[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: 7CFR762.160]



[Page 168]

 

                          TITLE 7--AGRICULTURE

 

       CHAPTER VII--FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE

 

PART 762_GUARANTEED FARM LOANS--Table of Contents

 

Sec. 762.160  Assignment of guarantee.



    (a) The following general requirements apply to assigning guaranteed 

loans:

    (1) Subject to Agency concurrence, the lender may assign all or part 

of the guaranteed portion of the loan to one or more holders at or after 

loan closing, if the loan is not in default. However, a line of credit 

cannot be assigned. The lender must always retain the unguaranteed 

portion in their portfolio, regardless of how the loan is funded.

    (2) The Agency may refuse to execute the Assignment of Guarantee and 

prohibit the assignment in case of the following:

    (i) The Agency purchased and is holder of a loan that was assigned 

by the lender that is requesting the assignment.

    (ii) The lender has not complied with the reimbursement requirements 

of Sec. 762.144(c)(7), except when the 180 day reimbursement or 

liquidation requirement has been waived by the Agency.

    (3) The lender will provide the Agency with copies of all 

appropriate forms used in the assignment.

    (4) The guaranteed portion of the loan may not be assigned by the 

lender until the loan has been fully disbursed to the borrower.

    (5) The lender is not permitted to assign any amount of the 

guaranteed or unguaranteed portion of the loan to the loan applicant or 

borrower, or members of their immediate families, their officers, 

directors, stockholders, other owners, or any parent, subsidiary, or 

affiliate.

    (6) Upon the lender's assignment of the guaranteed portion of the 

loan, the lender will remain bound to all obligations indicated in the 

Guarantee, Lender's Agreement, the Agency program regulations, and to 

future program regulations not inconsistent with the provisions of the 

Lenders Agreement. The lender retains all rights under the security 

instruments for the protection of the lender and the United States.

    (b) The following will occur upon the lender's assignment of the 

guaranteed portion of the loan:

    (1) The holder will succeed to all rights of the Guarantee 

pertaining to the portion of the loan assigned.

    (2) The lender will send the holder the borrower's executed note 

attached to the Guarantee.

    (3) The holder, upon written notice to the lender and the Agency, 

may assign the unpaid guaranteed portion of the loan. The holder must 

assign the guaranteed portion back to the original lender if requested 

for servicing or liquidation of the account.

    (4) The Guarantee or Assignment of Guarantee in the holder's 

possession does not cover:

    (i) Interest accruing 90 days after the holder has demanded 

repurchase by the lender, except as provided in the Assignment of 

Guarantee and Sec. 762.144(c)(3)(iii).

    (ii) Interest accruing 90 days after the lender or the Agency has 

requested the holder to surrender evidence of debt repurchase, if the 

holder has not previously demanded repurchase.

    (c) Negotiations concerning premiums, fees, and additional payments 

for loans are to take place between the holder and the lender. The 

Agency will participate in such negotiations only as a provider of 

information.



[70 FR 56107, Sept. 26, 2005]