[Code of Federal Regulations]
[Title 7, Volume 10]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1436.16]

[Page 587-588]
 
                          TITLE 7--AGRICULTURE
 
  CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE
 
PART 1436_FARM STORAGE FACILITY LOAN PROGRAM REGULATIONS--Table of Contents
 
Sec.  1436.16  Foreclosure, liquidation, assumptions, sale or conveyance, bankruptcy.

    (a) The collateral or land securing a loan may be sold by CCC 
whenever CCC has declared the entire indebtedness immediately due and 
payable under this part as follows:
    (1) If a demand for payment is not received by the due date 
acceptable to CCC, CCC may call the loan and initiate foreclosure 
proceedings by issuing a liquidation letter to the borrower.
    (2) The debtor may voluntarily agree to allow removal of the 
collateral to facilitate sale by signing an agreement for sale. If the 
debtor objects to removal of collateral, the law of the state where the 
collateral exists will be used to foreclose on the property.
    (3) For loans with movable collateral and no real estate lien, CCC 
may sell the collateral for the best price obtainable. Sales proceeds 
shall be distributed in the following order:
    (i) To CCC to satisfy the debtor's indebtedness including all costs 
associated with selling the collateral.
    (ii) Payment to junior lien holders if approved by USDA's Office of 
the General Counsel and then to the borrower or other persons as 
determined appropriate by that office.
    (4) For loans with nonmovable collateral, as determined by CCC, and 
no real estate lien, CCC may establish a claim according to 7 CFR part 
1403.
    (5) For loans secured with a real estate lien, CCC may obtain an 
appraisal of the property. Sales proceeds shall be distributed in the 
following order:
    (i) To CCC to satisfy the debtor's indebtedness including all costs 
associated with selling the collateral and the appraisal.
    (ii) To junior lien holders if approved by USDA's Office of the 
General Counsel; or

[[Page 588]]

    (iii) To the borrower or other persons as determined appropriate by 
that office.
    (b) Assumption by another borrower of a farm storage facility loan 
is permitted subject to county committee approval and the subsequent 
borrower's ability to show a satisfactory credit history. An assumption 
of the loan may be approved when the collateral is sold by CCC to an 
otherwise eligible borrower, the current borrower will convey the 
collateral or property securing the loan to another eligible borrower, 
or the borrower is dead, incompetent, or missing and an eligible 
borrower wants to assume the loan.
    (1) Requests for approval of assumptions shall be made to the county 
committee by the borrower, the borrower's successors, or representatives 
of the borrower. If approval is granted, the borrower's successors or 
representatives shall execute a new farm storage facility note and 
security agreement for the balance of the term of the loan.
    (2) The principal amount of the loan shall include the unpaid amount 
of the loan, interest computed to the date of assumption, all past due 
installments, and any other charges that may be required.
    (c) The borrower may voluntarily convey the collateral to CCC before 
repaying the loan. Before a borrower sells or conveys the facilities or 
other property securing a loan without repaying the loan in full, the 
borrower shall obtain approval for the sale or conveyance from the FSA 
county committee with the understanding that sale proceeds shall be paid 
to satisfy the borrowers indebtedness to CCC.
    (d) Remedies provided for in this section shall, unless CCC 
determines otherwise, be subject to the administrative appeals provided 
for elsewhere in this part, including those that are found at Sec.  
1436.13.