persons to 

provide expertise to assist in carrying out its responsibilities. The 

lender must be a local lender unless it:

    (i) Normally makes loans in the region or geographic location in 

which the loan applicant's operation being financed is located, or

    (ii) Demonstrates specific expertise in making and servicing loans 

for the proposed operation.

    (5) The lender, its officers, or agents must not be debarred or 

suspended from participation in Government contracts or programs or be 

delinquent on a Government debt.

    (c) Substitution of lenders. A new eligible lender may be 

substituted for the original lender, upon the original lender's 

concurrence, under the following conditions:

    (1) The Agency approves of the substitution in writing by executing 

a modification of the guarantee to identify the new lender, the amount 

of debt at the time of the substitution and any new loan terms if 

applicable.

    (2) The new lender agrees in writing to:

    (i) Assume all servicing and other responsibilities of the original 

lender and to acquire the unguaranteed portion of the loan;

    (ii) Execute a lender's agreement if one is not in effect;

    (iii) [Reserved]

    (iv) Give any holder written notice of the substitution. If the rate 

and terms are changed, written concurrence from the holder is required.

    (3) The original lender will:

    (i) Assign their promissory note, lien instruments, loan agreements, 

and other documents to the new lender.

    (ii) If the loan is subject to an existing interest assistance 

agreement, submit a request for subsidy for the partial year that it has 

owned the loan.

    (d) Lender name or ownership changes. (1) When a lender begins doing 

business under a new name or undergoes an ownership change the lender 

will notify the Agency.

    (2) The lender's CLP or PLP status is subject to reconsideration 

when ownership changes.

    (3) The lender will execute a new lender's agreement when ownership 

changes.



[64 FR 7378, Feb. 12, 1999, as amended at 66 FR 7567, Jan. 24, 2001]