[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: 7CFR762.129]



[Page 146]

 

                          TITLE 7--AGRICULTURE

 

       CHAPTER VII--FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

 

PART 762_GUARANTEED FARM LOANS--Table of Contents

 

Sec. 762.129  Percent of guarantee and maximum loss.



    (a) General. The percent of guarantee will not exceed 90 percent 

based on the credit risk to the lender and the Agency both before and 

after the transaction. The Agency will determine the percentage of 

guarantee.

    (b) Exceptions. The guarantee will be issued at 95 percent in any of 

the following circumstances:

    (1) The sole purpose of a guaranteed FO or OL is to refinance an 

Agency direct farm loan. When only a portion of the loan is used to 

refinance a direct Agency farm credit program loan, a weighted 

percentage of a guarantee will be provided;

    (2) When the purpose of an FO guarantee is to participate in the 

downpayment loan program;

    (3) When a guaranteed OL is made to a farmer or rancher who is 

participating in the Agency's down payment loan program. The guaranteed 

OL must be made during the period that a borrower has the down payment 

loan outstanding; or

    (4) When a guaranteed OL is made to a farmer or rancher whose farm 

or ranch land is subject to the jurisdiction of an Indian tribe and 

whose loan is secured by one or more security instruments that are 

subject to the jurisdiction of an Indian tribe.

    (c) CLP and PLP guarantees. All guarantees issued to CLP or PLP 

lenders will not be less than 80 percent.

    (d) Maximum loss. The maximum amount the Agency will pay the lender 

under the loan guarantee will be any loss sustained by such lender on 

the guaranteed portion including:

    (1) The pro rata share of principal and interest indebtedness as 

evidenced by the note or by assumption agreement;

    (2) Any loan subsidy due and owing;

    (3) The pro rata share of principal and interest indebtedness on 

secured protective and emergency advances made in accordance with this 

subpart; and

    (4) Principal and interest indebtedness on recapture debt pursuant 

to a shared appreciation agreement. Provided that the lender has paid 

the Agency its pro rata share of the recapture amount due.



[64 FR 7378, Feb. 12, 1999, as amended at 68 FR 7695, Feb. 18, 2003]