[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: 7CFR762.143]



[Page 152]

 

                          TITLE 7--AGRICULTURE

 

       CHAPTER VII--FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

 

PART 762_GUARANTEED FARM LOANS--Table of Contents

 

Sec. 762.143  Servicing distressed accounts.



    (a) A borrower is in default when 30 days past due on a payment or 

in violation of provisions of the loan documents.

    (b) In the event of a borrower default, SEL and CLP lenders will:

    (1) Report to the Agency in accordance with Sec. 762.141.

    (2) Determine whether it will repurchase the guaranteed portion from 

the holder in accordance with Sec. 762.144, if the guaranteed portion 

of the loan was sold on the secondary market.

    (3) Arrange a meeting with the borrower within 15 days of default 

(45 days after payment due date for monetary defaults) to identify the 

nature of the delinquency and develop a course of action that will 

eliminate the delinquency and correct the underlying problems. Non-

monetary defaults will be handled in accordance with the lender's note, 

loan agreements and any other applicable loan documents.

    (i) The lender and borrower will prepare a current balance sheet and 

cash flow projection in preparation for the meeting. If the borrower 

refuses to cooperate, the lender will compile the best financial 

information available.

    (ii) The lender or the borrower may request the attendance of an 

Agency credit officer. If requested, the Agency credit officer will 

assist in developing solutions to the borrower's financial problems.

    (iii) The lender will summarize the meeting and proposed solutions 

on the Agency form for guaranteed loan borrower default status completed 

after the meeting. The lender will indicate the results on this form for 

the lender's consideration of the borrower for interest assistance in 

conjunction with rescheduling under Sec. 762.145(b).

    (iv) The lender must decide whether to restructure or liquidate the 

account within 90 days of default, unless the lender can document 

circumstances that justify an extension by the Agency.

    (v) The lender may not initiate foreclosure action on the loan until 

60 days after eligibility of the borrower to participate in the interest 

assistance programs has been determined by the Agency. If the lender or 

the borrower does not wish to consider servicing options under this 

section, this should be documented, and liquidation under Sec. 762.149 

should begin.

    (vi) If a borrower is current on a loan, but will be unable to make 

a payment, a restructuring proposal may be submitted in accordance with 

Sec. 762.145 prior to the payment coming due.

    (c) PLP lenders will service defaulted loans according to their 

lender's agreement.