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					                                                                     RHS, RBS, RUS, FSA, USDA                                                                                                  Pt. 1955

                                                                                                                                                                                    Est. No.
                                                                                                                                       Estimated                    Total annual                Est. total
                                                                      Sect. of regula-                                  Form No. (if                 Report filed                   of man-
                                                                                                     Title                             No. of re-                    responses                  manhours
                                                                           tions                                           any)                       annually                      hrs. per
                                                                                                     (B)                               spondents                      (d) × (e)                  (f) × (g)
                                                                             (A)                                            (C)                         (E)                        response
                                                                                                                                          (D)                            (F)                        (H)
                                                                                                                                                                                      (G)

                                                                                                                      Reporting Requirements—No Forms

                                                                     1951.889(d)           Transferee financial         Written                  2   1                        2           .5            1
                                                                                             statement

                                                                                                                       Form Approved with this Docket

                                                                     1951.883(a)(2)        IRP Lending Activity Re-     1951–4
                                                                                             port
                                                                                           IRP borrower                                         10   4                       40           20          800
                                                                                           RDLF borrower                                        26   2                       52           20         1040

                                                                                                              Reporting Requirements Under Other Numbers

                                                                     1951.872(b)           Request for Environ-         1940–20
                                                                                             mental Information           (0575–
                                                                                                                          0094)
                                                                                                                                                                           1494                    22,726

                                                                       1 Docket  totals.
                                                                       2 Total hours.




                                                                                  PART 1955—PROPERTY                                        1955.22 State supplements.
                                                                                                                                            1955.23–1955.49 [Reserved]
                                                                                     MANAGEMENT                                             1955.50 OMB control number.
                                                                                                                                            EXHIBITS A–F TO SUBPART A [RESERVED]
                                                                     Subpart A—Liquidation of Loans Secured
                                                                        by Real Estate and Acquisition of Real                                 Subpart B—Management of Property
                                                                        and Chattel Property
                                                                                                                                            1955.51 Purpose.
                                                                     Sec.                                                                   1955.52 Policy.
                                                                     1955.1 Purpose.                                                        1955.53 Definitions.
                                                                     1955.2 Policy.                                                         1955.54 Redelegation of authority.
                                                                     1955.3 Definitions.                                                    1955.55 Taking abandoned real or chattel
                                                                     1955.4 Redelegation of authority.                                          property into custody and related ac-
                                                                     1955.5 General actions.                                                    tions.
                                                                     1955.6–1955.8 [Reserved]                                               1955.56 Real property located in Coastal
                                                                     1955.9 Requirements for voluntary convey-                                  Barrier Resources System (CBRS).
                                                                         ance of real property located within a                             1955.57 Real property containing under-
                                                                         federally recognized Indian reservation                                ground storage tanks.
                                                                         owned by a Native American borrower-                               1955.58–1955.59 [Reserved]
                                                                         owner.                                                             1955.60 Inventory property subject to re-
                                                                     1955.10 Voluntary conveyance of real prop-                                 demption by the borrower.
                                                                         erty by the borrower to the Government.                            1955.61 Eviction of persons occupying inven-
                                                                     1955.11 Conveyance of property to FmHA or                                  tory real property or dispossession of
                                                                         its successor agency under Public Law                                  persons in possession of chattel property.
                                                                         103–354 by trustee in bankruptcy.                                  1955.62 Removal and disposition of nonsecu-
                                                                     1955.12 Acquisition of property which served                               rity personal property from inventory
                                                                         as security for a loan guaranteed by                                   real property.
                                                                         FmHA or its successor agency under                                 1955.63 Suitability determination.
                                                                         Public Law 103–354 or at sale by another                           1955.64 [Reserved]
                                                                         lienholder, bankruptcy trustee, or taxing                          1955.65 Management of inventory and/or
                                                                         authority.                                                             custodial real property.
                                                                     1955.13 Acquisition of property by exercise                            1955.66 Lease of real property.
                                                                         of Government redemption rights.                                   1955.67–1955.71 [Reserved]
                                                                     1955.14 [Reserved]                                                     1955.72 Utilization of inventory housing by
                                                                     1955.15 Foreclosure by the Government of                                   Federal Emergency Management Agency
                                                                         loans secured by real estate.                                          (FEMA) or under a Memorandum of Un-
                                                                     1955.16–1955.17 [Reserved]                                                 derstanding between the Agency and the
                                                                     1955.18 Actions required after acquisition of                              Department of Health and Human Serv-
                                                                         property.                                                              ices (HHS) for transitional housing for
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                                                                     1955.19 [Reserved]                                                         the homeless.
                                                                     1955.20 Acquisition of chattel property.                               1955.73–1955.80 [Reserved]
                                                                     1955.21 Exception authority.                                           1955.81 Exception authority.

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                                                                     § 1955.1                                                              7 CFR Ch. XVIII (1–1–09 Edition)
                                                                     1955.82 State supplements.                                     USE OF CONTRACTORS TO DISPOSE OF
                                                                     1955.83–1955.99 [Reserved]                                            INVENTORY PROPERTY
                                                                     1955.100 OMB control number.                              1955.127 Selection and use of contractors to
                                                                     EXHIBIT A TO SUBPART B—MEMORANDUM OF                          dispose of inventory property.
                                                                         UNDERSTANDING BETWEEN THE FEDERAL                     1955.128 Appraisers.
                                                                         EMERGENCY MANAGEMENT AGENCY AND                       1955.129 Business brokers.
                                                                         THE FARMERS HOME ADMINISTRATION OR                    1955.130 Real estate brokers.
                                                                         ITS SUCCESSOR AGENCY UNDER PUBLIC                     1955.131 Auctioneers.
                                                                         LAW 103–354 [NOTE]
                                                                     EXHIBIT B TO SUBPART B—NOTIFICATION OF                                         GENERAL
                                                                         TRIBE OF AVAILABLITY OF FARM PROP-                    1955.132 Pilot projects.
                                                                         ERTY FOR PURCHASE                                     1955.133 Nondiscrimination.
                                                                     EXHIBIT C TO SUBPART B—COOPERATIVE                        1955.134 Loss, damage, or existing defects in
                                                                         AGREEMENT (EXAMPLE) [NOTE]                                inventory real property.
                                                                     EXHIBIT D TO SUBPART B—FACT SHEET—THE                     1955.135 Taxes on inventory real property.
                                                                         FEDERAL INTERAGENCY TASK FORCE ON                     1955.136 Environmental Assessment (EA)
                                                                         FOOD AND SHELTER FOR THE HOMELESS                         and Environmental Impact Statement
                                                                         [NOTE]                                                    (EIS).
                                                                                                                               1955.137 Real property located in special
                                                                      Subpart C—Disposal of Inventory Property                     areas or having special characteristics.
                                                                                                                               1955.138 Property subject to redemption
                                                                                        INTRODUCTION                               rights.
                                                                                                                               1955.139 Disposition of real property rights
                                                                     1955.101   Purpose.
                                                                                                                                   and title to real property.
                                                                     1955.102   Policy.                                        1955.140 Sale in parcels.
                                                                     1955.103   Definitions.                                   1955.141 Transferring title.
                                                                     1955.104   Authorities and responsibilities.              1955.142–1955.143 [Reserved]
                                                                                                                               1955.144 Disposal of NP or surplus property
                                                                     CONSOLIDATED FARM AND RURAL DEVELOP-
                                                                                                                                   to, through, or acquisition from other
                                                                        MENT ACT (CONACT) REAL PROPERTY
                                                                                                                                   agencies.
                                                                     1955.105   Real property affected (CONACT).               1955.145 Land acquisition to effect sale.
                                                                     1955.106   Disposition of farm property.                  1955.146 Advertising.
                                                                     1955.107   Sale of FSA property (CONACT).                 1955.147 Sealed bid sales.
                                                                     1955.108   Sale of (CONACT) property other                1955.148 Auction sales.
                                                                         than   FSA property.                                  1955.149 Exception authority.
                                                                     1955.109   Processing and closing (CONACT).               1955.150 State supplements.
                                                                                                                               EXHIBIT A TO SUBPART C—NOTICE OF FLOOD,
                                                                         RURAL HOUSING (RH) REAL PROPERTY                          MUDSLIDE HAZARD, OR WETLAND AREA
                                                                     1955.110 [Reserved]                                         AUTHORITY: 5 U.S.C. 301; 7 U.S.C. 1989; 42
                                                                     1955.111 Sale of real estate for RH purposes              U.S.C. 1480.
                                                                         (housing).
                                                                                                                                 SOURCE: 50 FR 23904, June 7, 1985, unless
                                                                     1955.112 Method of sale (housing).                        otherwise noted.
                                                                     1955.113 Price (housing).
                                                                     1955.114 Sales steps for program property
                                                                         (housing).                                            Subpart A—Liquidation of Loans
                                                                     1955.115 Sales steps for nonprogram (NP)                     Secured by Real Estate and
                                                                         property (housing).                                      Acquisition of Real and Chat-
                                                                     1955.116 Requirements for sale of property
                                                                         not meeting decent, safe and sanitary
                                                                                                                                  tel Property
                                                                         (DSS) standards (housing).
                                                                                                                               § 1955.1 Purpose.
                                                                     1955.117 Processing credit sales on program
                                                                         terms (housing).                                         This subpart delegates authority and
                                                                     1955.118 Processing cash sales or MFH credit              prescribes procedures for the liquida-
                                                                         sales on NP terms.                                    tion of loans to individuals and to or-
                                                                     1955.119 Sale of SFH inventory property to a              ganizations as identified in § 1955.3 of
                                                                         public body or nonprofit organization.                this subpart. It pertains to the Multi-
                                                                     1955.120 Payment of points (housing).
                                                                                                                               Family Housing (MFH) and Commu-
                                                                                     CHATTEL PROPERTY                          nity Facility (CF) programs of the
                                                                                                                               Rural Housing Service (RHS), and di-
                                                                     1955.121 Sale of acquired chattels (chattel).
                                                                     1955.122 Method of sale (chattel).                        rect programs of the Rural Business-
                                                                     1955.123 Sale procedures (chattel).                       Cooperative Service (RBS). Guaranteed
                                                                                                                               RBS loans are liquidated upon direc-
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                                                                     1955.124 Sale with inventory real estate
                                                                         (chattel).                                            tion from the Deputy Administrator,
                                                                     1955.125–1955.126 [Reserved]                              Business Programs, RBS. This subpart

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                            § 1955.3

                                                                     does not apply to Farm Service Agen-                        CONACT or CONACT property. Prop-
                                                                     cy, Farm Loan Programs, to RHS sin-                       erty acquired or sold pursuant to the
                                                                     gle family housing loans, or to CF                        Consolidated Farm and Rural Develop-
                                                                     loans sold without insurance in the pri-                  ment Act. Within this subpart, it shall
                                                                     vate sector. These CF loans will be                       also be construed to cover property
                                                                     serviced in the private sector, and fu-                   which secured loans made pursuant to
                                                                     ture revisions to this subpart no longer                  the Agriculture Credit Act of 1978; the
                                                                     apply to such loans. This subpart does                    Emergency Agricultural Credit Adjust-
                                                                     not apply to the Rural Rental Housing,                    ment Act of 1978; the Emergency Agri-
                                                                     Rural Cooperative Housing, or Farm                        cultural Credit Act of 1984; the Food
                                                                     Labor Housing Programs of RHS. In                         Security Act of 1985; and other statutes
                                                                     addition, this subpart does not apply to                  giving agricultural lending authority
                                                                     Water and Waste Programs of the                           to FmHA or its successor agency under
                                                                     Rural Utilities Service, Watershed                        Public Law 103–354.
                                                                     loans, and Resource Conservation and                        Farmer Programs loans. The term
                                                                     Development loans, which are serviced                     ‘‘Farmer Program loans’’ (FP) refers to
                                                                     under part 1782 of this title.                            the following types of loans: Farm
                                                                                                                               Ownership (FO), Soil and Water (SW),
                                                                     [72 FR 55019, Sept. 28, 2007, as amended at 72            Recreation (RL), Economic Oppor-
                                                                     FR 64123, Nov. 15, 2007]
                                                                                                                               tunity (EO), Operating (OL), Emer-
                                                                                                                               gency (EM), Economic Emergency
                                                                     § 1955.2     Policy.
                                                                                                                               (EE), Softwood Timber (ST), and Rural
                                                                       When it has been determined in ac-                      Housing Loans for farm service build-
                                                                     cordance with applicable loan servicing                   ings (RHF).
                                                                     regulations that further servicing will                     Government. The United States of
                                                                     not achieve loan objectives and that                      America acting through the Farmers
                                                                     voluntary sale of the property by the                     Home Administration or its successor
                                                                     borrower (except for Multiple Family                      agency under Public Law 103–354
                                                                     Housing (MFH) loans subject to pre-                       (FmHA or its successor agency under
                                                                     payment restrictions) cannot be ac-                       Public Law 103–354), U.S. Department
                                                                     complished, the loan(s) will be liq-                      of Agriculture; used interchangeably
                                                                     uidated through voluntary conveyance                      herein with ‘‘FmHA or its successor
                                                                     of the property to FmHA or its suc-                       agency under Public Law 103–354.’’
                                                                     cessor agency under Public Law 103–354                      Homestead protection. The Farmer
                                                                     or by foreclosure as outlined in this                     Programs borrower-owner’s right to
                                                                     subpart. For MFH loans subject to the                     lease with an option to purchase the
                                                                     prepayment restrictions, voluntary liq-                   principal residence located on or off
                                                                     uidation may be accomplished only                         the farm and up to 10 acres of adjoining
                                                                     through voluntary conveyance to                           land possessed and occupied by the bor-
                                                                     FmHA or its successor agency under                        rower-owner, including a reasonable
                                                                     Public Law 103–354 in accordance with                     number of farm outbuildings located on
                                                                     applicable portions of § 1955.10 of this                  the adjoining land that are useful to
                                                                     subpart. Nonprogram (NP) loans, ex-                       the occupants of the homestead.
                                                                     cept for Community and Business Pro-                        Interest credit. The terms ‘‘interest
                                                                     grams, will be liquidated as provided in                  credit’’ and ‘‘interest credit assist-
                                                                     subpart J of part 1951 of this chapter,                   ance,’’ as they relate to Single Family
                                                                     unless specifically referenced in this                    Housing (SFH) loans, are interchange-
                                                                     subpart.                                                  able with the term ‘‘payment assist-
                                                                                                                               ance.’’ Payment assistance is the ge-
                                                                     [51 FR 4138, Feb. 3, 1986, as amended at 53 FR            neric term for the subsidy provided to
                                                                     27826, July 25, 1988; 58 FR 52652, Oct. 12, 1993]
                                                                                                                               eligible SFH borrowers to reduce mort-
                                                                                                                               gage payments.
                                                                     § 1955.3     Definitions.
                                                                                                                                 Loans to individuals. Farm Ownership
                                                                       As used in this subpart, the following                  (FO), Soil and Water (SW), Recreation
                                                                     definitions apply:                                        (RL), Special Livestock (SL), Eco-
                                                                       Closing agent. An attorney or title in-                 nomic Opportunity (EO), Operating
                                                                     surance company which is approved as                      (OL), Emergency (EM), Economic
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                                                                     a loan closing agent in accordance with                   Emergency (EE), Softwood Timber
                                                                     subpart B of part 1927 of this chapter.                   (ST), and Rural Housing loans for farm

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                                                                     § 1955.4                                                              7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     service buildings (RHF), whether to in-                     Prior lien. A security instrument
                                                                     dividuals or entities, referred to in this                (such as a mortgage or deed of trust) or
                                                                     subpart as Farmer Programs (FP)                           a judgment which was of public record
                                                                     loans; and Land Conservation and De-                      before the FmHA or its successor agen-
                                                                     velopment (LCD); and Single-Family                        cy under Public Law 103–354 security
                                                                     Housing (SFH), including both Section                     instrument(s) as well as real estate
                                                                     502 and 504 loans.                                        taxes or assessments which are or will
                                                                       Loans to Native Americans. Farmer                       become a lien against the property
                                                                     Program loans secured by real estate                      which is superior to FmHA or its suc-
                                                                     located within the boundaries of a fed-                   cessor agency under Public Law 103–
                                                                     erally recognized Indian reservation.                     354’s security instrument(s).
                                                                     The Native American borrower-owner                          Recoverable cost is a contractual or
                                                                     is defined as the party who pledged real                  noncontractual program loan cost ex-
                                                                     estate as collateral for an FP loan and                   pense chargeable to a borrower, prop-
                                                                     is the tribe or a member of the tribe                     erty account, or part of the loan sub-
                                                                     with control over the reservation.                        sidy.
                                                                       Loans to organizations. Community                         Servicing official. For loans to individ-
                                                                     Facility (CF); Water and Waste Dis-                       uals as defined in paragraph (d) of this
                                                                     posal (WWD); Association Recreation;                      section, the servicing official is the
                                                                     Watershed (WS); Resource Conserva-                        County Supervisor. For insured B&I
                                                                     tion and Development (RC&D); insured                      loans, the servicing official is the State
                                                                     Business and Industrial (B&I) both to                     Director. For RDLF and IRP, the serv-
                                                                     individuals and groups; Rural Develop-                    icing official is the Director, Business
                                                                     ment Loan Fund (RDLF); Intermediary                       and Industry Division. For NNC, the
                                                                     Relending Program (IRP); Nonprofit                        servicing official is the Director, Com-
                                                                     National Corporations (NNC); loans to                     munity Facility Division. For all other
                                                                     associations for Irrigation and Drain-                    types of loans, the servicing official is
                                                                     age (I&D) and other Soil and Water                        the District Director.
                                                                     conservation measures; loans to Indian                    [50 FR 23904, June 7, 1985, as amended at 50
                                                                     Tribes and Tribal Corporations; Shift-                    FR 45782, Nov. 1, 1985; 52 FR 26138, July 13,
                                                                     In-Land Use (Grazing Association);                        1987; 53 FR 27826, July 25, 1988; 53 FR 30664,
                                                                     Economic Opportunity Cooperative                          Aug. 15, 1988; 53 FR 35762, Sept. 14, 1988; 56 FR
                                                                                                                               15821, Apr. 18, 1991; 56 FR 29402, June 27, 1991;
                                                                     (EOC); Rural Housing Site (RHS);
                                                                                                                               56 FR 67484, Dec. 31, 1991; 58 FR 68723, Dec. 29,
                                                                     Rural Cooperative Housing (RCH);                          1993; 60 FR 55147, Oct. 27, 1995; 62 FR 44395,
                                                                     Rural Rental Housing (RRH) and Labor                      Aug. 21, 1997; 63 FR 41716, Aug. 5, 1998]
                                                                     Housing (LH) to both individuals and
                                                                     groups. The housing-type organization                     § 1955.4     Redelegation of authority.
                                                                     loans identified here are referred to in                    Authorities will be redelegated to the
                                                                     this subpart collectively as Multiple-                    extent possible, consistent with pro-
                                                                     family Housing (MFH) loans.                               gram requirements and available re-
                                                                       Market value. The most probable                         sources.
                                                                     price which property should bring, as                       (a) Except as provided in § 1900.6(c) of
                                                                     of a specific date, in a competitive and                  this chapter, any authority in this sub-
                                                                     open market, assuming the buyer and                       part which is specifically delegated to
                                                                     seller are prudent and knowledgeable,                     the Administrator or to an Deputy Ad-
                                                                     and the price is not affected by undue                    ministrator may only be delegated to a
                                                                     stimulus such as forced sale or loan in-                  State Director. The State Director can-
                                                                     terest subsidy.                                           not redelegate such authority.
                                                                       Nonrecoverable cost is a contractual or                   (b) Except as provided in paragraph
                                                                     noncontractual program loan cost ex-                      (a) of this section, the State Director is
                                                                     pense not chargeable to a borrower,                       authorized to redelegate, in writing,
                                                                     property account, or part of the loan                     any authority delegated to the State
                                                                     subsidy.                                                  Director in this subpart to a Program
                                                                       OGC. The Office of the General Coun-                    Chief, Program Specialist or Property
                                                                     sel, U.S. Department of Agriculture;                      Management Specialist on the State
                                                                     refers to the Regional Attorney or At-                    Office staff; except the authority to ap-
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                                                                     torney-in-Charge in an OGC field office                   prove or disapprove foreclosure as out-
                                                                     unless otherwise indicated.                               lined in § 1955.115(a)(2) of this subpart

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                            § 1955.9

                                                                     may not be redelegated. However, a                        ized to execute all necessary forms and
                                                                     duly-designated Acting State Director                     documents except notices of accelera-
                                                                     may approve or disapprove foreclosure.                    tion required to complete transactions
                                                                       (c) The District Director is author-                    covered by this subpart.
                                                                     ized to redelegate, in writing, any au-                      (2) After liquidation of loans to orga-
                                                                     thority delegated to the District Direc-                  nizations has been approved by the ap-
                                                                     tor in this subpart to an Assistant Dis-                  propriate official, the District Director
                                                                     trict Director or District Loan Spe-                      is authorized to execute all forms and
                                                                     cialist determined by the District Di-                    documents for completion of the liq-
                                                                     rector to be qualified; except the au-                    uidation except:
                                                                     thority to approve or disapprove fore-                       (i) Notice of acceleration; or
                                                                     closure as outlined in § 1955.15(a)(1) of                    (ii) Other form or document which
                                                                     this subpart may not be redelegated.                      specifically required State or National
                                                                     However, a duly designated Acting Dis-                    Office approval because of monetary
                                                                     trict Director may approve or dis-                        limits or policy statement established
                                                                     approve foreclosure. Authority of Dis-                    elsewhere in this subpart.
                                                                     trict Directors in this subpart applies                      (c) Unused loan funds. (1) Funds re-
                                                                     to Area Loan Specialists in Alaska and                    maining in a supervised bank account
                                                                     the Director for the Western Pacific                      will be handed in accordance with
                                                                     Territories.                                              § 1902.15 of subpart A of part 1902 of this
                                                                       (d) The County Supervisor is author-                    chapter before a voluntary conveyance
                                                                     ized to redelegate, in writing, any au-                   or foreclosure is processed.
                                                                     thority delegated to the County Super-                       (2) Funds remaining in a construc-
                                                                     visor in this subpart to an Assistant                     tion or other account will be applied to
                                                                     County Supervisor, GS–7, or above, de-                    the borrower’s FmHA or its successor
                                                                     termined by the County Supervisor to                      agency under Public Law 103–354 ac-
                                                                     be qualified. Authority of County Su-                     counts.
                                                                     pervisors in this subpart applies to                         (d) Payment of costs. Costs related to
                                                                     Area Loan Specialists in Alaska and                       liquidation of a loan or acquisition of
                                                                     Area Supervisors in the Western Pa-                       property will be paid according to
                                                                     cific Territories and American Samoa.                     FmHA or its successor agency under
                                                                       (e) The monetary limitations on ac-                     Public Law 103–354 Instruction 2024–A
                                                                     ceptance of voluntary conveyance as                       (available in any FmHA or its suc-
                                                                     provided in § 1955.10(a) of this subpart                  cessor agency under Public Law 103–354
                                                                     may not be redelegated from a higher-                     office) as either a recoverable or non-
                                                                     level official to a lower level official.                 recoverable cost as defined in § 1955.3 of
                                                                     [53 FR 27826, July 25, 1988, as amended at 54             this subpart.
                                                                     FR 6875, Feb. 15, 1989; 59 FR 43441, Aug. 24,                (e) Escrow funds. Any funds remain-
                                                                     1994; 62 FR 44395, Aug. 21, 1997]                         ing in the borrower’s escrow account at
                                                                                                                               the time of liquidation by voluntary
                                                                     § 1955.5 General actions.
                                                                                                                               conveyance or foreclosure are non-
                                                                        (a) Assignment of notes to FmHA or its                 refundable and will be credited to the
                                                                     successor agency under Public Law 103–                    borrower’s loan account.
                                                                     354. When liquidation action is ap-
                                                                     proved and the insured note is not held                   [50 FR 23904, June 7, 1985, as amended at 56
                                                                                                                               FR 6953, Feb. 21, 1991, 57 FR 36590, Aug. 14,
                                                                     in the County or District Office, the
                                                                                                                               1992]
                                                                     approval official will request the Fi-
                                                                     nance Office to purchase the note and                     §§ 1955.6–1955.8     [Reserved]
                                                                     forward it to the appropriate office.
                                                                     Voluntary conveyance may be closed                        § 1955.9 Requirements for voluntary
                                                                     pending receipt of the note(s), and fore-                     conveyance of real property located
                                                                     closure may also be processed pending                         within a federally recognized In-
                                                                     receipt of the note(s), unless the origi-                     dian reservation owned by a Native
                                                                     nal note is required in connection with                       American borrower-owner.
                                                                     the foreclosure action.                                     (a) The borrower-owner is a member
                                                                        (b) Execution of documents. (1) After                  of the tribe that has jurisdiction over
                                                                     liquidation of loans to individuals has                   the reservation in which the real prop-
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                                                                     been approved by the appropriate offi-                    erty is located. An Indian tribe may
                                                                     cial, the County Supervisor is author-                    also meet the borrower-owner criterion

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                                                                     § 1955.9                                                              7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     if it is indebted for Farm Credit Pro-                    loans, the following actions shall
                                                                     grams loans.                                              occur:
                                                                       (b) A voluntary conveyance will be                        (A) FSA shall not foreclose the loan
                                                                     accepted only after all preacquisition                    because of any default that occurred
                                                                     primary and preservation servicing ac-                    before the date of the assumption.
                                                                     tions have been considered in accord-                       (B) The assumed loan shall be for the
                                                                     ance with subpart S of part 1951 of this                  lesser of the outstanding principal and
                                                                     chapter.                                                  interest of the loan or the fair market
                                                                       (c) When all servicing actions have                     value of the property as determined by
                                                                     been considered under subpart S of part                   an appraisal.
                                                                     1951 of this chapter and a positive out-                    (C) The assumed loan shall be treated
                                                                     come cannot be achieved, the following                    as though it is a regular Indian Land
                                                                     additional actions are to be taken:                       Acquisition Loan made in accordance
                                                                       (1) The county official will notify the                 with subpart N of part 1823 of this
                                                                     Native American borrower-owner and                        chapter.
                                                                     the tribe by certified mail, return re-                     (3) If a Native American borrower-
                                                                     ceipt requested, and by regular mail if                   owner does not voluntarily convey the
                                                                     the certified mail is not received, that:                 real property to FSA, not less than 30
                                                                       (i) The borrower-owner may convey                       days before a foreclosure sale of the
                                                                     the real estate security to FSA and                       property, FSA will provide written no-
                                                                     FSA will consider acceptance of the                       tice to the Indian tribe that has juris-
                                                                     property into inventory in accordance                     diction over the reservation in which
                                                                     with paragraph (d) of this section.                       the real property is located of the fol-
                                                                       (ii) The borrower-owner must inform                     lowing:
                                                                     FSA within 60 days from receipt of this                     (i) The sale;
                                                                     notice of the borrower and owner’s de-                      (ii) The fair market value of the
                                                                     cision to deed the property to FSA;                       property; and
                                                                       (iii) The borrower-owner has the op-                      (iii) The ability of the Native Amer-
                                                                     portunity to consult with the Indian                      ican borrower-owner to require the as-
                                                                     tribe that has jurisdiction over the res-                 signment of the loan and security in-
                                                                     ervation in which the real property is                    struments either to the Secretary of
                                                                     located, or counsel, to determine if                      the Interior or the tribe (and the con-
                                                                     State or tribal law provides rights and                   sequences of either action) as provided
                                                                     protections that are more beneficial                      in § 1955.9(c)(2).
                                                                     than those provided the borrower-                           (4) FSA will accept the offer of vol-
                                                                     owner under Agency regulations;                           untary conveyance of the property un-
                                                                       (2) If the borrower-owner does not                      less a hazardous substance, as defined
                                                                     voluntarily deed the property to FSA,                     in the Comprehensive Environmental
                                                                     not later than 30 days before the fore-                   Response, Compensation, and Liability
                                                                     closure sale, FSA will provide the Na-                    Act of 1980, is located on the property
                                                                     tive American borrower-owner with the                     which will require FSA to take reme-
                                                                     following options:                                        dial action to protect human health or
                                                                       (i) The Native American borrower-                       the environment if the property is
                                                                     owner may require FSA to assign the                       taken into inventory. In this case, a
                                                                     loan and security instruments to the                      voluntary conveyance will be accepted
                                                                     Secretary of the Interior. If the Sec-                    only if FSA determines that it is in the
                                                                     retary of the Interior agrees to such an                  best interests of the Government to ac-
                                                                     assignment, FSA will be released from                     quire title to the property.
                                                                     all further responsibility for collection                   (d) When determining whether to ac-
                                                                     of any amounts with regard to the                         cept a voluntary conveyance of a Na-
                                                                     loans secured by the real property.                       tive American borrower-owner’s real
                                                                       (ii) The Native American borrower-                      property, the county official must con-
                                                                     owner may require FSA to complete a                       sider:
                                                                     transfer and assumption of the loan to                      (1) The cost of cleaning or mitigating
                                                                     the tribe having jurisdiction over the                    the effects if a hazardous substance is
                                                                     reservation in which the real property                    found on the property. A deduction
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                                                                     is located if the tribe agrees to the as-                 equal to the amount of the cost of a
                                                                     sumption. If the tribe assumes the                        hazardous waste clean-up will be made

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.10

                                                                     to the fair market value of the prop-                     rowers, a voluntary conveyance should
                                                                     erty to determine if it is in the best in-                only be considered after all available
                                                                     terest of the Government to accept                        servicing actions outlined in the re-
                                                                     title to the property. FSA will accept                    spective servicing regulations have
                                                                     the property if clear title can be ob-                    been used or considered and it is deter-
                                                                     tained and if the value of the property                   mined that the borrower will not be
                                                                     after removal of hazardous substances                     successful. For FP borrowers, if the
                                                                     exceeds the cost of hazardous waste                       borrower has not received exhibit A
                                                                     clean-up.                                                 with attachments 1 and 2 of subpart S
                                                                       (2) If the property is located within                   of part 1951 of this chapter, a voluntary
                                                                     the boundaries of a federally recog-                      conveyance should be accepted only
                                                                     nized Indian reservation, and is owned                    after the borrower has been sent ex-
                                                                     by a member of the tribe with jurisdic-                   hibit A with attachments 1 and 2 of
                                                                     tion over the reservation, FSA will                       subpart S of 1951 of this chapter; all
                                                                     credit the Native American borrower-                      available servicing actions outlined in
                                                                     owner’s account based on the fair mar-                    the respective program servicing regu-
                                                                     ket value of the property or the FSA                      lations have been used or considered;
                                                                     debt against the property, whichever is                   and it will be in the Government’s best
                                                                     greater.                                                  financial interest to accept the FP vol-
                                                                     [62 FR 44395, Aug. 21, 1997]                              untary conveyance. Exhibit G of this
                                                                                                                               subpart will be used to determine
                                                                     § 1955.10 Voluntary conveyance of real                    whether or not to accept an FP vol-
                                                                          property by the borrower to the                      untary conveyance. In determining if
                                                                          Government.                                          the acceptance of the FP voluntary
                                                                        Voluntary conveyance is a method of                    conveyance is in the best financial in-
                                                                     liquidation by which title to security is                 terest of the Government, the County
                                                                     transferred to the Government. FmHA                       Supervisor will determine if the bor-
                                                                     or its successor agency under Public                      rower has exhausted all possibilities of
                                                                     Law 103–354 will not make a demand on                     restructuring the loan to where a fea-
                                                                     a borrower to voluntarily convey. If                      sible plan of operation may be devel-
                                                                     there is equity in the property. FmHA                     oped, the borrower has acted in good
                                                                     or its successor agency under Public                      faith in trying to service the debt and
                                                                     Law 103–354 should advise the borrower,                   FmHA or its successor agency under
                                                                     in writing, that there is equity in the                   Public Law 103–354 may recover its in-
                                                                     property before accepting an offer to                     vestment in return for the acceptance
                                                                     voluntarily convey. If FmHA or its suc-                   of the voluntary conveyance. In addi-
                                                                     cessor agency under Public Law 103–354                    tion, prior to acceptance of a voluntary
                                                                     receives an offer of voluntary convey-                    conveyance of farm real property that
                                                                     ance, acceptance should only be consid-                   collateralizes an FP loan, the County
                                                                     ered when the Government will likely                      Supervisor will remind the borrower-
                                                                     receive a recovery on its investment.                     owner of possible deed restrictions and
                                                                     In cases where there are outstanding                      easement that may be placed on the
                                                                     liens, a full assessment should be made                   property in the event the property con-
                                                                     of the debts against the property com-                    tains wetlands, floodplains, historical
                                                                     pared to the current market value.                        sites and/or other federally protected
                                                                     FmHA or its successor agency under                        environmental resources as set forth in
                                                                     Public Law 103–354 should refuse the                      exhibit M of subpart G of part 1940 of
                                                                     voluntary conveyance, if the FmHA or                      this chapter and § 1955.137 of subpart C
                                                                     its successor agency under Public Law                     of part 1955 of this chapter. When it is
                                                                     103–354 lien has neither present nor pro-                 determined that all conditions of
                                                                     spective value or recovery of the value                   § 1951.558(b) of subpart L of part 1951 of
                                                                     would be unlikely or uneconomical. In-                    this chapter have been met, loans for
                                                                     stead, for loans to individuals, FmHA                     unauthorized assistance will be treated
                                                                     or its successor agency under Public                      as authorized loans and exhibit A with
                                                                     Law 103–354 should release its lien as                    attachments 1 and 2 of subpart S of
                                                                     valueless in accordance with § 1965.25(d)                 part 1951 of this chapter will be sent
                                                                     of subpart A of part 1965 of this chapter                 prior to accepting a voluntary convey-
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                                                                     or § 1965.118(c) of subpart C of this chap-               ance. Those borrowers who are in-
                                                                     ter, as appropriate. For non-FP bor-                      debted for nonprogram (NP) loans who

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                                                                     § 1955.10                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     wish to voluntarily convey property                       volved; a statement of essential facts;
                                                                     will not be sent exhibit A with attach-                   and recommendations of the State Di-
                                                                     ments 1 and 2 of subpart S of part 1951                   rector and Program Chief. Submissions
                                                                     of this chapter. For Farmer Program                       are to be addressed to the Adminis-
                                                                     borrowers who have received exhibit A                     trator, ATTN: (appropriate program di-
                                                                     with attachments 1 and 2 of subpart S                     vision.)
                                                                     of part 1951 of this chapter, a voluntary                    (b) Forms and documents. All forms
                                                                     conveyance should only be accepted                        and documents in connection with vol-
                                                                     when it is determined to be in the Gov-                   untary conveyance will be prepared
                                                                     ernment’s best financial interest. Re-                    and distributed in accordance with the
                                                                     jection of an offer of voluntary convey-                  respective FMI or applicable OGC in-
                                                                     ance made before or after acceleration                    structions. For loans to individuals
                                                                     from an FP borrower is appealable. For                    when the County Supervisor has ap-
                                                                     borrowers having both FP and non-FP                       proval authority, the facts will be doc-
                                                                     loans secured by a farm tract, a vol-                     umented in the running record of the
                                                                     untary conveyance should be handled                       borrower’s case file. For all other
                                                                     as outlined above for non-FP loans se-                    loans, the servicing official will submit
                                                                     cured by farm tracts, except that the                     the voluntary conveyance offer, the
                                                                     applicable servicing option for the FP                    case file and a narrative report to the
                                                                     and non-FP loans should be considered                     appropriate approval official.
                                                                     separately. This separation of servicing                     (c) Liens against the property other
                                                                     options may permit a borrower to re-                      than FmHA or its successor agency under
                                                                     tain the nonfarm tract. For newly con-                    Public Law 103–354 liens—(1) Prior liens.
                                                                     structed SFH properties with major                        (i) The approval official will determine
                                                                     construction defects, see subpart F of                    whether or not prior liens will be paid.
                                                                     part 1924 of this chapter.                                Normally, the Government will pay
                                                                       (a) Authority—(1) Loans to individ-                     prior liens in full prior to acquisition
                                                                     uals—(i) SFH loans. The County Super-
                                                                                                                               if:
                                                                     visor is authorized to accept voluntary
                                                                                                                                  (A) A substantial recovery on the
                                                                     conveyances regardless of amount of
                                                                                                                               Government’s investment plus the
                                                                     indebtedness.
                                                                       (ii) [Reserved]                                         amount of the prior lien(s) can be ob-
                                                                       (2) Loans to organizations. (i) The                     tained; and
                                                                     State Director is authorized to approve                      (B) The holder of the prior lien(s) ob-
                                                                     voluntary conveyance of property se-                      jects to the Government accepting vol-
                                                                     curing Farmer Programs and EOC                            untary conveyance subject to the prior
                                                                     loans regardless of amount of indebted-                   lien(s), if consent of the prior
                                                                     ness.                                                     lienholder(s) is required.
                                                                       (ii) The State Director is authorized                      (ii) If property is acquired subject to
                                                                     to approve voluntary conveyance of                        prior lien(s), payment of installments
                                                                     property securing MFH loans if the                        on the lien(s) may be made while title
                                                                     total indebtedness against the prop-                      to the property is held by the Govern-
                                                                     erty, including prior and junior liens,                   ment in accordance with § 1955.67 of
                                                                     does not exceed his/her approval au-                      subpart B of part 1955 of this chapter.
                                                                     thority for the type loan involved.                          (2) Junior liens. The borrower must
                                                                     Loan approval authorities are outlined                    satisfy junior liens on the property (ex-
                                                                     in exhibits A through E of FmHA or its                    cept FmHA or its successor agency
                                                                     successor agency under Public Law 103–                    under Public Law 103–354 liens) and pay
                                                                     354 Instruction 1901–A (available in any                  real estate taxes or assessments which
                                                                     FmHA or its successor agency under                        are or will become a lien on the prop-
                                                                     Public Law 103–354 office).                               erty. However, if the borrower is un-
                                                                       (iii) Offers to convey property secur-                  able or unwilling to do so, settlement
                                                                     ing loans other than those outlined in                    of the liens may be made by FmHA or
                                                                     paragraphs (a)(2)(i) and (ii) of this sec-                its successor agency under Public Law
                                                                     tion will be submitted to the Adminis-                    103–354 if settlement would be in the
                                                                     trator for approval prior to acceptance                   best interest of the Government, con-
                                                                     of the conveyance offer. Submissions                      sidering all factors such as length of
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                                                                     will include the case file; OGC’s opin-                   time required to foreclose, vandalism
                                                                     ion on settling any other liens in-                       or other deterioration of the property

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.10

                                                                     which might occur, and effect on man-                     103–354 Services’’ or FmHA or its suc-
                                                                     agement of a MFH project and its ten-                     cessor agency under Public Law 103–354
                                                                     ants. An FmHA or its successor agency                     442–3, ‘‘Balance Sheet,’’ and informa-
                                                                     under Public Law 103–354 official will                    tion on present income and potential
                                                                     contact junior lienholders, negotiate                     earning ability. Exception for SFH
                                                                     the most favorable settlement possible,                   loans: FmHA or its successor agency
                                                                     and determine whether it is in the Gov-                   under Public Law 103–354 requires a
                                                                     ernment’s best interest to settle the                     budget and/or financial statement and,
                                                                     junior liens and accept the voluntary                     if necessary to discover suspected un-
                                                                     coveyance.                                                disclosed assets, a search of public
                                                                       (i) For loans to individuals, the ap-                   records, only when the value of the se-
                                                                     proval official is authorized to settle                   curity property may be less than the
                                                                     junior liens in the smallest amount                       debt.
                                                                     possible, but not to exceed an aggre-                       (4) For organization borrowers, a
                                                                     gate amount of $1,000 in each SFH case                    duly-adopted Resolution by the gov-
                                                                     or $5,000 for other type loans. For jun-                  erning body authorizing the convey-
                                                                     ior liens in greater amounts when the                     ance and certified by the attesting offi-
                                                                     approval official is the County Super-                    cial with the corporate seal affixed.
                                                                     visor or District Director, prior author-                 The Resolution will indicate which of-
                                                                     ization must be obtained from the                         ficials are authorized to execute the
                                                                     State Director.                                           offer to convey and the deed on behalf
                                                                       (ii) For loans to organizations, the                    of the borrower. If shareholder ap-
                                                                     State Director will determine whether                     proval is necessary, the Resolution will
                                                                     or not junior liens will be settled and                   specifically recite that shareholder ap-
                                                                     voluntary conveyance accepted.                            proval has been obtained.
                                                                       (3) Payment of liens. A lien to be set-                   (5) If water rights, mineral rights, de-
                                                                     tled in accordance with paragraph                         velopment rights, or other use rights
                                                                     (c)(1)(i) or (c)(2) of this section will be               are not fully covered in the deed, the
                                                                     paid as outlined in § 1955.5(d) of this                   advice of OGC will be obtained and ap-
                                                                     subpart and charged to the borrower’s                     propriate documents to transfer rights
                                                                     account as a recoverable cost.                            to the Government will be obtained be-
                                                                       (d) Offer of voluntary conveyance. An                   fore the voluntary conveyance is ac-
                                                                     offer of voluntary conveyance will con-                   cepted. The documents will be re-
                                                                     sist of the following:                                    corded, if necessary, in connection with
                                                                       (1) Form FmHA or its successor agen-                    closing the conveyance.
                                                                     cy under Public Law 103–354 1955–1,                         (6) If property is under lease, an as-
                                                                     ‘‘Offer to Convey Security.’’                             signment of the lease to the Govern-
                                                                       (2) Warranty deed, or other deed ap-                    ment will be obtained with the effec-
                                                                     proved by OGC to comply with State                        tive date being the date the voluntary
                                                                     Laws. The deed will not be recorded                       conveyance is closed. If an oral lease is
                                                                     until it is determined the voluntary                      in force, it will be reduced to writing
                                                                     conveyance will be accepted. At the                       and assigned to the Government.
                                                                     time of the offer, the borrowers will be                    (7) The borrower may be required to
                                                                     informed that the conveyance will not                     provide a title insurance policy or a
                                                                     be accepted until the property has been                   final title opinion from a designated
                                                                     appraised and a lien search has been                      attorney when the State Director de-
                                                                     obtained. If the voluntary conveyance                     termines it is necessary to protect the
                                                                     is not accepted, the deed and Form                        Government’s interest. Such title in-
                                                                     FmHA or its successor agency under                        surance policy or final title opinion
                                                                     Public Law 103–354 1955–1, properly exe-                  will show title vested to the Govern-
                                                                     cuted, will be returned to the borrower                   ment subject only to exceptions and
                                                                     along with a memorandum stating the                       liens approved by the County Super-
                                                                     reason(s) for nonacceptance.                              visor.
                                                                       (3) A current financial statement                         (8) Farmer program loan borrowers
                                                                     containing information similar to that                    who voluntarily convey after receiving
                                                                     required to complete Forms FmHA or                        the appropriate loan servicing notice(s)
                                                                     its successor agency under Public Law                     contained in the attachments of ex-
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                                                                     103–354 410–1, ‘‘Application for FmHA or                  hibit A of subpart S of part 1951 of this
                                                                     its successor agency under Public Law                     chapter, must properly complete and

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                                                                     § 1955.10                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     return the acknowledgement form sent                      loans, the portion of this paragraph
                                                                     with the notice.                                          dealing with the loan(s) other than
                                                                       (9) For MFH loans, assignment of                        SFH will be followed.
                                                                     Housing Assistance Payments (HAP)                           (1) SFH loans. FmHA or its successor
                                                                     Contracts will be obtained. Rental As-                    agency under Public Law 103–354 does
                                                                     sistance will be retained until the                       not solicit or encourage conveyance of
                                                                     State Director is advised by OGC that                     SFH security property to the Govern-
                                                                     the Agency has title to the property.                     ment and will consider a borrower’s
                                                                     After a voluntary conveyance, the                         offer to convey by deed in lieu of fore-
                                                                     Agency may transfer Rental Assistance                     closure only after the debt is acceler-
                                                                     in accordance with 7 CFR part 3560,                       ated and when it is in the Govern-
                                                                     subpart F.                                                ment’s interest. Upon receipt of an
                                                                       (e) Appraisal of property. After an                     offer to convey, the servicing official
                                                                     offer of voluntary conveyance, but be-                    will remind the borrower of provisions
                                                                     fore acceptance by FmHA or its suc-                       for voluntary liquidation under 7 CFR
                                                                     cessor agency under Public Law 103–                       part 3550,and the consequences of a
                                                                     354, an appraisal of the property will be                 conveyance by deed in lieu of fore-
                                                                     made to establish the current market                      closure as follows: All costs related to
                                                                     value of the property. If a qualified                     the conveyance which FmHA or its
                                                                     FmHA or its successor agency under                        successor agency under Public Law 103–
                                                                     Public Law 103–354 appraiser is not                       354 pays will be added to the debt; a
                                                                     available to appraise property securing                   credit equal to the market value of the
                                                                     a loan other than MFH, the State Di-                      property, as determined by FmHA or
                                                                     rector may obtain an appraisal from a                     its successor agency under Public Law
                                                                     qualified appraiser outside FmHA or                       103–354, less prior liens, will be applied
                                                                     its successor agency under Public Law                     to the debt; and if the credit does not
                                                                     103–354 in accordance with FmHA or its                    satisfy the debt, the borrower will not
                                                                     successor agency under Public Law 103–                    automatically be released of liability.
                                                                     354 Instruction 2024–A (available in any                  The unsatisfied debt, after acceleration
                                                                     FmHA or its successor agency under                        under § 1955.10(h)(5) of this subpart,
                                                                     Public Law 103–354 office). For property                  may be settled according to subpart B
                                                                     securing MFH, prior authorization                         of part 1956 of this chapter; however, a
                                                                     must be obtained by the Assistant Ad-                     deficiency judgment will not be pur-
                                                                     ministrator, Housing, to secure an ap-                    sued when the borrower was granted a
                                                                     praisal from a source outside FmHA or                     moratorium if the borrower faithfully
                                                                     its successor agency under Public Law                     tried to meet loan obligations. The
                                                                     103–354. For property securing FP                         conveyance is processed as follows:
                                                                     loan(s), the contract appraiser must                        (i) Before accepting the offer, the
                                                                     complete the appraisal in accordance                      County Supervisor will transmit the
                                                                     with § 761.7 of this title for FP prop-                   deed to a closing agent requesting a
                                                                     erty, or subpart C of part 1922 for Sin-                  title search covering the period of time
                                                                     gle Family Housing property. Also, the                    since the latest title opinion in the
                                                                     appraiser must meet at least one of the                   case file. The same agent who closed
                                                                     following qualifications:                                 the loan should be used, if possible;
                                                                       (1) Certification by a National or                      otherwise one will be selected from the
                                                                     State Appraisal Society.                                  approved list of closing agents, taking
                                                                       (2) If a certified appraiser is not                     care that cases are distributed fairly
                                                                     available, the appraiser may be one                       among approved agents. The closing
                                                                     who meets the criteria for certification                  agent may be instructed that the Coun-
                                                                     in a National or State Appraisal Soci-                    ty Supervisor considers the voluntary
                                                                     ety.                                                      conveyance offer conditionally ap-
                                                                       (3) The appraiser has recent, relevant                  proved, and the closing agent may
                                                                     documented appraisal experience or                        record the deed after the title search if
                                                                     training, or other factors clearly estab-                 there are no liens against the property
                                                                     lishing the appraiser’s qualifications.                   other than:
                                                                       (f) Processing offer to convey security                   (A) The FmHA or its successor agen-
                                                                     and acceptance by FmHA or its successor                   cy under Public Law 103–354 lien(s);
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                                                                     agency under Public Law 103–354. If a                       (B) Prior liens when FmHA or its
                                                                     borrower has both SFH and other type                      successor agency under Public Law 103–

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.10

                                                                     354 has advised the closing agent that                    American. Native American borrower-
                                                                     title will be taken subject to the prior                  owners will be credited with the fair
                                                                     lien(s) or has told the closing agent                     market value or the Agency debt
                                                                     that the prior lien(s) will be handled in                 against the property, whichever is
                                                                     accordance with § 1955.10(c)(1) of this                   greater, provided:
                                                                     subpart; and/or                                             (A) The borrower-owner is a member
                                                                       (C) Real estate taxes and/or assess-                    of a tribe or the tribe, and
                                                                     ments which must be paid when title to                      (B) The property is located within
                                                                     the property is transferred.                              the confines of a federally recognized
                                                                       (ii) If junior liens are discovered, the                Indian reservation.
                                                                     closing agent will be requested to pro-                     (ii) Agency approval. The same proce-
                                                                     vide FmHA or its successor agency                         dure outlined in paragraphs (f)(1)(i)
                                                                     under Public Law 103–354 with the                         through (f)(1)(iii) of this section will be
                                                                     lienholder’s name, amount of lien, date                   followed for approving the voluntary
                                                                     recorded, and the recording informa-                      conveyance. The conveyance will be ac-
                                                                     tion (recording office, book and page),                   cepted in full satisfaction of the in-
                                                                     return the unrecorded deed to FmHA                        debtedness unless the market value of
                                                                     or its successor agency under Public                      the property to be conveyed is less
                                                                     Law 103–354, and await further instruc-                   than the total of Government indebted-
                                                                     tions from FmHA or its successor agen-                    ness and prior liens, and the borrower
                                                                     cy under Public Law 103–354. In such                      has agreed to accept a credit in the
                                                                     cases, the County Supervisor will pro-                    amount of the market value of the se-
                                                                     ceed in accordance with § 1955.10(c)(2) of                curity property less prior liens, if any.
                                                                     this subpart. If agreement has been                         (3) Loans to organizations. When an
                                                                     reached with the lienholder(s) for set-                   offer of voluntary conveyance is re-
                                                                     tling the junior lien(s) in order to ac-                  ceived from an organization borrower,
                                                                     cept the conveyance, the deed will be                     and the market value of the property
                                                                     returned to the closing agent for a title                 being conveyed (less prior liens, if any)
                                                                     update and recording.                                     is less than the Government debt, full
                                                                       (iii) The closing agent will be re-                     consideration must be given to the bor-
                                                                     quested to provide a certification of                     rower’s present situation and future
                                                                     title to FmHA or its successor agency                     prospects for paying all or a part of the
                                                                     under Public Law 103–354 after recorda-                   debt.
                                                                     tion of the deed. A certification of title                  (g) Closing of conveyance. (1) The con-
                                                                     in a statement that fee title is vested                   veyance to the Government will be
                                                                     in the Government subject only to the                     considered closed when the recorded
                                                                     FmHA or its successor agency under                        deed has been returned to FmHA or its
                                                                     Public Law 103–354 lien(s) and prior                      successor agency under Public Law 103–
                                                                     liens previously approved by FmHA or                      354, a certification of title is received
                                                                     its successor agency under Public Law                     from the closing agent that title is
                                                                     103–354. After receipt of the certifi-                    vested in the Government with no out-
                                                                     cation of title, the County Supervisor                    standing encumbrances other than the
                                                                     will notify the borrower that the con-                    FmHA or its successor agency under
                                                                     veyance has been accepted in accord-                      Public Law 103–354 lien(s) or previously
                                                                     ance with § 1955.10(g) of this subpart.                   approved prior liens, and the borrower
                                                                       (2) Consolidated Farm and Rural Devel-                  is notified of the acceptance of the con-
                                                                     opment Act (CONACT) loans to individ-                     veyance. For loans to organizations,
                                                                     uals. If the Agency indebtedness plus                     OGC will be requested to review the
                                                                     any prior liens exceeds the market                        case to verify that it was closed prop-
                                                                     value of the property, the indebtedness                   erly. The property will be assigned an
                                                                     cannot be satisfied but a credit can be                   ID number and entered into the Ac-
                                                                     given equal to the market value less                      quired Property Tracking System
                                                                     prior liens. Debt settlement will be                      through the Automated Discrepancy
                                                                     considered in accordance with subpart                     Processing System (ADPS) terminal in
                                                                     B of part 1956 of this chapter.                           the County Office.
                                                                       (i) Crediting accounts. The Agency                        (2) When costs incident to the com-
                                                                     will credit an account by an amount                       pletion of the transaction are to be
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                                                                     equal to the market value less prior                      paid by the Government, the servicing
                                                                     liens, unless the borrower is Native                      official will prepare and process the

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                                                                     § 1955.11                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     necessary documents as outlined in                        suspend any rental assistance. These
                                                                     § 1955.5(d) of this subpart and the costs                 actions will be accomplished by noti-
                                                                     will be charged to the borrower’s ac-                     fying the Finance Office unit which
                                                                     count as recoverable costs. This in-                      handles MFH accounts. In the interm
                                                                     cludes taxes and assessments, water                       the tenants will continue rental pay-
                                                                     charges which protect the right to re-                    ments in accordance with their lease.
                                                                     ceive water, other liens, closing agent’s                 Tenants will be informed of the pend-
                                                                     fee, and any other costs related to the                   ing liquidation action and the possible
                                                                     conveyance.                                               consequences of the action. If the
                                                                        (h) Actions to be taken after closing                  project is to be removed from the Rural
                                                                     conveyance. (1) When the FmHA or its                      Development program, a minimum of
                                                                     successor agency under Public Law 103–                    180 days’ notice to the tenants is re-
                                                                     354 account is satisfied, the note(s) will                quired. Letters of Priority Entitlement
                                                                     be stamped ‘‘Satisfied by Surrender of                    must be made available to any tenants
                                                                     Security and Borrower Released from                       that will be displaced.
                                                                     Liability,’’ and the statement must be                      (7) Actions outlined in § 1955.18 of this
                                                                     signed by the servicing official.                         subpart will be taken, as applicable.
                                                                        (2) When the FmHA or its successor                     [50 FR 23904, June 7, 1985, as amended at 50
                                                                     agency under Public Law 103–354 ac-                       FR 45782, Nov. 1, 1985; 69 FR 69105, Nov. 26,
                                                                     count is not satisfied and the borrower                   2004]
                                                                     is not released from liability, the
                                                                     note(s) will be retained by FmHA or its                   § 1955.11 Conveyance of property to
                                                                     successor agency under Public Law 103–                         FmHA or its successor agency
                                                                     354.                                                           under Public Law 103–354 by trust-
                                                                        (3) The servicing official will release                     ee in bankruptcy.
                                                                     the lien(s) of record, indicating that                       (a) Authority. With the advice of OGC
                                                                     the debt was satisfied by surrender of                    (and prior approval of the National Of-
                                                                     security or that the lien is released but                 fice for MFH, Community Programs,
                                                                     the debt not satisfied, whichever is ap-                  and insured B&I loans), the State Di-
                                                                     plicable. If the lien is to be released                   rector within his/her authority is au-
                                                                     but the debt not satisfied, OGC will                      thorized to accept a conveyance of
                                                                     provide the type of instrument re-                        property to the Government by the
                                                                     quired to comply with applicable State                    Trustee in Bankruptcy, provided:
                                                                     laws.                                                        (1) The Bankruptcy Court has ap-
                                                                        (4) After release of the lien(s), the                  proved the conveyance;
                                                                     servicing official will return the fol-                      (2) The conveyance will permit a sub-
                                                                     lowing to the borrower:                                   stantial recovery on the FmHA or its
                                                                        (i) If borrower is released from liabil-               successor agency under Public Law 103–
                                                                     ity, the satisfied note(s) and a copy of                  354 debt; and
                                                                     Form FmHA or its successor agency                            (3) FmHA or its successor agency
                                                                     under Public Law 103–354 1955–1 show-                     under Public Law 103–354 will acquire
                                                                     ing acceptance by the Government; or                      title free of all liens and encumbrances
                                                                        (ii) If borrower is not released from                  except FmHA or its successor agency
                                                                     liability, a copy of Form FmHA or its                     under Public Law 103–354iens.
                                                                     successor agency under Public Law 103–                       (b) Fees and deed. (1) FmHA or its
                                                                     354 1955–1 showing acceptance by the                      successor agency under Public Law 103–
                                                                     Government.                                               354 may pay any necessary and proper
                                                                        (5) When the FmHA or its successor                     fees approved by the bankruptcy court
                                                                     agency under Public Law 103–354 ac-                       in connection with the conveyance. Be-
                                                                     count is not satisfied and the borrower                   fore paying a fee to a trustee for a
                                                                     not released from liability, the account                  Trustee’s Deed in excess of $300 for any
                                                                     balance, after deducting the ‘‘as is’’                    loan type(s) other than Farmer Pro-
                                                                     market value and prior liens, if any,                     grams or $1,000 for Farmer Program
                                                                     will be accelerated utilizing exhibit F                   loans, prior approval of the Adminis-
                                                                     of this subpart (available in any FmHA                    trator must be obtained. The State Di-
                                                                     or its successor agency under Public                      rector will process the necessary docu-
                                                                     Law 103–354 office).                                      ments as outlined in § 1955.5(d) of this
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                                                                        (6) For MFH loans, the State Direc-                    subpart for payment of fees as recover-
                                                                     tor will cancel any interest credit and                   able costs.

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.15

                                                                       (2) Conveyance may be by Trustee’s                      be included in the case file. The assist-
                                                                     Deed instead of a warranty deed. If                       ance of OGC will be obtained in effect-
                                                                     upon advice of OGC it is determined a                     ing the redemption. If the State Direc-
                                                                     deed from any other person or entity                      tor decides not to redeem the property,
                                                                     (including the borrower) is necessary                     the Government’s right of redemption
                                                                     to obtain clear title, a deed from such                   under Federal law (28 U.S.C. 2410) may
                                                                     person or entity will be obtained.                        be waived without consideration. If a
                                                                       (c) Acceptance. The conveyance will                     State law right of redemption exists
                                                                     be accepted for an amount of credit to                    and may be sold, it will not be disposed
                                                                     the borrower’s FmHA or its successor                      of for less than its value.
                                                                     agency under Public Law 103–354 ac-
                                                                     count(s) as set forth in § 1955.18(e)(4) of               [53 FR 35762, Sept. 14, 1988]
                                                                     this subpart.
                                                                       (d) Reporting. Acquisition of property                  § 1955.14    [Reserved]
                                                                     under this section will be reported in
                                                                     accordance with § 1955.18(a) of this sub-                 § 1955.15 Foreclosure by the Govern-
                                                                     part.                                                         ment of loans secured by real es-
                                                                                                                                   tate.
                                                                     [50 FR 23904, June 7, 1985, as amended at 53
                                                                     FR 27827, July 25, 1988]                                    Foreclosure will be initiated when all
                                                                                                                               reasonable efforts have failed to have
                                                                     § 1955.12 Acquisition       of    property                the borrower voluntarily liquidate the
                                                                         which served as security for a loan                   loan through sale of the property, vol-
                                                                         guarantee by FmHA or its successor                    untary conveyance, or by entering into
                                                                         agency under Public Law 103–354
                                                                         or at sale by another lienholder,                     an accelerated repayment agreement
                                                                         bankruptcy trustee, or taxing au-                     when applicable servicing regulations
                                                                         thority.                                              permit; when either a net recovery can
                                                                        When the servicing regulations for                     be made or when failure to foreclose
                                                                     the type of loan(s) involved permit                       would adversely affect FmHA or its
                                                                     FmHA or its successor agency under                        successor agency under Public Law 103–
                                                                     Public Law 103–354 to acquire property                    354 programs in the area. Also, in
                                                                     by one of these methods, the acquisi-                     Farmer Program cases (except gradua-
                                                                     tion will be reported in accordance                       tion cases under subpart F of part 1951
                                                                     with § 1955.18(a) of this subpart.                        of this chapter), the borrower must
                                                                                                                               have received exhibit A with attach-
                                                                     § 1955.13 Acquisition of property by                      ments 1 and 2 of subpart S of part 1951
                                                                         exercise of Government redemption                     of this chapter, and any appeal must
                                                                         rights.
                                                                                                                               have been concluded. For real property
                                                                        When the Government did not pro-                       located within the confines of a feder-
                                                                     tect its interest in security property in                 ally recognized Indian reservation and
                                                                     a foreclosure by another lienholder,                      owned by a Native American borrower,
                                                                     and if the Government has redemption                      proper notice of voluntary conveyance
                                                                     rights, the State Director will deter-                    must be given as outlined in § 1955.9
                                                                     mine whether to redeem the property.                      (c)(1) of this subpart.
                                                                     This determination will be based on all
                                                                                                                                 (a) Authority—(1) Loans to individuals.
                                                                     pertinent factors including the value of
                                                                                                                               The District Director is authorized to
                                                                     the property after the sale, and costs
                                                                     which may be incurred in acquiring                        approve or disapprove foreclosure and
                                                                     and reselling the property. For Farmer                    accelerate the account.
                                                                     Program loans, the County Supervisor                        (2) Loans to organizations. (i) The
                                                                     will document the determination on                        State Director or District Director is
                                                                     exhibit G of this subpart. The decision                   authorized to approve or disapprove
                                                                     must be made far enough in advance of                     foreclosure of MFH loans when the
                                                                     expiration of the redemption period to                    amount of the FmHA or its successor
                                                                     permit exercise of the Government’s                       agency under Public Law 103–354 se-
                                                                     rights. If the property is to be re-                      cured debt does not exceed their re-
                                                                     deemed, complete information docu-                        spective loan approval authority. The
                                                                     menting the basis for not acquiring the                   State Director is authorized to approve
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                                                                     property at the sale and factors which                    or disapprove foreclosure of I&D, Shift-
                                                                     justify redemption of the property will                   In-Land-Use      (Grazing  Association),

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                                                                     § 1955.15                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     loans to Indian Tribes and Tribal Cor-                    the foreclosure, the borrower’s finan-
                                                                     porations, and EOC loans, regardless of                   cial situation will be assessed to deter-
                                                                     the amount of debt.                                       mine if there is a possibility of further
                                                                       (ii) For all other organization loans,                  recovery on the account through a defi-
                                                                     foreclosure will not be initiated with-                   ciency judgment. A summary of these
                                                                     out prior approval of the Adminis-                        determinations will be fully docu-
                                                                     trator. The State Director will obtain                    mented and appropriate recommenda-
                                                                     OGC’s opinion on the steps necessary                      tions made concerning deficiency judg-
                                                                     to foreclose the loan, and forward the                    ment in the applicable problem case re-
                                                                     appropriate problem case report, a                        port.
                                                                     statement of essential facts, his/her                        (3) Historic preservation. If it is likely
                                                                     recommendation, a copy of the OGC                         that FmHA or its successor agency
                                                                     opinion, and the borrower’s case file to
                                                                                                                               under Public Law 103–354 will acquire
                                                                     the Administrator, Attn: Assistant Ad-
                                                                                                                               title to the property as a result of the
                                                                     ministrator (appropriate loan division)
                                                                                                                               foreclosure, and the structure(s) on the
                                                                     with a request for authorization to ini-
                                                                     tiate foreclosure.                                        property will be in excess of 50 years
                                                                       (b) Problem case report. When fore-                     old at the time of acquisition or meet
                                                                     closure is recommended, the servicing                     any of the other criteria contained in
                                                                     official will prepare Form FmHA or its                    § 1955.137(c) of subpart C of part 1955 of
                                                                     successor agency under Public Law 103–                    this chapter, steps should be initiated
                                                                     354 1955–2 for Farmer Program or SFH                      to meet the requirements of the Na-
                                                                     loans, exhibit A to this subpart for                      tional Historic Preservation Act as
                                                                     MFH loans, or exhibit A of FmHA or                        outlined in § 1955.137(c). Formal steps
                                                                     its successor agency under Public Law                     should not be initiated until the con-
                                                                     103–354 Instruction 1951–E (available in                  clusion of all appeals. However, any
                                                                     any FmHA or its successor agency                          such documentation required may be
                                                                     under Public Law 103–354 office) for                      completed when the problem case re-
                                                                     other organization loans. If chattel se-                  port is prepared. This action should
                                                                     curity is also involved, Forms FmHA                       eliminate delays in selling the prop-
                                                                     or its successor agency under Public                      erty after acquisition.
                                                                     Law 103–354 455–1, ‘‘Request for Legal                       (c) Submission of problem case. The
                                                                     Action’’; 455–2, ‘‘Evidence of Conver-                    servicing official will submit the com-
                                                                     sion’’; and 455–22, ‘‘Information for                     pleted problem case docket to the offi-
                                                                     Litigation’’; as applicable to the case,                  cial authorized to approve the fore-
                                                                     will be prepared in accordance with the                   closure (approval official). Before ap-
                                                                     respective FMIs and made a part of the                    proval of foreclosure and acceleration
                                                                     problem case submission. A statement                      of the account, the approval official is
                                                                     must be included by the servicing offi-                   responsible for review of the problem
                                                                     cial in the narrative that all servicing                  case report to see that all items are
                                                                     actions required by FmHA or its suc-                      complete and that all required serv-
                                                                     cessor agency under Public Law 103–354
                                                                                                                               icing actions have been taken and all
                                                                     loan servicing regulations have been
                                                                                                                               required notices given the borrower.
                                                                     taken and all required notices given to
                                                                                                                               The narrative portion of the report
                                                                     the borrower.
                                                                       (1) Appraisal. The market value of the                  should provide complete information
                                                                     property may be estimated in com-                         on the borrower’s financial condition,
                                                                     pleting the problem case report unless                    deficiency judgment in case the debt is
                                                                     there are one or more prior liens other                   not satisfied by the foreclosure, and
                                                                     than current-year real estate taxes.                      other pertinent background items. The
                                                                     Where such prior liens are involved, an                   approval official will approve or dis-
                                                                     appraisal report reflecting market                        approve the foreclosure, or make a rec-
                                                                     value in existing condition will be in-                   ommendation and refer the case to the
                                                                     cluded in the case file as a basis for de-                National Office, if not within his/her
                                                                     termining the Government’s prospects                      approval authority. If foreclosure is
                                                                     for financial recovery through fore-                      not approved, the case will be returned
                                                                     closure.                                                  to the originating office with instruc-
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                                                                       (2) Recommendation for deficiency judg-                 tions for further servicing. Problem
                                                                     ment. If the debt will not be satisfied by                case submission is as follows:

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.15

                                                                       (1) For loans to individuals. The Coun-                 will be accelerated using a notice sub-
                                                                     ty Supervisors will submit the case to                    stantially similar to exhibits B, C, D,
                                                                     the District Director.                                    or E of this subpart, or for multi-fam-
                                                                       (2) For loans to organizations. The Dis-                ily housing, FmHA or its successor
                                                                     trict Director will submit the case to                    agency under Public Law 103–354 Guide
                                                                     the State Director along with a pro-                      Letters 1955–A–1 or 1955–A–2 (available
                                                                     posed liquidation and management                          in any FmHA or its successor agency
                                                                     plan covering the time the foreclosure                    under Public Law 103–354 Office), as ap-
                                                                     is in process. The State Director will                    propriate, to be signed by the official
                                                                     obtain the advice of OGC if required in                   who approved the foreclosure. The ac-
                                                                     connection with the type of loan being                    counts of borrowers with pending Chap-
                                                                     liquidated.                                               ter 12 and 13 cases which have not been
                                                                       (d) Approval of foreclosure. When fore-                 discharged will be accelerated in ac-
                                                                     closure is approved, it will be handled                   cordance with instructions from OGC.
                                                                     as follows:                                               Upon OGC approval, accounts of these
                                                                       (1) Prior lien(s). If there is a prior lien,            borrowers may be accelerated using a
                                                                     all foreclosure alternatives should be                    notice substantially similar to exhibit
                                                                     explored including whether FmHA or                        D of this subpart. Loans secured by
                                                                     its successor agency under Public Law                     chattels must be accelerated at the
                                                                     103–354 will give the prior lienholder                    same time as loans secured by real es-
                                                                     the opportunity to foreclose; join in                     tate in accordance with § 1965.26 (c) of
                                                                     the action if the prior lienholder wish-                  subpart A of part 1965 of this chapter.
                                                                     es to foreclose; or foreclose the FmHA                    The notice will be sent by certified
                                                                     or its successor agency under Public                      mail, return receipt requested, to each
                                                                     Law 103–354 loan(s), either settling the                  obligor individually, addressed to the
                                                                     prior lien or foreclosing subject to it.                  last known address. If different from
                                                                     The provisions of § 1965.11(c) of subpart                 the property address and/or the address
                                                                     A of part 1965 of this chapter must be                    the Finance Office uses, a copy of the
                                                                     followed for loans serviced under sub-                    notice will also be mailed to the prop-
                                                                     part A of part 1965. The assistance of                    erty address and the address currently
                                                                     OGC should be obtained in weighing                        used by the Finance Office. (In chattel
                                                                     the alternatives, with the objective                      liquidation cases which have been re-
                                                                     being to pursue the course which will                     ferred for civil action under subpart A
                                                                     result in the greatest net recovery by                    of part 1962 of this chapter, the Finance
                                                                     the Government. After it is decided                       Office will be sent a copy of exhibits D,
                                                                     which option will be most advan-                          E, or E–1 (available in any FmHA or its
                                                                     tageous to the Government, the ap-                        successor agency under Public Law 103–
                                                                     proval official, either directly or                       354 office) as applicable. County Office
                                                                     through a designee, will contact the                      and Finance Office loan records will be
                                                                     prior lienholder to outline FmHA or its                   adjusted to mature the entire debt in
                                                                     successor agency under Public Law 103–                    such cases). If a signed receipt for at
                                                                     354’s position. If State laws affect this                 least one of these acceleration notices
                                                                     action, a State Supplement will be                        sent by certified mail is received, no
                                                                     issued with the advice of OGC to estab-                   further notice is required. If no receipt
                                                                     lish the procedure to be followed. For                    is received, a copy of the acceleration
                                                                     real property located within the con-                     notice will be sent by regular mail to
                                                                     fines of a federally recognized Indian                    each address to which the certified no-
                                                                     reservation owned by a Native Amer-                       tices were sent. This type mailing will
                                                                     ican borrower-owner, an analysis of                       be documented in the file. A State Sup-
                                                                     whether FmHA or its successor agency                      plement may be issued if OGC advises
                                                                     under Public Law 103–354 should ac-                       different or additional language or for-
                                                                     quire title must include facts which                      mat is required to comply with State
                                                                     demonstrate the fair market value                         laws or if notice and mailing instruc-
                                                                     after considering the cost of clean-up                    tions are different from that outlined
                                                                     of hazardous substances on the prop-                      in this paragraph. A conformed copy of
                                                                     erty.                                                     the acceleration notice will be for-
                                                                       (2) Acceleration of account. Subject to                 warded to the servicing official. Farm-
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                                                                     paragraphs (d)(2)(i), (d)(2)(ii), and                     er Program appeals will be concluded
                                                                     (d)(2)(iii) of this section, the account                  before acceleration. For MFH loans, a

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                                                                     § 1955.15                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     copy of the acceleration letter will also                 will be serviced in accordance with
                                                                     be forwarded to the National Office,                      § 1965.26 (c)(2) of subpart A of part 1965
                                                                     ATTN: MFH Servicing and Property                          of this chapter.
                                                                     Management Division, for monitoring                          (C) When the borrower’s dwelling is
                                                                     purposes. Accounts may be accelerated                     financed with an SFH loan(s) and is on
                                                                     as follows:                                               a non-farm tract which does not serve
                                                                       (i) Where monetary default is in-                       as additional security for the Farmer
                                                                     volved, the account may be accelerated                    Program loan(s), it will NOT be accel-
                                                                     immediately after approval of fore-                       erated simultaneously with sending
                                                                     closure.                                                  out attachments 5 and 6, or 5–A and 6–
                                                                       (ii) Where monetary default is not in-                  A, or attachment 9 and 10, or 9–A and
                                                                     volved, the account will not be acceler-                  10–A, of exhibit A of subpart S of part
                                                                     ated until the concurrence of OGC is                      1951 of this chapter, as applicable, un-
                                                                     obtained.                                                 less it is subject to liquidation based
                                                                       (iii) If borrower obtained the loan                     on provisions of 7 CFR part 3550, taking
                                                                     while a civilian, entered military serv-                  into consideration the prospects for
                                                                     ice after the loan was closed, the                        success that may evolve when the bor-
                                                                     FmHA or its successor agency under                        rower’s livelihood is from a source
                                                                     Public Law 103–354 has not obtained a                     other than the farming operation. If
                                                                     waiver of rights under the Soldiers and                   the SFH loan is in default and subject
                                                                     Sailors Relief Act, the account will not                  to liquidation based on provisions of 7
                                                                     be accelerated until OGC has reviewed                     CFR part 3550, the SFH loan(s) must be
                                                                     the case and given instructions.                          accelerated at the same time the bor-
                                                                       (iv) If the decision is made to liq-                    rower is sent attachment 5 and 6, or 5–
                                                                     uidate the farm loan(s) of a borrower                     A and 6–A, or attachments 9 and 10, or
                                                                     who also has a SFH loan(s), and the                       9–A and 10–A, to exhibit A of subpart S
                                                                     dwelling was used as security for the                     of part 1951 of this chapter, as applica-
                                                                     farm loan(s) it will not be necessary to                  ble. For those borrowers who are in
                                                                     meet the requirements of 7 CFR part                       non-monetary default on their Farmer
                                                                     3550 prior to accelerating the account.                   Programs loans and fail to return at-
                                                                     Except that, if the borrower is in de-                    tachment 4 of exhibit A of subpart S of
                                                                     fault on his/her farm loan(s), the SFH                    part 1951 of this chapter, the Farmer
                                                                     account must have been considered for                     Programs loans and SFH loans will be
                                                                     interest credit and/or moratorium at                      accelerated at the same time. If the
                                                                     the time servicing options are being                      borrower appeals, one appeal hearing
                                                                     considered for the FP loan(s) prior to                    and one review will be held for both ad-
                                                                     acceleration. If it is later determined                   verse actions.
                                                                     the FP loan(s) are to receive additional                     (D) If a borrower’s FP loan(s) were
                                                                     servicing in lieu of liquidation, the RH                  accelerated prior to May 7, 1987, and
                                                                     loan will be reinstated simultaneously                    the SFH loan(s) is not accelerated, the
                                                                     with the FP servicing actions and may                     SFH loan will be accelerated at the
                                                                     be reamortized in accordance with 7                       same time the borrower is sent attach-
                                                                     CFR part 3550. Accounts of a borrower                     ments 5 and 6, or 5–A and 6–A, or at-
                                                                     who has both Farmer Program and                           tachments 7 and 8 to exhibit A of sub-
                                                                     SFH loan(s) may be accelerated as fol-                    part S of 1951 of this chapter, as appli-
                                                                     lows:                                                     cable, unless the requirements of
                                                                       (A) When the borrower’s dwelling is                     § 1965.26 of subpart A of part 1965 of this
                                                                     financed with an SFH loan(s) is secured                   chapter are met or the liquidation of
                                                                     by and located on the same farm real                      the SFH loan is based on provisions of
                                                                     estate as the Farmer Program loan(s)                      7 CFR part 3550. If the borrower is sent
                                                                     (dwelling located on the farm), the                       attachments 5 and 6, or 5–A and 6–A to
                                                                     SFH loan(s) will be serviced in accord-                   exhibit A of subpart S of 1951 of this
                                                                     ance with § 1965.26(c)(1) of subpart A of                 chapter, as applicable, and requests an
                                                                     part 1965 of this chapter.                                appeal, one hearing and one review will
                                                                       (B) When the borrower’s dwelling is                     be held for both the adverse action on
                                                                     financed with an SFH loan(s) and is lo-                   the FP loan restructuring request and
                                                                     cated on a nonfarm tract which also                       SFH acceleration notices. If the bor-
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                                                                     serves as additional security for the                     rower is sent attachments 7 and 8 to
                                                                     Farmer Program loan(s), the loans(s)                      exhibit A of subpart S of 1951 of this

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.15

                                                                     chapter, there are no further appeals                       (B) Payments which do not pay the
                                                                     on the FP loans; but, the borrower is                     account in full can be accepted subject
                                                                     entitled to a hearing and a review on                     to the following requirements:
                                                                     the SFH acceleration notice.                                (1) Payments will be accepted if there
                                                                       (v) For MFH loans, the acceleration                     is no remaining security for the debt
                                                                     notice will advise the borrower of all                    (real estate and chattel).
                                                                     applicable prepayment requirements,                         (2) If the borrower is in the process of
                                                                     in accordance with 7 CFR part 3560,                       selling security or nonsecurity, pay-
                                                                     subpart N. The requirements include                       ments may be accepted unless State
                                                                     the application of restrictive-use provi-                 law would require the acceleration to
                                                                     sions to loans made on or after Decem-                    be reversed. In States where payments
                                                                     ber 21, 1979, prepaid in response to ac-                  cannot be accepted unless the accelera-
                                                                     celeration notices and all tenant and                     tion is reversed, the payments will not
                                                                     agency notifications. The acceleration                    be accepted. A State supplement will
                                                                     notice will also remind borrowers that                    be issued to address State law on ac-
                                                                     rent levels cannot be raised during the                   cepting payments after acceleration.
                                                                     acceleration without FmHA or its suc-                       (3) If payments are mistakenly cred-
                                                                     cessor agency under Public Law 103–354                    ited to the borrower’s account, no
                                                                     approval, even after subsidies are can-                   waiver or prejudice to any rights which
                                                                     celed or suspended. Tenants are to be                     the United States may have for breach
                                                                     notified of the status of the project and                 of any promissory note or convenant in
                                                                     of possible consequences of these ac-                     the real estate instruments will result.
                                                                     tions. If the borrower wishes to prepay                   Disposition of such payments will be
                                                                     the project in response to the accelera-                  made after consulting OGC.
                                                                     tion and FmHA or its successor agency                       (4) The servicing official will notify
                                                                     under Public Law 103–354 makes a de-                      the approval official of any other offer.
                                                                     termination that the housing is no                        This includes a request by the borrower
                                                                     longer needed, a minimum of 180 days’                     for an extension of time to accomplish
                                                                     notice to tenants is required before the                  voluntary liquidation or a proposal to
                                                                     project can be removed from the FmHA                      cure the default(s). In all other cases,
                                                                     or its successor agency under Public                      the approval official will decide wheth-
                                                                     Law 103–354 program. Letters of Pri-                      er an offer from a borrower will be ac-
                                                                     ority Entitlement must be made avail-                     cepted and servicing of the loan rein-
                                                                     able.                                                     stated or whether foreclosure will be
                                                                       (3) Offers by borrowers after accelera-                 delayed to give the borrower additional
                                                                     tion of account—(i) Farmers Programs                      time to voluntarily liquidate as au-
                                                                     (FP) accelerations. This category also                    thorized in servicing regulations for
                                                                     includes non-FP loans to the same bor-                    the type loan(s) involved. If an offer is
                                                                     rower which have been accelerated as                      received after the case has been re-
                                                                     part of the same action. After the ac-                    ferred to OGC, the approval official
                                                                     count is accelerated, the borrower will                   will consult OGC before accepting or
                                                                     have 30 days from the date of the accel-                  rejecting the offer. The denial of an
                                                                     eration notice to make payment in full                    offer to stop foreclosure is not appeal-
                                                                     to stop the acceleration, unless State                    able. In all cases, the approval official
                                                                     or tribal law requires that the fore-                     will notify the servicing official of the
                                                                     closure be withdrawn if the account is                    decision made.
                                                                     brought current and a State supple-                         (ii) All other accelerations. After the
                                                                     ment is issued to specify the require-                    account is accelerated, loan servicing
                                                                     ment.                                                     ceases. For example, for SFH loans, the
                                                                       (A) Payment in full [see exhibit D of                   renewal or granting of interest credit
                                                                     this subpart (available in any FmHA or                    or a moratorium is not authorized. The
                                                                     its successor agency under Public Law                     servicing official will accept no pay-
                                                                     103–354 office)] may consist of the fol-                  ment for less than the unpaid loan bal-
                                                                     lowing means of fully satisfying the                      ance, unless State law requires that
                                                                     debt.                                                     foreclosure be withdrawn if the ac-
                                                                       (1) Cash.                                               count is brought current and a State
                                                                       (2) Transfer and assumption.                            supplement is issued to specify this re-
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                                                                       (3) Sale of property.                                   quirement. If payments are mistakenly
                                                                       (4) Voluntary conveyance.                               accepted and credited to the borrower’s

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                                                                     § 1955.15                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     account, no waiver or prejudice to any                    ments in accordance with their leases,
                                                                     rights which the United States may                        and all rental rates and lease renewals
                                                                     have for breach of any promissory note                    and provisions will be continued as if
                                                                     or covenants in the real estate instru-                   acceleration had not taken place.
                                                                     ments will result. Disposition of such                      (4) Statement of account. If a state-
                                                                     payments will be made after consulta-                     ment of account is required for fore-
                                                                     tion with OGC. The servicing official                     closure proceedings, Form FmHA or its
                                                                     will notify the approval official of any                  successor agency under Public Law 103–
                                                                     offer received from the borrower. This                    354 451–10, ‘‘Request for Statement of
                                                                     includes a request by the borrower for                    Account,’’ will be processed in accord-
                                                                     an extension of time to accomplish vol-                   ance with the FMI. When an official
                                                                     untary liquidation or a written pro-                      statement of account is not required,
                                                                     posal to cure the default(s). The receipt                 account balances and recapture infor-
                                                                     of a payment with no proposal to cure                     mation may be obtained from the field
                                                                     the defaults is not considered a viable                   office terminal.
                                                                     offer, and such payments will be re-                        (5) Appeals. All appeals will be han-
                                                                     turned to the borrower. The approval                      dled pursuant to subpart B of part 1900
                                                                     official will decide whether an offer                     of this chapter. Foreclosure actions
                                                                     from a borrower will be accepted and                      will be held in abeyance while an ap-
                                                                     servicing of the loan reinstated or                       peal is pending. No case will be referred
                                                                     whether foreclosure will be delayed to                    to OGC for processing of foreclosure
                                                                     give the borrower additional time to                      until a borrower’s appeal and appeal re-
                                                                     voluntarily liquidate as authorized in                    view have been concluded, or until the
                                                                     servicing regulations for the type loan                   time has elapsed during which an ap-
                                                                     involved. If an offer is received after                   peal or a request for review may be
                                                                     the case has been referred to OGC, the                    made. In Farmer Programs cases, (ex-
                                                                     approval official will consult OGC be-                    cept graduation cases under subpart F
                                                                     fore accepting or rejecting the offer.                    of part 1951 of this chapter), the bor-
                                                                     The denial of an offer to stop fore-                      rower must have received the appro-
                                                                     closure is not appealable. In all cases,                  priate notices and consideration for
                                                                     the approval official will notify the                     primary loan servicing per subpart S of
                                                                     servicing official of the decision made.                  part 1951 of this chapter. Any Farmer
                                                                     For MFH loans, the National Office                        Programs cases may be accelerated
                                                                     will be notified when foreclosure is                      after all primary loan servicing options
                                                                     withdrawn. When an account is rein-                       have been considered and all related
                                                                     stated under this section, the servicing                  appeals concluded, but will not be sub-
                                                                     official will grant or reinstate assist-                  mitted to OGC for foreclosure action
                                                                     ance for which the borrower qualifies,                    until all appeals related to any preser-
                                                                     such as interest credit on an SFH loan.                   vation rights have been concluded.
                                                                     When granting interest credit in such a                     (6) Petition in bankruptcy filed by bor-
                                                                     case:                                                     rower after acceleration of account.(i)
                                                                       (A) If an interest credit agreement                     When bankruptcy is filed after an ac-
                                                                     expired after the account was acceler-                    count has been accelerated, any fore-
                                                                     ated, the effective date will be the date                 closure action initiated by FmHA or
                                                                     the previous agreement expired.                           its successor agency under Public Law
                                                                       (B) If an interest credit agreement                     103–354 must be suspended until:
                                                                     was not in effect when the account was                      (A) The bankruptcy case is dismissed
                                                                     accelerated, the effective date will be                   or closed (a discharge of debtor does not
                                                                     the date foreclosure action was with-                     close the case);
                                                                     drawn.                                                      (B) An Order lifting the automatic
                                                                       (C) For MFH loans with rental assist-                   stay is obtained from the Bankruptcy
                                                                     ance, after acceleration and after any                    Court; or
                                                                     appeal or review has been concluded,                        (C) The property is no longer prop-
                                                                     rental assistance will be suspended if                    erty of the bankruptcy estate and the
                                                                     foreclosure is to continue. If the ac-                    borrower has received a discharge.
                                                                     count is reinstated, the rental assist-                     (ii) The State Director will request
                                                                     ance will be reinstated retroactively to                  the assistance of OGC in obtaining the
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                                                                     the date of suspension. In the interim,                   Order(s)      described    in   paragraph
                                                                     the tenants will continue rental pay-                     (c)(6)(i)(B) of this section.

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.15

                                                                       (e) Referral of case. If the borrower                   handicap, religion, age or sex in pro-
                                                                     fails to satisfy the account during the                   grams or activities receiving Federal
                                                                     period of time specified in the accelera-                 financial assistance, for as long as the
                                                                     tion notice, and no appeal is pending,                    property continues to be used for the
                                                                     the foreclosure process will continue:                    same or similar purposes for which the
                                                                       (1) If the District Director is the ap-                 Federal assistance was extended or for
                                                                     proval official, he/she will forward the                  so long as the purchaser owns it,
                                                                     case file with all pertinent documents                    whichever is later.’’ At least 30 days
                                                                     and information concerning the fore-                      before the foreclosure sale, the County
                                                                     closure action and appeal, if any, to                     Supervisor will notify, in writing, the
                                                                     the State Director for completion of                      Indian tribe which has jurisdiction
                                                                     the foreclosure.                                          over the reservation, and in which the
                                                                       (2) If the State Director is the ap-                    real property is owned by a Native
                                                                     proval official, or in cases referred by                  American member of said tribe that a
                                                                     the District Director under paragraph                     foreclosure sale will be conducted to
                                                                     (e)(1) of this section, the State Director                resolve this account, and will provide:
                                                                     will forward to OGC the case file and                       (A) Projected sale date and location;
                                                                     all documents needed by OGC to proc-                        (B) Fair market value of property;
                                                                     ess the foreclosure. A State Supple-                        (C) Amount FmHA or its successor
                                                                     ment will be issued, with the advice                      agency under Public Law 103–354 will
                                                                     and assistanced of OGC, to reflect the                    bid on the property; and
                                                                     make-up of the foreclosure docket.                          (D) Amount of FmHA or its successor
                                                                     Since foreclosure processing varies                       agency under Public Law 103–354 debt
                                                                     widely from State to State, each State                    against the property.
                                                                     Supplement will be explicit in out-                         (ii) The purchaser will be required to
                                                                     lining step-by-step procedures. At the                    sign Form FmHA or its successor agen-
                                                                     time indicated by OGC in the fore-                        cy under Public Law 103–354 400–4, ‘‘As-
                                                                     closure instructions, Form FmHA or                        surance Agreement,’’ if the property
                                                                     its successor agency under Public Law                     will be used for its original or similar
                                                                     103–354 1951–6, ‘‘Borrower Account De-                    purposes.
                                                                     scription Flag,’’ will be processed in ac-                  (2) Restrictive-use provisions for MFH
                                                                     cordance with the FMI. After referral                     loans. For MFH loans, the advertise-
                                                                     to OGC, further actions will be in ac-                    ment will state the restrictive-use pro-
                                                                     cordance with OGC’s instructions for                      visions which will be included in any
                                                                     completion of the foreclosure. If prior                   deed used to transfer title.
                                                                     approval of the Administrator is ob-                        (3) Expenses. Expenses which are in-
                                                                     tained, nonjudicial foreclosure for                       curred in connection with foreclosure,
                                                                     monetary default may be handled as                        including legal fees, will be paid at the
                                                                     outlined in a State Supplement ap-                        time recommended by OGC by proc-
                                                                     proved by OGC without referral to OGC                     essing the necessary documents as out-
                                                                     before foreclosure.                                       lined in § 1955.5 (d) of this subpart.
                                                                       (f) Completion of foreclosure—(1) Fore-                 Costs will be charged as outlined in
                                                                     closure advertisement for organization                    FmHA or its successor agency under
                                                                     loans subject to title VI of the Civil Rights             Public Law 103–354 Instruction 2024–A
                                                                     Act of 1964.(i) The advertisement for                     (available in any FmHA or its suc-
                                                                     foreclosure sale of property subject to                   cessor agency under Public Law 103–354
                                                                     title VI of the Civil Rights Act of 1964                  office).
                                                                     will contain a statement substantially                      (4) Notice of judgment. In states with
                                                                     similar to the following: ‘‘The property                  judicial foreclosure, as soon as the
                                                                     described herein was purchased or im-                     foreclosure judgment is obtained, Form
                                                                     proved with Federal financial assist-                     FmHA or its successor agency under
                                                                     ance and is subject to the non-                           Public Law 103–354 1962–20, ‘‘Notice of
                                                                     discrimination provisions of title VI of                  Judgment,’’ will be processed in ac-
                                                                     the Civil Rights Act of 1964, section 504                 cordance with the FMI. This will estab-
                                                                     of the Rehabilitation Act of 1973 and                     lish a judgment account to accrue in-
                                                                     other similarly worded Federal stat-                      terest at the rate stated in the judg-
                                                                     utes and regulations issued pursuant                      ment order so that an accurate account
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                                                                     thereto that prohibit discrimination on                   balance can be obtained for calculating
                                                                     the basis of race, color, national origin,                the Government’s foreclosure bid.

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                                                                     § 1955.15                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                       (5) Gross investment. The gross invest-                 bid for the costs for hazardous material
                                                                     ment is the sum of the following:                         assessment and/or mitigation. For FP
                                                                       (i) The unpaid balance of one of the                    loans, except as modified by paragraph
                                                                     following, as applicable:                                 (f)(7)(ii) of this section, the Govern-
                                                                       (A) In States with nonjudicial fore-                    ment’s bid will be the amount of FmHA
                                                                     closure, the borrower’s FmHA or its                       or its successor agency under Public
                                                                     successor agency under Public Law 103–                    Law 103–354’s gross investment or the
                                                                     354 account balance reflecting secured                    amount determined by use of exhibit
                                                                     loan(s) and advances; and where State                     G–1 of this subpart, whichever is less.
                                                                     law permits, unsecured debts; or                          When the foreclosure sale is imminent,
                                                                       (B) In States with judicial fore-                       the State Director must request the
                                                                     closure, the judgment account estab-                      servicing official to submit a current
                                                                     lished as a result of the foreclosure                     appraisal (in existing condition) as a
                                                                     judgment in favor of FmHA or its suc-                     basis for determining the Govern-
                                                                     cessor agency under Public Law 103–                       ment’s bid. Except for MFH properties,
                                                                     354.                                                      if an FmHA or its successor agency
                                                                       (ii) All recoverable costs charged (or                  under Public Law 103–354 appraiser is
                                                                     to be charged) to the borrower’s ac-                      not available, the State Director may
                                                                     count in connection with the fore-                        authorize an appraisal to be obtained
                                                                     closure action and other costs which                      by contract from a source outside
                                                                     OGC advises must be paid from pro-                        FmHA or its successor agency under
                                                                     ceeds of the sale before paying the                       Public Law 103–354 in accordance with
                                                                     FmHA or its successor agency under                        FmHA or its successor agency under
                                                                     Public Law 103–354 secured debt, in-                      Public Law 103–354 Instruction 2024–A
                                                                     cluding but not limited to payment of                     (available in any FmHA or its suc-
                                                                     real estate taxes and assessments,                        cessor agency under Public Law 103–354
                                                                     prior liens, legal fees including U.S. At-                office). For MFH properties, prior ap-
                                                                     torney’s and U.S. Marshal’s, and man-                     proval of the Assistant Administrator,
                                                                     agement fees; and                                         Housing, is necessary to procure an
                                                                       (iii) If a SFH loan subject to recap-                   outside appraisal.
                                                                     ture of interest credit is involved, the                     (7) Bidding. The State Director will
                                                                     total amount of subsidy granted and                       designate an individual to bid on behalf
                                                                     principal reduction attributed to sub-                    of the Government unless judicial pro-
                                                                     sidy.                                                     ceedings or State nonjudicial fore-
                                                                       (6) Amount of Government’s bid. Except                  closure law provides for someone other
                                                                     for FP loans and as modified by para-                     than an FmHA or its successor agency
                                                                     graph (f)(7)(ii) of this section, the Gov-                under Public Law 103–354 employee to
                                                                     ernment’s bid will be the amount of                       enter the Government’s bid. When the
                                                                     FmHA or its successor agency under                        State Director determines attendance
                                                                     Public Law 103–354’s gross investment                     of an FmHA or its successor agency
                                                                     or the market value of the security,                      under Public Law 103–354 employee at
                                                                     whichever is less. For real property lo-                  the sale might pose physical danger, a
                                                                     cated within the confines of a federally                  written bid may be submitted to the
                                                                     recognized Indian reservation and                         Marshal, Sheriff, or other party in
                                                                     which is owned by an FmHA or its suc-                     charge of holding the sale. The Govern-
                                                                     cessor agency under Public Law 103–354                    ment’s bid will be entered when no
                                                                     borrower who is a member of the tribe                     other party makes a bid or when the
                                                                     with jurisdiction over the reservation,                   last bid will result in the property
                                                                     the Government’s bid will be the great-                   being sold for less than the bid author-
                                                                     er of the fair market value or the                        ized in paragraph (f)(6) of this section.
                                                                     FmHA or its successor agency under                           (i) When FmHA or its successor agen-
                                                                     Public Law 103–354 debt against the                       cy under Public Law 103–354 is the sen-
                                                                     property, unless FmHA or its successor                    ior lienholder, only one bid will be en-
                                                                     agency under Public Law 103–354 deter-                    tered, and that will be for the amount
                                                                     mines that, because of the presence of                    authorized by the State Director.
                                                                     hazardous substances on the property,                        (ii) When FmHA or its successor
                                                                     it is not in the best interest of the Gov-                agency under Public Law 103–354 is not
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                                                                     ernment to bid such amount, in which                      the senior lienholder and OGC advises
                                                                     case there may be a deduction from the                    that the borrower has no redemption

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.18

                                                                     rights or if a deficiency judgment will                      (ii) In a foreclosure where the bid is
                                                                     be obtained, the State Director may                       less than the account balance and a de-
                                                                     authorize the person who will bid for                     ficiency judgment will be sought for
                                                                     the Government to make incremental                        the difference, in which case the ac-
                                                                     bids in competition with other bidders.                   count credit will be the amount of
                                                                     If incremental bidding is desired, the                    FmHA or its successor agency under
                                                                     State Director’s instructions to the                      Public Law 103–354’s bid.
                                                                     bidder will state the initial bid, bidding                   (2) For all types of accounts other than
                                                                     increments, and the maximum bid.                          SFH. When FmHA or its successor
                                                                       (g) Reports on sale and finalizing fore-                agency under Public Law 103–354 ac-
                                                                     closure. Immediately after a foreclosure                  quired the property, the account credit
                                                                     sale at which the State Director has
                                                                                                                               will be as follows:
                                                                     designated a person to bid on behalf of
                                                                                                                                  (i) In a voluntary conveyance case:
                                                                     the Government, the servicing official
                                                                     will furnish the State Director a report                     (A) Where the market value of the
                                                                     on the sale. The State Director will                      property equals or exceeds the debt or
                                                                     forward a copy of this report to OGC                      where the borrower is released from li-
                                                                     and, for MFH loans, to the National Of-                   ability for any difference, the account
                                                                     fice. Based on OGC’s instructions, a                      will be satisfied.
                                                                     State supplement will provide a de-                          (B) Where the debt exceeds the mar-
                                                                     tailed outline of actions necessary to                    ket value of the property and the bor-
                                                                     complete the foreclosure.                                 rower is not released from liability, the
                                                                                                                               account credit will be the market
                                                                     [50 FR 23904, June 7, 1985]
                                                                                                                               value (less outstanding liens, if any).
                                                                       EDITORIAL NOTE: For FEDERAL REGISTER ci-                   (ii) In a foreclosure, the account
                                                                     tations affecting § 1955.15, see the List of CFR
                                                                                                                               credit will be the amount of FmHA or
                                                                     Sections Affected, which appears in the
                                                                     Finding Aids section of the printed volume                its successor agency under Public Law
                                                                     and on GPO Access.                                        103–354’s bid except when incremental
                                                                                                                               bidding       as     provided     for    in
                                                                     §§ 1955.16–1955.17        [Reserved]                      § 1955.15(f)(7)(ii) of this subpart was
                                                                                                                               used, in which case the account credit
                                                                     § 1955.18 Actions required after acqui-                   will be the maximum bid that was au-
                                                                           sition of property.
                                                                                                                               thorized by the State Director.
                                                                        The approval official may employ the                      (3) For all types of accounts when
                                                                     services of local designated attorneys,                   FmHA or its successor agency under Pub-
                                                                     of a case by case basis, to process all                   lic Law 103–354 did not acquire the prop-
                                                                     legal procedures necessary to clear the                   erty. The sale proceeds will be handled
                                                                     title of foreclosure properties. Such at-                 in accordance with applicable State
                                                                     torneys shall be compensated at not                       laws with the advice and assistance of
                                                                     more than their usual and customary                       OGC, including remittance of funds, ap-
                                                                     charges for such work. Contracting for                    plication of the borrower’s account
                                                                     such attorneys shall be accomplished                      credit, and disbursement of any funds
                                                                     pursuant to the Federal acquisition                       in excess of the amount due FmHA or
                                                                     regulations and related procurement
                                                                                                                               its successor agency under Public Law
                                                                     regulations and guidance.
                                                                                                                               103–354.
                                                                        (a)–(d) [Reserved]
                                                                        (e) Credit to the borrower’s account or                   (4) In cases where FmHA or its suc-
                                                                     foreclosure judgment account—(1) For                      cessor agency under Public Law 103–354
                                                                     SFH accounts. When FmHA or its suc-                       acquired security property by means other
                                                                     cessor agency under Public Law 103–354                    than voluntary conveyance or foreclosure.
                                                                     acquired the property, the account will                   In these cases, such as conveyance by a
                                                                     be satisfied unless:                                      bankruptcy trustee or by Court Order,
                                                                        (i) In a voluntary conveyance case                     the account credit will be as follows:
                                                                     where the debt exceeds the market                            (i) If the market value of the ac-
                                                                     value of the property and the borrower                    quired property equals or exceeds the
                                                                     is not released from liability, in which                  debt, the account will be satisfied.
                                                                     case the account credit will be the                          (ii) If the debt exceeds the market
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                                                                     market value (less outstanding liens if                   value of the acquired property, the ac-
                                                                     any); or                                                  count credit will be the market value.

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                                                                     § 1955.19                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                       (f)–(l) [Reserved]                                      2 of Subpart S of Part 1951 of this chap-
                                                                                                                               ter.
                                                                     [50 FR 23904, June 7, 1985, as amended at 52
                                                                     FR 41957, Nov. 2, 1987; 53 FR 27827, July 25,               (1) Offer. The borrower’s offer of vol-
                                                                     1988; 53 FR 35764 Sept. 14, 1988; 55 FR 35295,            untary conveyance will be made on
                                                                     Aug. 29, 1990; 56 FR 10147, Mar. 11, 1991; 56 FR          Form FmHA or its successor agency
                                                                     29402, June 27, 1991; 58 FR 38927, July 21, 1993;         under Public Law 103–354 1955–1. If it is
                                                                     58 FR 68725, Dec. 29, 1993; 60 FR 34455, July 3,          determined the conveyance offer can be
                                                                     1995]
                                                                                                                               accepted, the borrower will execute a
                                                                     § 1955.19     [Reserved]                                  bill of sale itemizing each item of chat-
                                                                                                                               tel property being conveyed and will
                                                                     § 1955.20 Acquisition of chattel prop-                    provide titles to vehicles or other
                                                                         erty.                                                 equipment, where applicable.
                                                                        Every effort will be made to avoid ac-                   (2) Acceptance of offer release from li-
                                                                     quiring chattel property by having the                    ability. Before accepting an offer to
                                                                     borrower or FmHA or its successor                         convey chattels to FmHA or its suc-
                                                                     agency under Public Law 103–354 liq-                      cessor agency under Public Law 103–
                                                                     uidate the property according to Sub-                     354, the concurrence of the State Direc-
                                                                     part A of Part 1962 of this chapter and                   tor must be obtained. When chattel se-
                                                                     apply the proceeds to the borrower’s                      curity is voluntarily conveyed to the
                                                                     account(s). Methods of acquisition au-                    Government and the borrower and co-
                                                                     thorized are:                                             signer(s), if any, are to be released
                                                                        (a) Purchase at the following types of                 from liability, the servicing official
                                                                     sale: (1) Execution sale conducted by                     will stamp the note(s) ‘‘Satisfied by
                                                                     the U.S. Marshal, sheriff or other party                  Surrender of Security and Borrower
                                                                     acting under Court order to satisfy                       Released from Liability.’’ When the
                                                                     judgment liens.                                           Agency debt less the market value and
                                                                        (2) FmHA or its successor agency                       prior liens is $1 million or more (in-
                                                                     under Public Law 103–354 foreclosure                      cluding principal, interest and other
                                                                     sale conducted by the U.S. Marshal or                     charges), release of liability must be
                                                                     sheriff in States where a State Supple-                   approved by the Administrator or des-
                                                                     ment provides for sales to be conducted                   ignee; otherwise, the State Director
                                                                     by them.                                                  must approve the release of liability.
                                                                        (3) Sale by trustee in bankruptcy.                     All cases requiring a release of liability
                                                                        (4) Public sale by prior lienholder.                   will be submitted in accordance with
                                                                        (5) Public sale conducted under the                    Exhibit A of Subpart B of Part 1956 of
                                                                     terms of Form FmHA or its successor                       this chapter (available in any FmHA or
                                                                     agency under Public Law 103–354 455–4,                    its successor agency under Public Law
                                                                     ‘‘Agreement for Voluntary Liquidation                     103–354 office). Form FmHA or its suc-
                                                                     of Chattel Security,’’ the power of sale                  cessor agency under Public Law 103–354
                                                                     in security agreements or crop and
                                                                                                                               1955–1 will be executed by the servicing
                                                                     chattel mortgage, or similar instru-
                                                                                                                               official showing acceptance by the
                                                                     ment, if authorized by State Supple-
                                                                                                                               Government, and the satisfied note(s)
                                                                     ment.
                                                                                                                               and a copy of Form FmHA or its suc-
                                                                        (b) Voluntary conveyance. Voluntary
                                                                                                                               cessor agency under Public Law 103–354
                                                                     conveyance of chattels will be accepted
                                                                     only when the borrower can convey                         1955–1 will be furnished to the bor-
                                                                     ownership free of other liens and the                     rower.
                                                                     borrower can be released from liability                     (3) Release of lien(s). When an offer
                                                                     under the conditions set forth in                         has been accepted as outlined in para-
                                                                     § 1955.10(f)(2) of this subpart. Payment                  graph (b)(2) of this section, the serv-
                                                                     of other lienholders’ debts by FmHA or                    icing official will release any liens of
                                                                     its successor agency under Public Law                     record which secured the satisfied in-
                                                                     103–354 in order to accept voluntary                      debtedness.
                                                                     conveyance of chattels is not author-                       (4) Rejection of offer. If it is deter-
                                                                     ized. Before a voluntary conveyance                       mined an offer of voluntary conveyance
                                                                     from a Farmer Program loan borrower                       will not be accepted, the servicing offi-
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                                                                     can be accepted, the borrower must be                     cial will indicate on Form FmHA or its
                                                                     sent Exhibit A with Attachments 1 and                     successor agency under Public Law 103–

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.20

                                                                     354 1955–1 that the offer is rejected, exe-               under Public Law 103–354 employee
                                                                     cute the form, and furnish a copy to                      might pose physical danger, a written
                                                                     the borrower.                                             bid may be submitted to the party
                                                                       (c) Attending sales. The servicing offi-                holding the sale. The bid(s) will be the
                                                                     cial will:                                                lesser of:
                                                                       (1) Attend all sales described in para-                   (i) The market value of the item(s)
                                                                     graph (a)(5) of this section unless an                    less the estimated costs involved in the
                                                                     exception is authorized by the State                      acquisition, care, and sale of the
                                                                     Director because of physical danger to                    item(s) of security; or
                                                                     the FmHA or its successor agency
                                                                                                                                 (ii) The unpaid balance of the bor-
                                                                     under Public Law 103–354 employee or
                                                                                                                               rower’s secured FmHA or its successor
                                                                     adverse publicity would be likely.
                                                                       (2) Attend public sales by prior                        agency under Public Law 103–354 debt
                                                                     lienholders when the market value of                      plus prior liens, if any.
                                                                     the chattel property is significantly                       (2) Bids will not be made in the fol-
                                                                     more than the amount of the prior                         lowing situations unless authorized by
                                                                     lien(s).                                                  the State Director:
                                                                       (3) Obtain the advice of the State Di-                    (i) When chattel property under prior
                                                                     rector on attending sales described in                    lien has a market value which is not
                                                                     paragraphs (a) (1), (2), and (3) of this                  significantly more than the amount
                                                                     section.                                                  owed the prior lienholder. If FmHA or
                                                                       (d) Appraising chattel property. Prior                  its successor agency under Public Law
                                                                     to the sale, the servicing official will                  103–354 holds a junior lien on several
                                                                     appraise chattel property using Form                      items of chattel property, advice
                                                                     FmHA or its successor agency under                        should be obtained from the State Di-
                                                                     Public Law 103–354 440–21, ‘‘Appraisal of                 rector on bidding.
                                                                     Chattel Property.’’ If a qualified ap-                      (ii) After sufficient chattel property
                                                                     praiser is not available to appraise                      has been bid in by FmHA or its suc-
                                                                     chattel property, the State Director                      cessor agency under Public Law 103–354
                                                                     may obtain an appraisal from a quali-
                                                                                                                               to satisfy the FmHA or its successor
                                                                     fied source outside FmHA or its suc-
                                                                                                                               agency under Public Law 103–354 debt;
                                                                     cessor agency under Public Law 103–354
                                                                     by contract in accordance with FmHA                       prior liens, and cost of the sale.
                                                                     or its successor agency under Public                        (iii) When the sale is being conducted
                                                                     Law 103–354 Instruction 2024–A (avail-                    by a lienholder junior to FmHA or its
                                                                     able in any FmHA or its successor                         successor agency under Public Law 103–
                                                                     agency under Public Law 103–354 of-                       354.
                                                                     fice).                                                      (iv) At a private sale.
                                                                       (e) Abandonment of security interest.                     (v) When the sale is being conducted
                                                                     The State Director may authorize                          under the terms of Form FmHA or its
                                                                     abandonment of the Government’s se-                       successor agency under Public Law 103–
                                                                     curity interest when chattel property,                    354 455–3, ‘‘Agreement for Sale by Bor-
                                                                     considering costs of moving or reha-                      rower (Chattels and/or Real Estate)’’.
                                                                     bilitation, has no market value and ob-                     (g) Payment of costs. Costs to be paid
                                                                     taining title would not be in the best                    by FmHA or its successor agency under
                                                                     interest of the Government.                               Public Law 103–354 in connection with
                                                                       (f) Bidding at sale. (1) The servicing                  acquisition of chattel property will be
                                                                     official is authorized to bid at sales de-                paid as outlined in § 1955.5(d) of this
                                                                     scribed in paragraph (a) of this section.                 subpart as recoverable costs.
                                                                     Ordinarily, only one bid will be made
                                                                     on items of chattel security unless the                     NOTE: Payment of other lienholders’ debts
                                                                     State Director authorizes incremental                     in connection with voluntary conveyance of
                                                                     bidding. Bids will be made only when                      chattels is not authorized.
                                                                     no other party bids or when it appears                      (h) Reporting acquisition of chattel
                                                                     bidding will stop and the property will                   property. Acquisition of chattel prop-
                                                                     be sold for less than the amount of the
                                                                                                                               erty will be reported by use of Form
                                                                     Government’s authorized bid. When the
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                                                                                                                               FmHA or its successor agency under
                                                                     State Director determines attendance
                                                                                                                               Public Law 103–354 1955–3 prepared and
                                                                     of an FmHA or its successor agency

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                                                                     § 1955.21                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     distributed       in    accordance      with     the      ber 0575–0109. Public reporting burden
                                                                     FMI.                                                      for this collection of information is es-
                                                                     [50 FR 23904, June 7, 1985, as amended at 50              timated to vary from 5 minutes to 5
                                                                     FR 45783, Nov. 1, 1985; 51 FR 45433, Dec. 18,             hours per response, with an average of
                                                                     1986; 53 FR 27828 July 25, 1988; 53 FR 35764,             .56 hours per response including time
                                                                     Sept. 14, 1988; 60 FR 28320, May 31, 1995]                for reviewing instructions, searching
                                                                                                                               existing data sources, gathering and
                                                                     § 1955.21 Exception authority.                            maintaining the data needed, and com-
                                                                        The Administrator may, in indi-                        pleting and reviewing the collection of
                                                                     vidual cases, make an exception to any                    information. Send comments regarding
                                                                     requirement or provision of this sub-                     this burden estimate or any other as-
                                                                     part or address any omission of this                      pect of this collection of information,
                                                                     subpart which is not inconsistent with                    including suggestions for reducing this
                                                                     the authorizing statute or other appli-                   burden, to Department of Agriculture,
                                                                     cable law if the Administrator deter-                     Clearance Officer, OIRM, room 404–W,
                                                                     mines that the Government’s interest                      Washington, DC 20250; and to the Office
                                                                     would be adversely affected or the im-                    of Management and Budget, Paperwork
                                                                     mediate health and/or safety of tenants                   Reduction Project (OMB #0575–0109),
                                                                     or the community are endangered if                        Washington, DC 20503.
                                                                     there is no adverse effect on the Gov-
                                                                     ernment’s interest. The Administrator                     [57 FR 1372, Jan. 14, 1992]
                                                                     will exercise this authority upon the
                                                                     request of the State Director with rec-                     EXHIBITS A–F TO SUBPART A OF PART
                                                                     ommendation of the appropriate pro-                                   1955 [RESERVED]
                                                                     gram Assistant Administrator; or upon
                                                                     request initiated by the appropriate                           Subpart B—Management of
                                                                     program Assistant Administrator. Re-                                    Property
                                                                     quests for exceptions must be made in
                                                                     writing and supported with documenta-                       SOURCE: 53 FR 35765, Sept. 14, 1988, unless
                                                                     tion to explain the adverse effect, pro-                  otherwise noted.
                                                                     pose alternative courses of action, and
                                                                     show how the adverse effect will be                       § 1955.51     Purpose.
                                                                     eliminated or minimized if the excep-
                                                                                                                                 This subpart delegates authority and
                                                                     tion is granted.
                                                                                                                               prescribes policies and procedures for
                                                                     § 1955.22 State supplements.                              the Rural Housing Service (RHS),
                                                                                                                               Rural Business-Cooperative Service
                                                                        State Supplements will be prepared
                                                                                                                               (RBS) and herein referred to as ‘‘Agen-
                                                                     with the assistance of OGC as nec-
                                                                                                                               cy.’’ This subpart does not apply to
                                                                     essary to comply with State laws or
                                                                                                                               Farm Service Agency, Farm Loan Pro-
                                                                     only as specifically authorized in this
                                                                                                                               grams, or to RHS single family housing
                                                                     regulation to provide guidance to
                                                                                                                               loans or community program loans
                                                                     FmHA or its successor agency under
                                                                     Public Law 103–354 officials. State sup-                  sold without insurance to the private
                                                                     plements will be submitted to the Na-                     sector. These community program
                                                                     tional Office for post approval in ac-                    loans will be serviced by the private
                                                                     cordance with FmHA or its successor                       sector, and future revisions to this sub-
                                                                     agency under Public Law 103–354 In-                       part no longer apply to such loans.
                                                                     struction 2006–B (available in any                        This subpart does not apply to the
                                                                     FmHA or its successor agency under                        Rural Rental Housing, Rural Coopera-
                                                                     Public Law 103–354 office).                               tive Housing, or Farm Labor Housing
                                                                                                                               Program of RHS. In addition, this sub-
                                                                     §§ 1955.23–1955.49        [Reserved]                      part does not apply to Water and Waste
                                                                                                                               Programs of the Rural Utilities Serv-
                                                                     § 1955.50 OMB control number.                             ice, Watershed loans, and Resource
                                                                        The collection of information re-                      Conservation and Development loans,
                                                                     quirements contained in this regula-                      which are serviced under part 1782 of
                                                                     tion have been approved by the Office                     this title. This subpart covers:
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                                                                     of Management and Budget (OMB) and                          (a) Management of real property
                                                                     have been assigned OMB control num-                       which has been taken into custody by

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.53

                                                                     the respective Agency after abandon-                      acting within the limits of their au-
                                                                     ment by the borrower;                                     thority as delegated by the CO.
                                                                       (b) Management of real and chattel                        Custodial property. Borrower-owned
                                                                     property which is in Agency inventory;                    real property and improvements which
                                                                     and                                                       serve as security for an FmHA or its
                                                                       (c) Management of real and chattel                      successor agency under Public Law 103–
                                                                     property which is security for a guar-                    354 loan, have been abandoned by the
                                                                     anteed loan liquidated by an Agency                       borrower, and of which FmHA or its
                                                                     (or which the Agency is in the process                    successor agency under Public Law 103–
                                                                     of liquidating).                                          354 has taken possession.
                                                                                                                                 Farmer program loans. This includes
                                                                     [61 FR 59778, Nov. 22, 1996, as amended at 69             Farm Ownership (FO), Soil and Water
                                                                     FR 69106, Nov. 26, 2004; 72 FR 55019, Sept. 28,
                                                                     2007; 72 FR 64123, Nov. 15, 2007]
                                                                                                                               (SW), Recreation (RL), Economic Op-
                                                                                                                               portunity (EO), Operating (OL), Emer-
                                                                     § 1955.52     Policy.                                     gency (EM), Economic Emergency
                                                                                                                               (EE), Special Livestock (SL), Softwood
                                                                       Inventory and custodial real property                   Timber (ST) loans, and Rural Housing
                                                                     will be effectively managed to preserve                   loans for farm service buildings (RHF).
                                                                     its value and protect the Government’s                      Government. The United States of
                                                                     financial interests. Properties owned or                  America, acting through the FmHA or
                                                                     controlled by FmHA or its successor                       its successor agency under Public Law
                                                                     agency under Public Law 103–354 will                      103–354, U.S. Department of Agri-
                                                                     be maintained so that they are not a                      culture.
                                                                     detriment to the surrounding area and                       Indian reservation. All land located
                                                                     they comply with State and local                          within the limits of any Indian reserva-
                                                                     codes. Generally, FmHA or its suc-                        tion under the jurisdiction of the
                                                                     cessor agency under Public Law 103–354                    United States notwithstanding the
                                                                     will continue operation of Multiple                       issuance of any patent, and including
                                                                     Family Housing (MFH) projects which                       rights-of-way running through the res-
                                                                     are acquired or taken into custody.                       ervation; trust or restricted land lo-
                                                                     Servicing of repossessed or abandoned                     cated within the boundaries of a former
                                                                     chattel property is covered in subpart                    reservation of a federally recognized
                                                                     A of part 1962 of this chapter, and man-                  Indian tribe in the State of Oklahoma;
                                                                     agement of inventory chattel property                     or all Indian allotments the Indian ti-
                                                                     is covered in § 1955.80 of this subpart.                  tles to which have not been extin-
                                                                                                                               guished if such allotments are subject
                                                                     § 1955.53     Definitions.
                                                                                                                               to the jurisdiction of a federally recog-
                                                                       As used in this subpart, the following                  nized Indian tribe.
                                                                     definitions apply:                                          Inventory property. Real and chattel
                                                                       CONACT or CONACT property. Prop-                        property and related rights to which
                                                                     erty acquired or sold pursuant to the                     the Government has acquired title.
                                                                     Consolidated Farm and Rural Develop-                        Loans to individuals. Farmer Program
                                                                     ment Act (CONACT). Within this sub-                       loans, as defined above, whether to in-
                                                                     part, it shall also be construed to cover                 dividuals or entities; Land Conserva-
                                                                     property which secured loans made                         tion and Development (LCD); and Sin-
                                                                     pursuant to the Agriculture Credit Act                    gle-Family Housing (SFH), including
                                                                     of 1978; the Emergency Agricultural                       both Sections 502 and 504 loans.
                                                                     Credit Adjustment Act of 1978; the                          Loans to organizations. Community
                                                                     Emergency Agricultural Credit Act of                      Facility (CF), Water and Waste Dis-
                                                                     1984; the Food Security Act of 1985; and                  posal (WWD), Association Recreation,
                                                                     other statutes giving agricultural lend-                  Watershed (WS), Resource Conserva-
                                                                     ing authority to FmHA or its successor                    tion and Development (RC&D), loans to
                                                                     agency under Public Law 103–354.                          associations for Irrigation and Drain-
                                                                       Contracting Officer (CO). CO means a                    age and other Soil and Water Conserva-
                                                                     person with the authority to enter                        tion measures, loans to Indian Tribes
                                                                     into, administer, and/or terminate con-                   and Tribal Corporations, Shift-in-Land-
                                                                     tracts and make related determina-                        Use (Grazing Associations) Business
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                                                                     tions and findings. The term includes                     and Industrial (B&I) to both individ-
                                                                     authorized representatives of the CO                      uals and groups, Rural Development

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                                                                     § 1955.54                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     Loan Fund (RDLF), Intermediary Re-                        ness and Industry Division. For Non-
                                                                     lending Program (IRP), Nonprofit Na-                      profit National Corporations loans, the
                                                                     tional Corporation (NNC), Economic                        servicing official is Director, Commu-
                                                                     Opportunity Cooperative (EOC), Rural                      nity Facility Division. For all other
                                                                     Housing Site (RHS), Rural Cooperative                     types of loans, the servicing official is
                                                                     Housing (RCH), and Rural Rental Hous-                     the District Director.
                                                                     ing (RRH) and Labor Housing (LH) to                         Suitable property. For FSA inventory
                                                                     both individuals and groups. The hous-                    property, real property that can be
                                                                     ing-type loans identified here are re-                    used for agricultural purposes, includ-
                                                                     ferred to in this subpart collectively as                 ing those farm properties that may be
                                                                     MFH loans.                                                used as a start up or add-on parcel of
                                                                        Nonprogram (NP) property. SFH and                      farmland. It also includes a residence
                                                                     MFH property acquired pursuant to the                     or other off-farm site that could be
                                                                     Housing Act of 1949, as amended, that                     used as a basis for a farming operation.
                                                                     cannot be used by a borrower to effec-                    For agencies other than FSA, real
                                                                     tively carry out the objectives of the                    property that could be used to carry
                                                                     respective loan program; for example, a                   out the objectives of the Agency’s loan
                                                                     dwelling that cannot be feasibly re-                      program     with    financing   provided
                                                                     paired to meet the requirements for ex-                   through that program.
                                                                     isting housing as described in 7 CFR                        Surplus property. For FSA inventory
                                                                     part 3550. It may contain a structure                     property, real property that cannot be
                                                                     which would meet program standards;                       used for agricultural purposes includ-
                                                                     however, is so remotely located it                        ing nonfarm properties. For other
                                                                     would not serve as an adequate residen-                   agencies, property that cannot be used
                                                                     tial unit or an older house which is ex-                  to carry out the objectives of financing
                                                                     cessively expensive to heat and/or                        available through the applicable loan
                                                                     maintain for a very-low or low-income                     program.
                                                                     homeowner.
                                                                        Nonrecoverable cost is a contractual or                [53 FR 35765, Sept. 14, 1988, as amended at 56
                                                                     noncontractual program loan cost ex-                      FR 29402, June 27, 1991; 57 FR 19525, 19528,
                                                                     pense not chargeable to a borrower,                       May 7, 1992; 58 FR 58648, Nov. 3, 1993; 62 FR
                                                                                                                               44396, Aug. 21, 1997; 63 FR 41716, Aug. 5, 1998;
                                                                     property account, or part of the loan
                                                                                                                               67 FR 78329, Dec. 24, 2002]
                                                                     subsidy.
                                                                        Office of the General Counsel (OGC).                   § 1955.54     Redelegation of authority.
                                                                     The OGC, U.S. Department of Agri-
                                                                     culture, refers to the Regional Attor-                      Authorities will be redelegated to the
                                                                     ney or Attorney-in-Charge in an OGC                       extent possible, consistent with pro-
                                                                     field office unless otherwise indicated.                  gram objectives and available re-
                                                                        Program property. SFH and MFH in-                      sources.
                                                                     ventory property that can be used to                        (a) Any authority in this subpart
                                                                     effectively carry out the objectives of                   which is specifically provided to the
                                                                     their respective loan programs with fi-                   Administrator or to an Assistant Ad-
                                                                     nancing through that program. Inven-                      ministrator may only be delegated to a
                                                                     tory property located in an area where                    State Director. The State Director can-
                                                                     the designation has been changed from                     not redelegate such authority.
                                                                     rural to nonrural will be considered as                     (b) Except as provided in paragraph
                                                                     if it were still in a rural area.                         (a) of this section, the State Director
                                                                        Recoverable cost is a contractual or                   may redelegate, in writing, any author-
                                                                     noncontractual program loan expense                       ity delegated to the State Director in
                                                                     chargeable to a borrower, property ac-                    this subpart, unless specifically ex-
                                                                     count, or part of the loan subsidy.                       cluded, to a Program Chief, Program
                                                                        Servicing official. For loans to individ-              Specialist, or Property Management
                                                                     uals as defined in this section, the serv-                Specialist on the State Office staff.
                                                                     icing official is the County Supervisor.                    (c) The District Director may redele-
                                                                     For insured B&I loans, the servicing of-                  gate, in writing, any authority dele-
                                                                     ficial is the State Director. For Rural                   gated to the District Director in this
                                                                     Development Loan Fund and Inter-                          subpart to an Assistant District Direc-
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                                                                     mediary Relending Program loans, the                      tor or District Loan Specialist. Au-
                                                                     servicing official is the Director, Busi-                 thority of District Directors in this

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.55

                                                                     subpart applies to Area Loan Special-                     these forms to the borrower’s last
                                                                     ists in Alaska and the Director for the                   known address as soon as it is deter-
                                                                     Western Pacific Territories.                              mined that the borrower has aban-
                                                                       (d) The County Supervisor may re-                       doned security property.
                                                                     delegate, in writing, any authority del-                    (b) Taking security property into FmHA
                                                                     egated to the County Supervisor in this                   or its successor agency under Public Law
                                                                     subpart to an Assistant County Super-                     103–354 custody. When security property
                                                                     visor, GS–7 or above, who is determined                   is determined to be abandoned, the
                                                                     by the County Supervisor to be quali-                     running record in the borrower’s file
                                                                     fied. Authority of County Supervisors                     will be fully documented with the facts
                                                                     in this subpart applies to Area Loan                      substantiating the determination of
                                                                     Specialists in Alaska, Island Directors                   abandonment, and the servicing offi-
                                                                     in Hawaii, the Director for the Western                   cial shall proceed as follows without
                                                                     Pacific Territories, and Area Super-                      delay:
                                                                     visors in the Western Pacific Terri-                        (1) For loans to individuals (except
                                                                     tories and American Samoa.                                those with Farmer Program loans), if
                                                                                                                               there are no prior liens, or if a prior
                                                                     § 1955.55 Taking abandoned real or                        lienholder will not take the measures
                                                                         chattel property into custody and                     necessary to protect the property, the
                                                                         related actions.                                      County Supervisor shall take custody
                                                                        (a) Determination of abandonment.                      of the property, and a problem case re-
                                                                     (Multi-family housing type loans will                     port will be prepared recommending
                                                                     be handled in accordance with 7 CFR                       foreclosure in accordance with § 1955.15
                                                                     part 3560, subpart J.) When it appears a                  of Subpart A of this part, unless the
                                                                     borrower has abandoned security prop-                     borrower can be located and voluntary
                                                                     erty, the servicing official shall make a                 liquidation accomplished. Farmer Pro-
                                                                     diligent attempt to locate the borrower                   gram loan borrowers will be sent the
                                                                     to determine what the borrower’s in-                      forms listed in paragraph (a) of this
                                                                     tentions are concerning the property.                     section and the provisions of § 1965.26 of
                                                                     This includes making inquiries of                         Subpart A of Part 1965 of this chapter
                                                                     neighbors, checking with the Postal                       will be followed.
                                                                     Service,     utility   companies,    em-                    (2) For MFH loans, if there are no
                                                                     ployer(s), if known, and schools, if the                  prior liens, the District Director will
                                                                     borrower has children, to see if the bor-                 immediately notify the State Director,
                                                                     rower’s whereabouts can be determined                     who will request guidance from OGC
                                                                     and an address obtained. A State sup-                     and may also request advice from the
                                                                     plement may be issued if necessary to                     National Office. The State Director,
                                                                     further define ‘‘abandonment’’ based on                   with the advice of OGC, will advise the
                                                                     State law. If the borrower is not occu-                   borrower by writing a letter, certified
                                                                     pying or is not in possession of the                      mail, return receipt requested, at the
                                                                     property but has it listed for sale with                  address currently used by Finance Of-
                                                                     a real estate broker or has made other                    fice, outlining proposed actions by
                                                                     arrangements for its care or sale, it                     FmHA or its successor agency under
                                                                     will not be considered abandoned so                       Public Law 103–354 to secure, maintain,
                                                                     long as it is adequately secured and                      and operate the project.
                                                                     maintained. Except for borrowers with                       (i) If the unpaid loan balance plus re-
                                                                     Farmers Program loans, if the bor-                        coverable costs do not exceed the State
                                                                     rower has made no effort to sell the                      Director’s loan approval authority, the
                                                                     property and can be located, an oppor-                    State Director will authorize the Dis-
                                                                     tunity to voluntarily convey the prop-                    trict Director to take custody of the
                                                                     erty to the Government will be offered                    property, make emergency repairs if
                                                                     the borrower in accordance with                           necessary to protect the Government’s
                                                                     § 1955.10 of Subpart A of this part. In                   interest, and will advise how the prop-
                                                                     farmer program cases, borrowers must                      erty is to be managed in accordance
                                                                     receive Attachments 1 and 2 of Exhibit                    with 7 CFR part 3560.
                                                                     A of Subpart S of Part 1951 of this                         (ii) If the unpaid loan balance plus re-
                                                                     chapter and any appeal must be con-                       coverable costs exceeds the State Di-
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                                                                     cluded before any adverse action can be                   rector’s loan approval authority, the
                                                                     taken. The County Supervisor will send                    State Director will refer the case to

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                                                                     § 1955.55                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     the National Office for advice on emer-                   property is acquired by the Govern-
                                                                     gency actions to be taken. The docket                     ment. If the premises are in a condition
                                                                     will be forwarded to the National Of-                     which presents a fire, health or safety
                                                                     fice with detailed recommendations for                    hazard, but also contains items of
                                                                     immediate review and authorization                        value, only the trash and debris pre-
                                                                     for further action, if requested by the                   senting the hazard will be removed.
                                                                     MFH staff.                                                The servicing official may request ad-
                                                                       (iii) Costs incurred in connection                      vice from the State Director as nec-
                                                                     with procurement of such things as                        essary. The servicing official shall
                                                                     management services will be handled                       check for liens on nonsecurity personal
                                                                     in accordance with FmHA or its suc-                       property left on abandoned premises. If
                                                                     cessor agency under Public Law 103–354                    there is a known lienholder(s), the
                                                                     Instruction 2024–A (available in any                      lienholder(s) will be notified by cer-
                                                                     FmHA or its successor agency under                        tified mail, return receipt requested,
                                                                     Public Law 103–354 office).                               that the borrower has abandoned the
                                                                       (iv) The District Director will pre-                    property and that FmHA or its suc-
                                                                     pare a problem case report to initiate                    cessor agency under Public Law 103–354
                                                                     foreclosure in accordance with § 1955.15                  has taken the real property into cus-
                                                                     of Subpart A of this part and submit                      tody.
                                                                     the report to the State Director along                      Actions by FmHA or its successor
                                                                     with a proposed plan for managing the                     agency under Public Law 103–354 must
                                                                     project while liquidation is pending.                     not damage or jeopardize livestock,
                                                                       (3) For organization loans other than                   growing crops, stored agricultural
                                                                     MFH, if there are no prior liens, the                     products, or any other personal prop-
                                                                     District Director will immediately no-                    erty which is not FmHA or its suc-
                                                                     tify the State Director that the prop-                    cessor agency under Public Law 103–354
                                                                     erty has been abandoned and rec-                          security.
                                                                     ommend action which should be taken                         (2) Repairs to custodial property. Re-
                                                                     to protect the Government’s interest.                     pairs to custodial property will be lim-
                                                                     After obtaining the advice of OGC and                     ited to those which are essential to
                                                                     the appropriate staff in the National                     prevent further deterioration of the
                                                                     Office, the State Director may author-                    property. Expenditures in excess of an
                                                                     ize the District Director to take cus-                    aggregate of $1,000 per property must
                                                                     tody of the property and give instruc-                    have prior approval of the state Direc-
                                                                     tions for immediate actions to be                         tor.
                                                                     taken as necessary. The District Direc-                     (d) Emergency advances where liquida-
                                                                     tor will prepare a Report on Servicing                    tion is pending. Although security prop-
                                                                     Action (Exhibit A of Subpart E of Part                    erty may not be defined as abandoned
                                                                     1951 of this chapter) recommending                        in accordance with paragraph (a) of
                                                                     that foreclosure be initiated in accord-                  this section, if the borrower is not oc-
                                                                     ance with § 1955.15 of Subpart A of this                  cupying the property and refuses or is
                                                                     part and submit the report to the State                   unable to protect the security prop-
                                                                     Director, along with a proposed plan                      erty, the servicing official is author-
                                                                     for management and/or operation of                        ized to make expenditures necessary to
                                                                     the project while liquidation is pend-                    protect the Government’s interest.
                                                                     ing.                                                      This would include, but is not limited
                                                                       (c) Protecting custodial property. The                  to, securing or winterizing the prop-
                                                                     FmHA or its successor agency under                        erty or making emergency repairs to
                                                                     Public Law 103–354 official who takes                     prevent deterioration. Expenditures
                                                                     custody of abandoned property shall                       will be handled in accordance with
                                                                     take the actions necessary to secure,                     paragraph (e) of this section. Situa-
                                                                     maintain, preserve, lease, manage, or                     tions where this authority may be used
                                                                     operate the property.                                     include, but are not limited to, where a
                                                                       (1) Nonsecurity personal property on                    borrower has a sale pending or when a
                                                                     premises. If a property has been aban-                    voluntary conveyance is in process.
                                                                     doned by a borrower who left nonsecu-                       (e) Income and costs. Income received
                                                                     rity personal property on the premises,                   from the property will be applied to the
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                                                                     the personal property will not be re-                     borrower’s account as an extra pay-
                                                                     moved and disposed of before the real                     ment. Expenditures will be charged to

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.56

                                                                     the borrower’s account as a recoverable                   thority to enter the off-site property to
                                                                     cost.                                                     accomplish the contemplated work, or
                                                                       (f)    Off-site   procurements.    Cir-                   (ii) A specific legal entity has author-
                                                                     cumstances may require off-site pro-                      ity to grant an easement (right-of-way)
                                                                     curement action(s) to be taken by                         to FmHA or its successor agency under
                                                                     FmHA or its successor agency under                        Public Law 103–354 for the con-
                                                                     Public Law 103–354 to protect custodial,                  templated work and such an easement,
                                                                     security or inventory property from                       in a form approved by the Regional At-
                                                                     damage or destruction and/or protect                      torney, has been obtained.
                                                                     the Government’s investment in the                          (3) Cooperative agreements. Coopera-
                                                                     property. Such procurements may in-                       tive agreements between FmHA or its
                                                                     clude, but are not limited to construc-                   successor agency under Public Law 103–
                                                                     tion or reconstruction of roads, sewers,                  354 and other entities may be made to
                                                                     drainage work or utility lines. This                      accomplish the requirement where the
                                                                     type work may be accomplished either                      principal purpose is to provide money,
                                                                     through FmHA or its successor agency                      property, services or items of value to
                                                                     under Public Law 103–354 procurement                      state or local governments or other re-
                                                                     or cooperative agreement. However, if                     cipients to accomplish a public pur-
                                                                     FmHA or its successor agency under                        pose. Exhibit C of this subpart (avail-
                                                                     Public Law 103–354 is obtaining a serv-                   able in any FmHA or its successor
                                                                     ice or product for itself only, it must                   agency under Public Law 103–354 office)
                                                                     be a procurement and any such actions                     is an example of a typical cooperative
                                                                     will be in accordance with FmHA or its                    agreement. A USDA handbook pro-
                                                                     successor agency under Public Law 103–                    viding detailed guidance for all parties
                                                                     354 Instruction 2024–A (available in any                  is available from the USDA—Office of
                                                                     FmHA or its successor agency under                        Operations and Finance. Although co-
                                                                     Public Law 103–354 office). Funding will                  operative agreements are not a con-
                                                                     come from the appropriate insurance                       tracting action, the authority, respon-
                                                                     fund.                                                     sibility and administration of these
                                                                       (1) Conditions for procurement. Such                    agreements will be handled consistent
                                                                     expenditures may be made only when                        with contracting actions.
                                                                     all of the following conditions are met:                    (4) Consideration of maintenance agree-
                                                                                                                               ments. Maintenance requirements must
                                                                       (i) A determination is made that fail-
                                                                                                                               be considered in evaluating the eco-
                                                                     ure to procure work would likely result
                                                                                                                               nomic benefits of off-site procure-
                                                                     in a property loss greater than the ex-
                                                                                                                               ments. Where feasible, arrangements or
                                                                     penditure;
                                                                                                                               agreements should be made with state,
                                                                       (ii) There are no other feasible means                  local governments or other entities to
                                                                     (including cooperative agreements) to                     ensure continued maintenance by dedi-
                                                                     accomplish the same result;                               cation or acceptance, letter agree-
                                                                       (iii) The recovery of such advance(s)                   ments, or other applicable statutes.
                                                                     is not authorized by security instru-
                                                                     ments in the case of security or custo-                   [53 FR 35765, Sept. 14, 1988, as amended at 54
                                                                     dial property (no such limitation exists                  FR 20521, May 12, 1989; 57 FR 36591, Aug. 14,
                                                                                                                               1992; 68 FR 61331, Oct. 28, 2003; 69 FR 69106,
                                                                     for inventory property);
                                                                                                                               Nov. 26, 2004]
                                                                       (iv) Written documentation sup-
                                                                     porting subparagraphs (i), (ii) and (iii)                 § 1955.56 Real property located in
                                                                     has been obtained from the authorized                          Coastal Barrier Resources System
                                                                     program official;                                              (CBRS).
                                                                       (v) Approval has been obtained from                        (a) Approval official’s scope of author-
                                                                     the appropriate Assistant Adminis-                        ity. Any action that is not in conflict
                                                                     trator.                                                   with the limitations in paragraphs
                                                                       (2) Direct procurement action. Where                    (a)(1), (a)(2) or (a)(3) of this section
                                                                     direct procurement action is con-                         shall not be undertaken until the ap-
                                                                     templated, an opinion must be ob-                         proval official has consulted with the
                                                                     tained from the Regional Attorney                         appropriate Regional Director of the
                                                                     that:                                                     U.S. Fish and Wildlife Service. The Re-
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                                                                       (i) FmHA or its successor agency                        gional Director may or may not concur
                                                                     under Public Law 103–354 has the au-                      that the proposed action does or does

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                                                                     § 1955.57                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     not violate the provisions of the Coast-                  Agency (EPA) to receive such reports.
                                                                     al Barrier Resources Act (CBRA). Pur-                     Notification will be accomplished by
                                                                     suant to the requirements of the                          completing an appropriate EPA or al-
                                                                     CBRA, and except as specified in para-                    ternate State form, if approved by
                                                                     graphs (b) and (c) of this section, no                    EPA. A State supplement will be issued
                                                                     maintenance or repair action may be                       providing the appropriate forms re-
                                                                     taken for property located within a                       quired by EPA and instructions on
                                                                     CBRS where:                                               processing same.
                                                                       (1) The action goes beyond mainte-                         (a) Underground storage tanks which
                                                                     nance,     replacement-in-kind,   recon-                  meet the following criteria must be re-
                                                                     struction, or repair and would result in                  ported:
                                                                     the expansion of any roads, structures                       (1) It is a tank, or combination of
                                                                     or facilities. Water and waste disposal                   tanks (including pipes which are con-
                                                                     facilities as well as community facili-                   nected thereto) the volume of which is
                                                                     ties may be improved to the extent re-                    ten percent or more beneath the sur-
                                                                     quired to meet health and safety re-                      face of the ground, including the vol-
                                                                     quirements but may not be improved                        ume of the underground pipes; and
                                                                     or expanded to serve additional users,                       (2) It is not exempt from the report-
                                                                     patients, or residents;                                   ing requirements as outlined in para-
                                                                       (2) The action is inconsistent with                     graph (b) of this section; and
                                                                     the purposes of the CBRA; or                                 (3) The tank contains petroleum or
                                                                       (3) The property to be repaired or                      substances defined as hazardous under
                                                                     maintained was initially the subject of                   section 101(14) of the Comprehensive
                                                                     a financial transaction that violated                     Environmental Response Compensation
                                                                     the CBRA.                                                 and Liability Act, 42 U.S.C. 9601. The
                                                                       (b) Administrator’s review. Any pro-                    State      Environmental       Coordinator
                                                                     posed maintenance or repair action                        should be consulted whenever there is a
                                                                     that does not conform to the require-                     question regarding the presence of a
                                                                     ments of paragraph (a) of this section                    regulated substance; or
                                                                     must be forwarded to the Adminis-                            (4) The tank contained a regulated
                                                                     trator for review and approval. Ap-                       substance, was taken out of operation
                                                                     proval will not be granted unless the                     by FmHA or its successor agency under
                                                                     Administrator determines, through                         Public Law 103–354 since January 1,
                                                                     consultation with the Department of                       1974, and remains in the ground. Exten-
                                                                     the Interior, that the proposed action                    sive research of records of inventory
                                                                     does not violate the provisions of the                    property sold before the effective date
                                                                     CBRA.                                                     of this section is not required.
                                                                       (c) Emergency provisions. In emer-                         (b) The following underground stor-
                                                                     gency situations to prevent imminent                      age tanks are exempt from the EPA re-
                                                                     loss of life, imminent substantial dam-                   porting requirements:
                                                                     age to the inventory property or the                         (1) Farm or residential tanks of 1,100
                                                                     disruption of utility service, the ap-                    gallons or less capacity used for stor-
                                                                     proval official may take whatever min-                    ing motor fuel for noncommercial pur-
                                                                     imum steps are necessary to prevent                       poses;
                                                                     such loss or damage without first con-                       (2) Tanks used for storing heating oil
                                                                     sulting with the appropriate Regional                     for consumptive use on the premises
                                                                     Director of the U.S. Fish and Wildlife                    where stored;
                                                                     Service. However, the Regional Direc-                        (3) Septic tanks;
                                                                     tor must be immediately notified of                          (4) Pipeline facilities (including gath-
                                                                     any such emergency action.                                ering lines) regulated under; (i) The
                                                                                                                               Natural Gas Pipeline Safety Act of
                                                                     § 1955.57 Real property containing un-                    1968; (ii) the Hazardous Liquid Pipeline
                                                                          derground storage tanks.                             Safety Act of 1979; or (iii) for an intra-
                                                                        Within 30 days of acquisition of real                  state pipeline facility, regulated under
                                                                     property into inventory, FmHA or its                      State laws comparable to the provi-
                                                                     successor agency under Public Law 103–                    sions of law referred to in (b)(4) (i) or
                                                                     354 must report certain underground                       (ii) of this section;
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                                                                     storage tanks to the State agency iden-                      (5) Surface impoundments, pits,
                                                                     tified by the Environmental Protection                    ponds, or lagoons;

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.62

                                                                       (6) Storm water or wastewater collec-                   other items OGC deems necessary to
                                                                     tion systems;                                             comply with State laws. Routine care
                                                                       (7) Flow-through process tanks;                         and maintenance will be provided ac-
                                                                       (8) Liquid traps or associated gath-                    cording to § 1955.64 of this subpart to
                                                                     ering lines directly related to oil or gas                preserve and protect the property. Re-
                                                                     production and gathering operations;                      pairs are limited to those essential to
                                                                     or                                                        prevent further deterioration of the
                                                                       (9) Storage tanks situated in an un-                    property or to remove a health or safe-
                                                                     derground area (such as a basement,                       ty hazard to the community in accord-
                                                                     cellar, mineworking, drift, shaft, or                     ance with § 1955.64(a) of this subpart un-
                                                                     tunnel) if the tank is situated upon or                   less State law permits full recovery of
                                                                     above the surface of the floor.                           cost of repairs in which case usual pol-
                                                                       (c) A copy of each report filed with                    icy on repairs is applicable. If the
                                                                     the designated State agency will be                       former borrower with redemption
                                                                     forwarded to and maintained in the                        rights has possession of the property or
                                                                     State Office by program area.                             has a right to lease proceeds, FmHA or
                                                                       (d) Prospective purchasers of FmHA                      its successor agency under Public Law
                                                                     or its successor agency under Public                      103–354 will not rent the property until
                                                                     Law 103–354 inventory property with a                     the redemption period has expired un-
                                                                     reportable underground storage tank                       less the State Director obtains prior
                                                                     will be informed of the reporting re-                     authorization from OGC. Further guid-
                                                                     quirement, and provided a copy of the                     ance on sale subject to redemption
                                                                     form filed by FmHA or its successor                       rights is set forth in § 1955.138 of Sub-
                                                                     agency under Public Law 103–354.                          part C of this part.
                                                                       (e) In a State which has promulgated                    [54 FR 20522, May 12, 1989]
                                                                     additional underground storage tank
                                                                     reporting requirements, FmHA or its                       § 1955.61 Eviction of persons occu-
                                                                     successor agency under Public Law 103–                        pying inventory real property or
                                                                                                                                   dispossession of persons in posses-
                                                                     354 will comply with such requirements                        sion of chattel property.
                                                                     and a State supplement will be issued
                                                                     to provide necessary guidance.                               Advice and assistance will be ob-
                                                                       (f) Regardless of whether an under-                     tained from OGC where eviction from
                                                                     ground storage tank must be reported                      realty or dispossession of chattel prop-
                                                                     under the requirements of this section,                   erty is necessary. Where OGC has given
                                                                     if FmHA or its successor agency under                     written authorization, eviction may be
                                                                     Public Law 103–354 personnel detect or                    effected through State courts rather
                                                                     believe there has been a release of pe-                   than Federal courts when the former
                                                                     troleum or other regulated substance                      borrower is involved, or through local
                                                                     from an underground storage tank on                       courts instead of Federal/State courts
                                                                     an inventory property, the incident                       when the party occupying/possessing
                                                                     will be reported to the appropriate                       the FmHA or its successor agency
                                                                     State Agency, the State Environ-                          under Public Law 103–354 property is
                                                                     mental Coordinator and appropriate                        not the former borrower. In those
                                                                     program chief. These parties will col-                    cases, a State Supplement will be
                                                                     lectively inform the servicing official                   issued to provide explicit instructions.
                                                                     of the appropriate response action.                       For MFH, eviction of tenants will be
                                                                                                                               handled in accordance with 7 CFR part
                                                                     §§ 1955.58–1955.59        [Reserved]                      3560, subpart D and with the terms of
                                                                                                                               the tenant’s lease. If no written lease
                                                                     § 1955.60 Inventory property subject to                   exists, the State Director will obtain
                                                                         redemption by the borrower.                           advice from OGC.
                                                                       If inventory property is subject to re-                 [54 FR 20522, May 12, 1989, as amended at 69
                                                                     demption rights, the State Director,                      FR 69106, Nov. 26, 2004]
                                                                     with prior approval of OGC, will issue a
                                                                     State Supplement giving guidance con-                     § 1955.62 Removal and disposition of
                                                                     cerning the former borrower’s rights,                          nonsecurity personal property from
                                                                     whether or not the property may be                             inventory real property.
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                                                                     leased or sold by the Government, pay-                       If the former borrower has vacated
                                                                     ment of taxes, maintenance, and any                       the inventory property but left items

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                                                                     § 1955.62                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     of value which do not customarily pass                    after notification as outlined in para-
                                                                     with title to the real estate, such as                    graphs (a)(1) and (a)(2) of this section,
                                                                     furniture, personal effects, and chattels                 the servicing official shall list the
                                                                     not covered by an FmHA or its suc-                        items with clear description, estimated
                                                                     cessor agency under Public Law 103–354                    value, and indication of which are cov-
                                                                     lien, the personal property will be han-                  ered by a lien, if any, and submit the
                                                                     dled as outlined below unless otherwise                   list to the State Director with a re-
                                                                     directed by a State supplement ap-                        quest for authorization to have the
                                                                     proved by OGC which is necessary to                       items removed and disposed of. Based
                                                                     comply with State law. For MFH, the                       on advice from OGC, the State Director
                                                                     removal and disposition of nonsecurity                    will give authorization and provide in-
                                                                     personal property will be handled in ac-                  structions for removal and disposal of
                                                                     cordance with the tenant’s lease or ad-                   the personal property. If approved by
                                                                     vice from OGC. When property is                           OGC, the property may be disposed of
                                                                     deemed to have no value, it is rec-
                                                                                                                               as follows:
                                                                     ommended that it be photographed for
                                                                                                                                 (1) If a reasonable amount can likely
                                                                     documentation before it is disposed of.
                                                                     The FmHA or its successor agency                          be realized by the agency from sale of
                                                                     under Public Law 103–354 official hav-                    the personal property, it may be sold
                                                                     ing custody of the property may re-                       at public sale. Items under lien will be
                                                                     quest advice from the State Office staff                  sold first and the proceeds up to the
                                                                     as necessary. Actions to effect removal                   amount of the lien paid to the
                                                                     of items of value from inventory prop-                    lienholders less a pro rata share of the
                                                                     erty shall be as follows:                                 sale expenses. Proceeds from sale of
                                                                       (a) Notification to owner or lienholder.                items not under lien and proceeds in
                                                                     The servicing official will check the                     excess of the amount due a lienholder
                                                                     public records to see if there is a lien                  will be remitted and applied in the fol-
                                                                     on any of the personal property.                          lowing order:
                                                                       (1) If there is a lien(s) of record, the                  (i) To the inventory account up to
                                                                     servicing official will notify the                        the amount of expenses incurred by the
                                                                     lienholder(s) by certified mail, return                   Government in connection with sale of
                                                                     receipt requested, that the personal                      the personal property (such as adver-
                                                                     property will be disposed of by FmHA                      tising and auctioneer, if used).
                                                                     or its successor agency under Public                        (ii) To an unsatisfied balance on the
                                                                     Law 103–354 unless it is removed from                     FmHA or its successor agency under
                                                                     the premises within 7 days from the                       Public Law 103–354 loan account, if
                                                                     date of the letter.                                       any.
                                                                       (2) If there are no liens of record, or                   (iii) To the borrower, if whereabouts
                                                                     if a lienholder notified in accordance                    are known.
                                                                     with paragraph (a)(1) of this section
                                                                                                                                 (2) If personal property is not sold, a
                                                                     fails to remove the property within the
                                                                                                                               mover or hauler may be authorized to
                                                                     time specified, the servicing official
                                                                                                                               take the items for moving costs. Refer
                                                                     will notify the former borrower at the
                                                                                                                               to FmHA or its successor agency under
                                                                     last known address by certified mail,
                                                                                                                               Public Law 103–354 Instruction 2024–A
                                                                     return receipt requested, that the per-
                                                                     sonal property remaining on the prem-                     (available in any FmHA or its suc-
                                                                     ises will be disposed of by FmHA or its                   cessor agency under Public Law 103–354
                                                                     successor agency under Public Law 103–                    office) for guidance.
                                                                     354 unless it is removed within 7 days                      (c) Payment of costs. Upon payment of
                                                                     from the date of the letter. If no ad-                    all expenses incurred by the Govern-
                                                                     dress can be determined, a copy of the                    ment in connection with the personal
                                                                     letter should be posted on the front                      property, FmHA or its successor agen-
                                                                     door of the property and documenta-                       cy under Public Law 103–354 will allow
                                                                     tion entered in the running record of                     the former borrower or a lienholder ac-
                                                                     the FmHA or its successor agency                          cess to the property to reclaim the per-
                                                                     under Public Law 103–354 file.                            sonal property at any time prior to its
                                                                       (b) Disposal of unclaimed personal                      disposal.
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                                                                     property. If the property is not removed                    (d) Removal of abandoned motor vehi-
                                                                     by the former borrower or a lienholder                    cles from inventory property. Since State

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.65

                                                                     laws vary concerning disposal of aban-                    cost of repairs will generally not be
                                                                     doned motor vehicles, the State Direc-                    considered in determining suitability.
                                                                     tor shall, with the advice of OGC, issue                  Since houses, sites and locations vary
                                                                     a State supplement outlining the                          widely throughout the country, discre-
                                                                     method to be followed which will com-                     tion and sound judgment must be used
                                                                     ply with applicable State laws.                           in determining suitability. The major-
                                                                     [53 FR 35765, Sept. 14, 1988, as amended at 68            ity of houses RHS acquires will be suit-
                                                                     FR 61332, Oct. 28, 2003]                                  ed for retention and classified as pro-
                                                                                                                               gram property. In some instances,
                                                                     § 1955.63 Suitability determination.                      property will not be suited for reten-
                                                                        As soon as real property is acquired,                  tion in the program and will be classi-
                                                                     a determination must be made as to                        fied as ‘‘nonprogram (NP)’’ property.
                                                                     whether or not the property can be                        Situations of this type include, but are
                                                                     used for program purposes. The suit-                      not limited to:
                                                                     ability determination will be recorded                      (1) A dwelling which has been en-
                                                                     in the running record of the case file.                   larged or improved to the point where
                                                                        (a) Determination. The Agency will                     it is clearly above modest.
                                                                     classify property that secured loans or                     (2) When a determination is made
                                                                     was acquired under the CONACT as                          that the property should not have been
                                                                     ‘‘suitable property’’ or ‘‘surplus prop-                  financed originally.
                                                                     erty’’ in accordance with the defini-                       (3) A dwelling brought into the pro-
                                                                     tions found in § 1955.53.                                 gram as an existing dwelling which
                                                                        (b) Grouping and subdividing farm                      met program standards at the time it
                                                                     properties. To the maximum extent                         was originally financed by the Agency
                                                                     practicable, the Agency will maximize                     but which does not conform to current
                                                                     the opportunity for beginning farmers                     policies. This includes older and/or
                                                                     and ranchers to purchase inventory                        larger houses of a type which have
                                                                     properties. Farm properties may be                        proven to create excessive energy and/
                                                                     subdivided or grouped according to                        or maintenance costs to very-low and
                                                                     § 1955.140, as feasible, to carry out the                 low-income borrowers.
                                                                     objectives of the applicable loan pro-
                                                                                                                                 (4) A dwelling which is obsolete due
                                                                     gram. Properties may also be sub-
                                                                                                                               to location, design, construction or
                                                                     divided to facilitate the granting or
                                                                     selling of a conservation easement or                     age.
                                                                     the fee title transfer of portions of a                     (5) A dwelling which requires major
                                                                     property for conservation purposes.                       redesign/renovation to be brought to
                                                                     The environmental effects of such ac-                     program standards.
                                                                     tions will be considered pursuant to                        (d) [Reserved]
                                                                     subpart G of part 1940 of this chapter.                   [53 FR 35765, Sept. 14, 1988, as amended at 54
                                                                        (c) Housing property. Property which                   FR 20522, May 12, 1989; 58 FR 58648, Nov. 3,
                                                                     secured housing loans will be classified                  1993; 60 FR 34455, July 3, 1995; 60 FR 55147,
                                                                     as ‘‘program’’ or ‘‘nonprogram (NP).’’                    Oct. 27, 1995; 62 FR 44396, Aug. 21, 1997; 68 FR
                                                                     After a determination of whether the                      7700, Feb. 18, 2003]
                                                                     property is suited for retention in the
                                                                     respective program, the repair policy                     § 1955.64    [Reserved]
                                                                     outlined in § 1955.64(a) of this subpart
                                                                     will be followed. In determining wheth-                   § 1955.65 Management of inventory
                                                                                                                                   and/or custodial real property.
                                                                     er a property is suited for retention in
                                                                     the program, items such as size, design,                    (a) Authority—(1) County Supervisor.
                                                                     possible health and/or safety hazards                     The County Supervisor, with the as-
                                                                     and obsolescence due to functional,                       sistance of the District Director and
                                                                     economic, or locational conditions                        State Office program staff as nec-
                                                                     must carefully be considered. Gen-                        essary, will select the management
                                                                     erally, program property will meet, or                    method(s) used for property which se-
                                                                     can be realistically repaired to meet,                    cures (or secured) loans to individuals
                                                                     the standards for existing housing out-                   as defined in this subpart.
                                                                     lined in Subpart A of Part 1944 of this                     (2) State Director. The State Director
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                                                                     chapter provided the property is typ-                     will select the management method to
                                                                     ical of modest homes in the area. The                     be used for property which secures (or

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                                                                     § 1955.65                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     secured) loans to organizations as de-                    mudslide hazard area, lessees or ten-
                                                                     fined in this subpart. The State Direc-                   ants must be notified to that effect in
                                                                     tor shall also provide guidance and as-                   accordance with § 1955.66(e) of this sub-
                                                                     sistance to County Supervisors and                        part. A management contract which
                                                                     District Directors as necessary to in-                    covers property in such a hazard area
                                                                     sure that property under their jurisdic-                  may provide for the contractor to issue
                                                                     tion is effectively managed.                              the required notices.
                                                                       (b) Management methods. Management                        (c) Obtaining services for management
                                                                     methods and requirements will vary                        and/or operation of properties. Services
                                                                     depending on such things as the num-                      for management, repair, and/or oper-
                                                                     ber of properties involved, their den-                    ation of properties will be obtained by
                                                                     sity of location, and market condi-                       contract in accordance with FmHA or
                                                                     tions. Management tools which may be                      its successor agency under Public Law
                                                                     used effectively range from contracts                     103–354 Instruction 2024–A (available in
                                                                     to secure individual property, have the                   any FmHA or its successor agency
                                                                     grass cut, or winterize a dwelling; a                     under Public Law 103–354 office).
                                                                     simple management contract to pro-
                                                                                                                                 (1) Management contracts. Manage-
                                                                     vide maintenance and other services on
                                                                                                                               ment contracts are flexible instru-
                                                                     a group of properties (including but not
                                                                                                                               ments which may be tailored to meet
                                                                     limited to specification writing, in-
                                                                                                                               the specific needs of almost any situa-
                                                                     spection of repairs, and yard and direc-
                                                                     tional signs and their installation), or                  tion involving custodial or inventory
                                                                     manage an MFH project; blanket-pur-                       property. This type of contract may be
                                                                     chase arrangement contracts to obtain                     used to manage and maintain SFH
                                                                     services for more than one property; to                   properties, farms, and any other type
                                                                     a broad-scope management contract                         of facility for which FmHA or its suc-
                                                                     with a real estate broker or manage-                      cessor agency under Public Law 103–354
                                                                     ment agent which may include inspec-                      is responsible. Organization-type prop-
                                                                     tion and specification-writing services,                  erties will be secured, maintained, re-
                                                                     making simple repairs, obtaining les-                     paired, and operated if authorized, in
                                                                     sees, collecting rents, coordination                      accordance with a management plan
                                                                     with listing brokers in marketing the                     prepared by the District Director and
                                                                     properties and effecting eviction of                      approved by the State Director if the
                                                                     tenants when necessary. A contractor                      amount of total debt does not exceed
                                                                     may handle evictions only where State                     the State Director’s loan approval au-
                                                                     laws permit the contractor to do so in                    thority, or by the Administrator. For
                                                                     his/her own name; a contractor may                        MFH projects, tenant occupancy and
                                                                     not pursue eviction in the name of the                    selection will be in accordance with
                                                                     Government (FmHA or its successor                         the occupancy standards set forth in 7
                                                                     agency under Public Law 103–354). Cus-                    CFR part 3560, subpart D. Tenants will
                                                                     todial property may be managed in the                     be required to sign a written lease if
                                                                     same manner as inventory property ex-                     one does not exist when the property is
                                                                     cept that it may be leased only if it is                  acquired or taken into custody. If a
                                                                     habitable without repairs in excess of                    contract involves management of an
                                                                     those authorized in § 1955.55(c) of this                  MFH project with 5 or more units, or 5
                                                                     subpart. Farm or organization prop-                       or more single-family dwellings located
                                                                     erty, such as rental housing and com-                     in the same subdivision, the contractor
                                                                     munity facilities, may be operated                        must furnish Form HUD 935.2, ‘‘Af-
                                                                     under a management contract if the                        firmative Fair Housing Marketing
                                                                     State Director has determined it is                       Plan,’’ subject to FmHA or its suc-
                                                                     approporiate to have the property in                      cessor agency under Public Law 103–
                                                                     operation. In any case, the primary                       354’s approval. Contracts for manage-
                                                                     consideration in selecting the method                     ment of farm inventory property will
                                                                     of management to be used is to protect                    be offered on a competitive bid basis,
                                                                     the Government’s interest. If property                    giving preference to persons who live
                                                                     to be operated or leased under a man-                     in, and own and operate qualified small
                                                                     agement contract is located in an area                    businesses in the area where the prop-
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                                                                     identified by the Federal Insurance Ad-                   erty is located in accordance with the
                                                                     ministration as a special flood or                        provisions in FmHA or its successor

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.65

                                                                     agency under Public Law 103–354 In-                       also provide for properties to be added
                                                                     struction 2024–Q (available in any                        or removed from the contractor’s as-
                                                                     FmHA or its successor agency under                        signment whenever necessary, such as
                                                                     Public Law 103–354 office).                               when a property is acquired or taken
                                                                       (2) Authority to enter into management                  into custody during the period of a con-
                                                                     contracts. (i) The County Supervisor                      tract or when a property is sold from
                                                                     may enter into a management contract                      inventory. If a contractor prepares re-
                                                                     for basic services involving farms or                     pair specifications, that contractor will
                                                                     not more than 25 single-family dwell-                     be excluded from the solicitation for
                                                                     ings; however, the aggregate amount                       making the repairs to avoid a conflict
                                                                     paid under a contract may not exceed                      of interest.
                                                                     the contracting authority limitation                        If a management contract calls for
                                                                     for County Supervisors outlined in                        specification writing services, a clause
                                                                     FmHA or its successor agency under                        must be inserted in the contract pro-
                                                                     Public Law 103–354 Instruction 2024–A                     hibiting the preparer or his/her associ-
                                                                     (available in any FmHA or its suc-                        ates from doing the repair work.
                                                                     cessor agency under Public Law 103–354                      (4) Costs. Costs incurred with the
                                                                     office).                                                  management of property will be paid
                                                                       (ii) A District Director may enter                      according to FmHA or its successor
                                                                     into a management contract for basic                      agency under Public Law 103–354 In-
                                                                     maintenance and management services                       struction 2024–A (available in any
                                                                     for an MFH project within the con-                        FmHA or its successor agency under
                                                                     tracting authority outlined in FmHA                       Public Law 103–354 office). For manage-
                                                                     or its successor agency under Public                      ment of custodial property, costs will
                                                                     Law 103–354 Instruction 2024–A (avail-                    be charged to the borrower’s account
                                                                     able in any FmHA or its successor                         as recoverable; and for management of
                                                                     agency under Public Law 103–354 of-                       inventory property as nonrecoverable.
                                                                     fice). The aggregate amount of any
                                                                                                                               Except for management fees, costs of
                                                                     contract may not exceed that con-
                                                                                                                               managing MFH inventory property
                                                                     tracting authority.
                                                                                                                               when tenants are still in residence will
                                                                       (iii) A CO in the State Office may
                                                                                                                               be paid to the extent possible with
                                                                     enter into a management contract for
                                                                                                                               rental income. Management fees will
                                                                     basic services involving more than 25
                                                                                                                               be paid to the manager in accordance
                                                                     single-family dwellings, a more com-
                                                                                                                               with FmHA or its successor agency
                                                                     plex management contract for SFH
                                                                                                                               under Public Law 103–354 Instruction
                                                                     property, or an appropriate contract
                                                                                                                               2024–A (available in any FmHA or its
                                                                     for management or operation of farm
                                                                     or organization-type property. The ag-                    successor agency under Public Law 103–
                                                                     gregate amount paid under a contract                      354 Office).
                                                                     may not exceed the contracting au-                          (d) Additional management services.
                                                                     thority limitation for State Office staff                 Additional types of management serv-
                                                                     outlined in FmHA or its successor                         ices and supplies for which the State
                                                                     agency under Public Law 103–354 In-                       Director may authorize acquisition in-
                                                                     struction 2024–A (available in any                        clude: Appraisal services (except for
                                                                     FmHA or its successor agency under                        MFH), security services, newspaper
                                                                     Public Law 103–354 office).                               copy preparation services, market data
                                                                       (iv) If a proposed management con-                      and comparable list acquisition, and
                                                                     tract will exceed the contracting au-                     tax data acquisition. If the State Di-
                                                                     thority for State Office staff within a                   rector believes there is a need to ac-
                                                                     short time, a request for contract ac-                    quire other services not listed in this
                                                                     tion will be forwarded to the Adminis-                    paragraph or authorized elsewhere in
                                                                     trator, to the attention of the appro-                    this subpart, the State Director should
                                                                     priate program division.                                  make a written request to the Assist-
                                                                       (3) Specification of services. All man-                 ant Administrator (appropriate pro-
                                                                     agement contracts will provide for ter-                   gram) for consideration and/or author-
                                                                     mination by either the contractor or                      ization.
                                                                     the Government upon 30 days written
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                                                                                                                               [53 FR 35765, Sept. 14, 1988, as amended at 57
                                                                     notice. Contracts providing for man-                      FR 36591, Aug. 14, 1992; 69 FR 69106, Nov. 26,
                                                                     agement of multiple properties will                       2004; 70 FR 20704, Apr. 21, 2005]

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                                                                     § 1955.66                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     § 1955.66 Lease of real property.                         cases where an acceptable management
                                                                        When inventory real property, except                   contract cannot be obtained, the Dis-
                                                                     for FSA and MFH properties, cannot be                     trict Director may execute individual
                                                                     sold promptly, or when custodial prop-                    leases.
                                                                     erty is subject to lengthy liquidation                       (iii) Farm property. (A) Any property
                                                                     proceedings, leasing may be used as a                     which secures an insured loan made
                                                                     management tool when it is clearly in                     under the CONACT and which contains
                                                                     the best interest of the Government.                      a dwelling (whether located on or off
                                                                     Leasing will not be used as a means of                    the farm) that is possessed and occu-
                                                                     deferring other actions which should be                   pied as a principal residence by a prior
                                                                     taken, such as liquidation of loans in                    owner who was personally liable for a
                                                                     abandonment cases or repair and sale                      Farm Credit Programs loan must first
                                                                     of inventory property. Leases will pro-                   be considered for Homestead Protec-
                                                                     vide for cancellation by the lessee or                    tion in accordance with subpart S of
                                                                     the Agency on 30-day written notice                       part 1951 of this chapter.
                                                                     unless Special Stipulations in an indi-                      (B) Other than for Homestead Protec-
                                                                     vidual lease for good reason provide                      tion and except as provided in para-
                                                                     otherwise. If extensive repairs are                       graph (c), the county official may only
                                                                     needed to render a custodial property
                                                                                                                               approve the lease of farm property to a
                                                                     suitable for occupancy, this will pre-
                                                                                                                               beginning farmer or rancher who was
                                                                     clude its being leased since repairs
                                                                     must be limited to those essential to                     selected through the random selection
                                                                     prevent further deterioration of the se-                  process to purchase the property but is
                                                                     curity in accordance with § 1955.55(c) of                 not able to complete the purchase due
                                                                     this subpart. The requirements of sub-                    to the lack of Agency funding.
                                                                     part G of part 1940 of this chapter will                     (C) When the servicing official deter-
                                                                     be met for all leases.                                    mines it is impossible to sell farm
                                                                        (a) Authority to approve lease of prop-                property after advertising the property
                                                                     erty—(1) Custodial property. Custodial                    for sale and negotiating with inter-
                                                                     property may be leased pending fore-                      ested parties in accordance with
                                                                     closure with the servicing official ap-                   § 1955.107 of subpart C of this part, farm
                                                                     proving the lease on behalf of the                        property may be leased, upon the ap-
                                                                     Agency.                                                   proval of the Administrator, on a case-
                                                                        (2) Inventory property. Inventory prop-                by-case basis. This authority cannot be
                                                                     erty may be leased under the following                    delegated. Any lease under this para-
                                                                     conditions. Except for farm property                      graph shall be for 1 year only, and not
                                                                     proposed for a lease under the Home-                      subject to renewal or extension. If the
                                                                     stead Protection Program, any prop-                       servicing official determines that the
                                                                     erty that is listed or eligible for listing               prospective lessee may be interested in
                                                                     on the National Register of Historic                      purchasing the property, the lease may
                                                                     Places may be leased only after the                       contain an option to purchase.
                                                                     servicing official and the State His-
                                                                                                                                  (D) When a lease with an option to
                                                                     toric Preservation Officer determine
                                                                                                                               purchase is signed, the lessee should be
                                                                     that the lease will adequately ensure
                                                                                                                               advised that FSA cannot make a com-
                                                                     the property’s condition and historic
                                                                                                                               mitment to finance the purchase of the
                                                                     character.
                                                                        (i) SFH. SFH inventory will generally                  property.
                                                                     not be leased; however, if unusual cir-                      (E) Chattel property will not nor-
                                                                     cumstances indicate leasing may be                        mally be leased unless it is attached to
                                                                     prudent, the county official is author-                   the real estate as a fixture or would
                                                                     ized to approve the lease.                                normally pass with the land.
                                                                        (ii) MFH. MFH projects will gen-                          (F) The property may not be used for
                                                                     erally not be leased, although indi-                      any purpose that will contribute to ex-
                                                                     vidual living units may be leased under                   cessive erosion of highly erodible land
                                                                     a management agreement. After the                         or to conversion of wetlands to produce
                                                                     property is placed under a management                     an agricultural commodity. See Ex-
                                                                     contract, the contractor will be respon-                  hibit M of subpart G of part 1940 of this
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                                                                     sible for leasing the individual units in                 chapter. All prospective lessees of in-
                                                                     accordance with 7 CFR part 3560. In                       ventory property will be notified in

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.66

                                                                     writing of the presence of highly erod-                   part. The applicant must have been
                                                                     ible land, converted wetlands and wet-                    able to demonstrate a feasible farm
                                                                     land and other important resources                        plan and Agency funds must have been
                                                                     such as threatened or endangered spe-                     unavailable at the time of the sale.
                                                                     cies. This notification will include a                    Any applicant determined not to be a
                                                                     copy of the completed and signed Form                     beginning farmer or rancher may re-
                                                                     SCS-CPA-26, ‘‘Highly Erodible Land                        quest that the State Executive Direc-
                                                                     and Wetland Conservation Determina-                       tor conduct an expedited review in ac-
                                                                     tion,’’ which identifies whether the                      cordance with § 1955.107(a)(2)(ii) of sub-
                                                                     property contains wetland or converted                    part C of this part.
                                                                     wetlands or highly erodible land. The                        (d) Property securing Farm Credit Pro-
                                                                     notification will also state that the                     grams loans located within an Indian
                                                                     lease will contain a restriction on the                   Reservation. (1) State Executive Direc-
                                                                     use of such property and that the Agen-                   tors will contact the Bureau of Indian
                                                                     cy’s compliance requirements for wet-                     Affairs Agency supervisor to determine
                                                                     lands, converted wetlands, and highly                     the boundaries of Indian Reservations
                                                                     erodible lands are contained in Exhibit                   and Indian allotments.
                                                                     M of subpart G of part 1940 of this chap-                    (2) Not later than 90 days after ac-
                                                                     ter. Additionally, a copy of the com-                     quiring a property, FSA will afford the
                                                                     pleted and signed Form SCS-CPA-26                         Indian tribe having jurisdiction over
                                                                     will be attached to the lease and the                     the Indian reservation within which
                                                                     lease will contain a special stipulation                  the inventory property is located an
                                                                     as provided on the FMI to Form RD                         opportunity to purchase the property.
                                                                     1955–20, ‘‘Lease of Real Property,’’ pro-                 The purchase shall be in accordance
                                                                     hibiting the use of the property as                       with the priority rights as follows:
                                                                     specified above.                                             (i) To a member of the Indian tribe
                                                                        (iv) Organization property other than                  that has jurisdiction over the reserva-
                                                                     MFH. Only the State Director, with the                    tion within which the real property is
                                                                     advice of appropriate National Office                     located;
                                                                     staff, may approve the lease of organi-                      (ii) To an Indian corporate entity;
                                                                     zation property other than MFH, such                         (iii) To the Indian tribe.
                                                                     as community facilities, recreation                          (3) The Indian tribe having jurisdic-
                                                                     projects, and businesses. A lease of                      tion over the Indian reservation may
                                                                     utilities may require approval by State                   revise the order of priority and may re-
                                                                     regulatory agencies.                                      strict the eligibility for purchase to:
                                                                        (b) Selection of lessees for other than                   (i) Persons who are members of such
                                                                     farm property. When the property to be                    Indian tribe;
                                                                     leased is residential, a special effort                      (ii) Indian corporate entities that are
                                                                     will be made to reach prospective les-                    authorized by such Indian tribe to pur-
                                                                     sees who might not otherwise apply be-                    chase lands within the boundaries of
                                                                     cause of existing community patterns.                     the reservation; or
                                                                     A lessee will be selected considering                        (iii) The Indian tribe itself.
                                                                     the potential as a program applicant                         (4) If any individual, Indian corporate
                                                                     for purchase of the property (if prop-                    entity, or Indian tribe covered in para-
                                                                     erty is suited for program purposes)                      graphs (d)(1) and (d)(2) of this section
                                                                     and ability to preserve the property.                     wishes to purchase the property, the
                                                                     The leasing official may require                          county official must determine the
                                                                     verification of income or a credit re-                    prospective purchaser has the financial
                                                                     port (to be paid for by the prospective                   resources and management skills and
                                                                     lessee) as he or she deems necessary to                   experience that is sufficient to assure a
                                                                     assure payment ability and credit-                        reasonable prospect that the terms of
                                                                     worthiness of the prospective lessee.                     the purchase agreement can be ful-
                                                                        (c) Selection of lessees for FSA property.             filled.
                                                                     FSA inventory property may only be                           (5) If the real property is not pur-
                                                                     leased to an eligible beginning farmer                    chased by any individual, Indian cor-
                                                                     or rancher who was selected to pur-                       porate entity or Indian tribe pursuant
                                                                     chase the property through the random                     to paragraphs (d)(1) and (d)(2) of this
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                                                                     selection process in accordance with                      section and all appeals have concluded,
                                                                     § 1955.107(a)(2)(ii) of subpart C of this                 the State Executive Director shall

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                                                                     § 1955.66                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     transfer the property to the Secretary                      (f) Property containing wetlands or lo-
                                                                     of the Interior if they are agreeable. If                 cated in a floodplain or mudslide hazard
                                                                     present on the property being trans-                      area. Inventory property located in
                                                                     ferred, important resources will be pro-                  areas identified by the Federal Insur-
                                                                     tected as outlined in §§ 1955.137 and                     ance Administration as special flood or
                                                                     1955.139 of subpart C of this part.                       mudslide hazard areas will not be
                                                                       (6) Properties within a reservation                     leased or operated under a manage-
                                                                     formerly owned by entities and non-                       ment contract without prior written
                                                                     tribal members will be treated as reg-                    notice of the hazard to the prospective
                                                                     ular inventory that is not located on                     lessee or tenant. If property is leased
                                                                     an Indian Reservation and disposed of                     by FSA, the servicing official will pro-
                                                                     pursuant to this part.                                    vide the notice, and if property is
                                                                       (e) Lease amount. Inventory property                    leased under a management contract,
                                                                     will be leased for an amount equal to                     the contractor must provide the notice
                                                                     that for which similar properties in the                  in compliance with a provision to that
                                                                     area are being leased or rented (market                   effect included in the contract. The no-
                                                                     rent). Inventory property will not be                     tice must be in writing, signed by the
                                                                     leased for a token amount.                                servicing official or the contractor, and
                                                                       (1) Farm property. To arrive at a mar-                  delivered to the prospective lessee or
                                                                     ket rent amount, the county official                      tenant at least one day before the lease
                                                                     will make a survey of lease amounts of                    is signed. A copy of the notice will be
                                                                     farms in the immediate area with simi-                    attached to the original and each copy
                                                                     lar soils, capabilities, and income po-                   of the lease. Property containing
                                                                     tential. The income-producing capa-                       floodplains and wetlands will be leased
                                                                     bility of the property during the term                    subject to the same use restrictions as
                                                                     of the lease must also be considered.                     contained in § 1955.137(a)(1) of subpart C
                                                                     This rental data will be maintained in                    of this part.
                                                                     an operational file as well as in the                       (g) Highly erodible land. If farm inven-
                                                                     running records of case files for leased                  tory property contains ‘‘highly erod-
                                                                     inventory properties. While cash rent                     ible land,’’ as determined by the NRCS,
                                                                     is preferred, the lease of a farm on a                    the lease must include conservation
                                                                     crop-share basis may be approved if                       practices specified by the NRCS and
                                                                     this is the customary method in the                       approved by FSA as a condition for
                                                                     area. The lessee will market the crops,                   leasing.
                                                                     provide FSA with documented evidence                        (h) Lease of FSA property with option
                                                                     of crop income, and pay the pro rata                      to purchase. A beginning farmer or
                                                                     share of the income to FSA.                               rancher lessee will be given an option
                                                                       (2) SFH property. The lease amount                      to purchase farm property. Terms of
                                                                     will be the market rent unless the les-                   the option will be set forth as part of
                                                                     see is a potential program applicant, in                  the lease as a special stipulation.
                                                                     which case the lease amount may be                          (1) The lease payments will not be ap-
                                                                     set at an amount approximating the                        plied toward the purchase price.
                                                                     monthly payment if a loan were made                         (2) The purchase price (option price)
                                                                     (reflecting payment assistance, if any)                   will be the advertised sales price as de-
                                                                     calculated on the basis of the price of                   termined by an appraisal prepared in
                                                                     the house and income of the lessee,                       accordance with § 761.7 of this title.
                                                                     plus 1⁄12 of the estimated real estate                      (3) For inventory properties leased to
                                                                     taxes, property insurance, and mainte-                    a beginning farmer or rancher appli-
                                                                     nance which would be payable by a                         cant, the term of the lease shall be the
                                                                     homeowner.                                                earlier of:
                                                                       (3) Property other than farm or SFH.                      (i) A period not to exceed 18 months
                                                                     Any inventory property other than a                       from the date that the applicant was
                                                                     farm or single-family dwelling will                       selected to purchase the inventory
                                                                     generally be leased for market rent for                   farm, or
                                                                     that type property in the area. How-                        (ii) The date that direct, guaranteed,
                                                                     ever, such property may be leased for                     credit sale or other Agency funds be-
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                                                                     less than market rent with prior ap-                      come available for the beginning farm-
                                                                     proval of the Administrator.                              er or rancher to close the sale.

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                        § 1955.81

                                                                       (4) Indian tribes or tribal corpora-                    FEMA, inventory housing property not
                                                                     tions which utilize the Indian Land Ac-                   under lease or sales agreement may be
                                                                     quisition program will be allowed to                      made available to shelter victims in an
                                                                     purchase the property for its market                      area designated as a major disaster
                                                                     value less the contributory value of the                  area by the President. See Exhibit A of
                                                                     buildings, in accordance with subpart                     this subpart (available in any FmHA or
                                                                     N of part 1823 of this chapter.                           its successor agency under Public Law
                                                                       (i) Costs. The costs of repairs to                      103–354 office). Authority is hereby del-
                                                                     leased property will be paid by the                       egated to the State Director to imple-
                                                                     Government. However, the Government                       ment this Memorandum of Under-
                                                                     will not pay costs of utilities or any                    standing; and the State Director may
                                                                     other costs of operation of the property                  redelegate this authority to County
                                                                     by the lessee. Repairs will be obtained                   Supervisors or District Directors.
                                                                     pursuant to subpart B of part 1924 of                       (b) HHS. By a Memorandum of Under-
                                                                     this chapter. Expenditures on custodial                   standing between the Agency and HHS,
                                                                     property as limited in § 1955.55 (c) (2) of               inventory housing property not under
                                                                     this subpart will be charged to the bor-                  lease or sales agreement may be made
                                                                     rower’s account as recoverable costs.                     available by lease to public bodies and
                                                                       (j) Security deposit. A security deposit                nonprofit organizations to provide
                                                                     in at least the amount of one month’s                     transitional housing for the homeless.
                                                                     rent will be required from all lessees of                 See Exhibit D of this subpart (available
                                                                     SFH properties. The security deposit                      in any FmHA or its successor agency
                                                                     for farm property should be determined                    under Public Law 103–354 office). Au-
                                                                     by considering only the improvements                      thority is hereby delegated to the
                                                                     or facilities which might be subject to                   State Director to implement this
                                                                     misuse or abuse during the term of the                    Memorandum of Understanding; and
                                                                     lease. For all other types of property,                   the State Director may redelegate this
                                                                     the leasing official may determine                        authority to County Supervisors or
                                                                     whether or not a security deposit will                    District Directors. Copies of all exe-
                                                                     be required and the amount of the de-
                                                                                                                               cuted leases and/or questions regarding
                                                                     posit.
                                                                                                                               this program should be referred by
                                                                       (k) Lease form. Form RD 1955–20 ap-
                                                                                                                               State Offices to the Single Family
                                                                     proved by OGC will be used by the
                                                                                                                               Housing Servicing and Property Man-
                                                                     agency to lease property.
                                                                                                                               agement (SFH/SPM) Division in the
                                                                       (l) Lease income. Lease proceeds will
                                                                                                                               National Office.
                                                                     be applied as follows:
                                                                       (1) Custodial property. The proceeds                    [54 FR 20523, May 12, 1989, as amended at 60
                                                                     from a lease of custodial property will                   FR 34455, July 3, 1995]
                                                                     be applied to the borrower’s account as
                                                                     an extra payment unless foreclosure                       §§ 1955.73–1955.80      [Reserved]
                                                                     proceedings require that such pay-
                                                                     ments be held in suspense.                                § 1955.81    Exception authority.
                                                                       (2) Inventory property. The proceeds                      The Administrator may, in indi-
                                                                     from a lease of inventory property will                   vidual cases, make an exception to any
                                                                     be applied to the lease account.                          requirement or provision of this sub-
                                                                     [62 FR 44397, Aug. 21, 1997, as amended at 64             part, or address any omission of this
                                                                     FR 62568, Nov. 17, 1999; 68 FR 61332, Oct. 28,            subpart which is not inconsistent with
                                                                     2003; 69 FR 69106, Nov. 26, 2004]                         the authorizing statute or other appli-
                                                                     §§ 1955.67–1955.71 [Reserved]                             cable law, if the Administrator deter-
                                                                                                                               mines that the Government’s interest
                                                                     § 1955.72 Utilization of inventory hous-
                                                                          ing by Federal Emergency Manage-                     would be adversely affected or the im-
                                                                          ment Agency (FEMA) or under a                        mediate health and/or safety of tenants
                                                                          Memorandum of Understanding be-                      or the community are endangered if
                                                                          tween the Agency and the Depart-                     there is no adverse effect on the Gov-
                                                                          ment of Health and Human Services                    ernment’s interest. The Administrator
                                                                          (HHS) for transitional housing for                   will exercise this authority upon re-
                                                                          the homeless.                                        quest of the State Director with the
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                                                                        (a) FEMA. By a Memorandum of Un-                       recommendation of the appropriate
                                                                     derstanding between the Agency and                        program Assistant Administrator or

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                                                                     § 1955.82                                                             7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     upon a request initiated by the appro-                    Subject: Availability of Farm Property for
                                                                     priate program Assistant Adminis-                             Purchase
                                                                     trator. Requests for exceptions must be                     [To be Used within 90 days of acquisition]
                                                                     made in writing and supported with                          Recently the Farm Service Agency (FSA)
                                                                     documentation to explain the adverse                      acquired title to llll acres of farm real
                                                                                                                               property located within the boundaries of
                                                                     effect, propose alternative courses of
                                                                                                                               your Reservation. The previous owner of this
                                                                     action, and show how the adverse effect
                                                                                                                               property was llll. The property is avail-
                                                                     will be eliminated or minimized if the                    able for purchase by persons who are mem-
                                                                     exception is granted.                                     bers of your tribe, an Indian Corporate enti-
                                                                     [53 FR 35765, Sept. 14, 1988, as amended at 58            ty, or the tribe itself. Our regulations pro-
                                                                     FR 58649, Nov. 3, 1993]                                   vide for those three distinct priority cat-
                                                                                                                               egories which may be eligible; however, you
                                                                     § 1955.82     State supplements.                          may revise the order of the priority cat-
                                                                                                                               egories and may restrict the eligibility to
                                                                       State supplements will be prepared                      one or any combination of categories. Fol-
                                                                     with the assistance of OGC as nec-                        lowing is a more detailed description of
                                                                     essary to comply with State laws or                       these categories:
                                                                     only as specifically authorized in this                     1. Persons who are members of your Tribe.
                                                                     regulation to provide guidance to                         Individuals so selected must be able to meet
                                                                     FmHA or its successor agency under                        the eligibility criteria for the purchase of
                                                                     Public Law 103–354 officials. State sup-                  Government inventory property and be able
                                                                     plements applicable to MFH must have                      to carry on a family farming operation.
                                                                                                                               Those persons not eligible for FSA’s regular
                                                                     prior approval of the National Office;
                                                                                                                               programs may also purchase this property as
                                                                     others may receive post approval. Re-                     a Non-Program loan on ineligible rates and
                                                                     quests for approval for those affecting                   terms.
                                                                     MFH must include complete justifica-                        2. Indian corporate entities. You may re-
                                                                     tion, citations of State law, and an                      strict eligible Indian corporate entities to
                                                                     opinion from OGC.                                         those authorized by your Tribe to purchase
                                                                                                                               lands within the boundaries of your Reserva-
                                                                     §§ 1955.83–1955.99        [Reserved]                      tion. These entities also must meet the basic
                                                                                                                               eligibility criteria established for the type of
                                                                     § 1955.100      OMB control number.                       assistance granted.
                                                                       The collection of information re-                         3. The Tribe itself is also considered eligi-
                                                                                                                               ble to exercise their right to purchase the
                                                                     quirements in this regulation have
                                                                                                                               property. If available, Indian Land Acquisi-
                                                                     been approved by the Office of Manage-                    tion funds may be used or the property fi-
                                                                     ment and Budget and assigned OMB                          nanced as a Non-Program loan on ineligible
                                                                     control number 0575–0110.                                 rates and terms.
                                                                                                                                 We are requesting that you notify the local
                                                                     EXHIBIT A TO SUBPART B OF PART 1955—                      FSA county office of your selection or inten-
                                                                        MEMORANDUM OF UNDERSTANDING                            tions within 45 days of receipt of this letter,
                                                                        BETWEEN THE FEDERAL EMERGENCY                          regarding the purchase of this real estate. If
                                                                        MANAGEMENT AGENCY AND THE                              you have questions regarding eligibility for
                                                                        FARMERS HOME ADMINISTRATION OR                         any of the groups mentioned above, please
                                                                        ITS SUCCESSOR AGENCY UNDER PUB-                        contact our office. If the Tribe wishes to pur-
                                                                        LIC LAW 103–354                                        chase the property, but is unable to do so at
                                                                                                                               this time, contact with the FSA county of-
                                                                                                                               fice should be made.
                                                                       EDITORIAL NOTE: Exhibit A is not published
                                                                     in the Code of Federal Regulations. It is                                      Sincerely,
                                                                     available in any FmHA or its successor agen-
                                                                     cy under Public Law 103–354 County Office.                                  County official

                                                                     EXHIBIT B TO SUBPART B OF PART 1955—                      [62 FR 44399, Aug. 21, 1997]
                                                                        NOTIFICATION OF TRIBE OF AVAIL-
                                                                        ABILITY OF FARM PROPERTY FOR                           EXHIBIT C TO SUBPART B OF PART 1955—
                                                                        PURCHASE                                                COOPERATIVE AGREEMENT (EXAMPLE)
                                                                       (To Be Used By Farm Service Agency To
                                                                                                                                 EDITORIAL NOTE: Exhibit C is not published
                                                                                    Notify Tribe)
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                                                                                                                               in the Code of Federal Regulations. It is
                                                                     From: County official                                     available in any FmHA or its successor agen-
                                                                     To: (Name of Tribe and address)                           cy under Public Law 103–354 County Office.

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.103

                                                                     EXHIBIT D TO SUBPART B OF PART 1955—                      able a qualified applicant for one of
                                                                        FACT SHEET—THE FEDERAL INTER-                          Farmers Home Administration or its
                                                                        AGENCY TASK FORCE ON FOOD AND                          successor agency under Public Law 103–
                                                                        SHELTER FOR THE HOMELESS                               354s (FmHA or its successor agency
                                                                                                                               under Public Law 103–354’s) loan pro-
                                                                       EDITORIAL NOTE: Exhibit D is not published              grams to meet the objectives of that
                                                                     in the Code of Federal Regulations. It is
                                                                     available in any FmHA or its successor agen-
                                                                                                                               loan program, preference will be given
                                                                     cy under Public Law 103–354 County Office.                to the program applicants. Sales are
                                                                                                                               authorized for program purposes which
                                                                      Subpart C—Disposal of Inventory                          differ from the purposes of the loan the
                                                                                Property                                       property formerly secured, and prop-
                                                                                                                               erty which secured more than one type
                                                                                       INTRODUCTION                            loan may be sold under the program
                                                                                                                               most appropriate for the specific prop-
                                                                     § 1955.101 Purpose.                                       erty and community needs as long as
                                                                        This subpart delegates program au-                     the price is not diminished. Examples
                                                                     thority and prescribes policies and pro-                  are: (RH) property; detached Labor
                                                                     cedures for the sale of inventory prop-                   Housing or Rural Rental Housing units
                                                                     erty including real estate, related real                  may be sold as SFH units; or SFH units
                                                                     estate rights, and chattels. It also cov-                 may be sold as a Rural Rental Housing
                                                                     ers the granting of easements and                         project. All such properties and appli-
                                                                     rights-of-way on inventory property.                      cants must meet the requirements for
                                                                     Credit sales of inventory property to                     the loan program under which the sale
                                                                     ineligible (non-program (NP)) pur-                        is proposed.
                                                                     chasers will be handled in accordance
                                                                     with Subpart J of Part 1951 of this                       [53 FR 35776, Sept. 14, 1988, as amended at 58
                                                                     chapter, except Community and Busi-                       FR 52652, Oct. 12, 1993; 62 FR 44399, Aug. 21,
                                                                     ness Programs (C&BP) and Multi-Fam-                       1997]
                                                                     ily Housing (MFH) which will be han-
                                                                     dled in accordance with this Subpart.                     § 1955.103     Definitions.
                                                                     In addition, credit sales of Single Fam-                     As used in this subpart, the following
                                                                     ily Housing (SFH) properties converted                    apply:
                                                                     to MFH will be handled in accordance                         Approval official. The FmHA or its
                                                                     with this Subpart. This subpart does                      successor agency under Public Law 103–
                                                                     not apply to Farm Service Agency,                         354 official having loan and grant ap-
                                                                     Farm Loan Programs, Single Family                         proval authority auhorized under Sub-
                                                                     Housing (SFH) inventory property, or                      part A of Part 1901 of this chapter.
                                                                     to the Rural Rental Housing, Rural Co-
                                                                                                                                  Auction sale. A public sale in which
                                                                     operative Housing, and Farm Labor
                                                                                                                               property is sold to the highest bidder
                                                                     Housing Programs. In addition, this
                                                                     subpart does not apply to Water and                       in open verbal competition.
                                                                     Waste Programs of the Rural Utilities                        Beginning farmer or rancher. A begin-
                                                                     Service, Watershed loans, and Resource                    ning farmer or rancher is an individual
                                                                     Conservation and Development loans,                       or entity who:
                                                                     which are serviced under part 1782 of                        (1) Is an eligible applicant for FO
                                                                     this title.                                               loan assistance in accordance with
                                                                                                                               § 1943.12 of subpart A of part 1943 of this
                                                                     [72 FR 55019, Sept. 28, 2007, as amended at 72
                                                                     FR 64123, Nov. 15, 2007]                                  chapter or § 1980.180 of subpart B of part
                                                                                                                               1980 of this chapter.
                                                                     § 1955.102 Policy.                                           (2) Has not operated a farm or ranch,
                                                                        The terms ‘‘nonprogram (NP)’’ and                      or who has operated a farm or ranch
                                                                     ‘‘ineligible’’ may be used interchange-                   for not more than 10 years. This re-
                                                                     ably throughout this subpart, but are                     quirement applies to all members of an
                                                                     identical in their meaning. Sales ef-                     entity.
                                                                     forts will be initiated as soon as prop-                     (3) Will materially and substantially
                                                                     erty is acquired in order to effect sale                  participate in the operation of the farm
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                                                                     at the earliest practicable time. When                    or ranch.
                                                                     a property is of a nature that will en-

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                                                                     § 1955.103                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                        (i) In the case of a loan made to an                     (i) All the members are related by
                                                                     individual, individually or with the im-                  blood or marriage.
                                                                     mediate family, material and substan-                       (ii) All the stockholders in a corpora-
                                                                     tial participation requires that the in-                  tion are qualified beginning farmers or
                                                                     dividual provide substantial day-to-day                   ranchers.
                                                                     labor and management of the farm or                         Borrower. An individual or entity
                                                                     ranch, consistent with the practices in                   which has outstanding obligations to
                                                                     the county or State where the farm is                     the FmHA or its successor agency
                                                                     located.                                                  under Public Law 103–354 under any
                                                                        (ii) In the case of a loan made to an                  Farmer Programs loan(s), without re-
                                                                     entity, all members must materially                       gard to whether the loan has been ac-
                                                                     and substantially participate in the op-                  celerated. A borrower includes all par-
                                                                     eration of the farm or ranch. Material                    ties liable for the FmHA or its suc-
                                                                     and substantial participation requires                    cessor agency under Public Law 103–354
                                                                     that the individual provides some                         debt, including collection-only bor-
                                                                     amount of the management, or labor                        rowers, except for debtors whose total
                                                                     and management necessary for day-to-                      loans and accounts have been volun-
                                                                     day activities, such that if the indi-                    tarily or involuntarily foreclosed or
                                                                     vidual did not provide these inputs, op-                  liquidated, or who have been dis-
                                                                     eration of the farm or ranch would be                     charged of all FmHA or its successor
                                                                     seriously impaired.                                       agency under Public Law 103–354 debt.
                                                                        (4) Agrees to participate in any loan                    Capitalization value. The value deter-
                                                                     assessment, borrower training, and fi-                    mined in accordance with subpart E of
                                                                     nancial management programs re-                           part 1922 of this chapter.
                                                                     quired by FmHA or its successor agen-                       Closing agent. An attorney or title in-
                                                                     cy under Public Law 103–354 regula-                       surance company which is approved as
                                                                     tions.                                                    a loan closing agent in accordance with
                                                                        (5) Does not own real farm or ranch                    subpart B of part 1927 of this chapter.
                                                                     property or who, directly or through                        CONACT or CONACT property, Prop-
                                                                     interests in family farm entities, owns                   erty acquired or sold pursuant to the
                                                                     real farm or ranch property, the aggre-                   Consolidated Farm and Rural Develop-
                                                                     gate acreage of which does not exceed                     ment Act (CONACT). Within this sub-
                                                                     30 percent of the average farm or ranch                   part, it shall also be construed to cover
                                                                     acreage of the farms or ranches in the                    property which secured loans made
                                                                     county where the property is located.                     pursuant to the Emergency Agricul-
                                                                     If the farm is located in more than one                   tural Credit Act of 1984; the Food Secu-
                                                                     county, the average farm acreage of                       rity Act of 1985; and other statutes giv-
                                                                     the county where the applicant’s resi-                    ing agricultural lending authority to
                                                                     dence is located will be used in the cal-                 FmHA or its successor agency under
                                                                     culation. If the applicant’s residence is                 Public Law 103–354.
                                                                     not located on the farm or if the appli-                    Credit sale. A sale in which financing
                                                                     cant is an entity, the average farm                       is provided to an applicant for the pur-
                                                                     acreage of the county where the major                     chase of inventory property.
                                                                     portion of the farm is located will be                      Decent, safe and sanitary (DSS) hous-
                                                                     used. The average county farm or                          ing. Standards required for the sale of
                                                                     ranch acreage will be determined from                     Government acquired SFH, MFH and
                                                                     the most recent Census of Agriculture                     LH structures acquired pursuant to the
                                                                     developed by the U.S. Department of                       Housing Act of 1949, as amended.
                                                                     Commerce, Bureau of the Census. State                     ‘‘DSS’’ housing unit(s) are structures
                                                                     Directors will publish State supple-                      which meet the requirements of FmHA
                                                                     ments containing the average farm or                      or its successor agency under Public
                                                                     ranch acreage by county.                                  Law 103–354 as described in Subpart A
                                                                        (6) Demonstrates that the available                    of Part 1924 of this chapter for existing
                                                                     resources of the applicant and spouse                     construction or if not meeting the re-
                                                                     (if any) are not sufficient to enable the                 quirements:
                                                                     applicant to enter or continue farming                      (1) Are structurally sound and habit-
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                                                                     or ranching on a viable scale.                            able,
                                                                        (7) In the case of an entity:                            (2) Have a potable water supply,

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.103

                                                                       (3) Have functionally adequate, safe                    plus. Loans made on ineligible terms
                                                                     and operable heating, plumbing, elec-                     are classified as Nonprogram (NP)
                                                                     trical and sewage disposal systems,                       loans and are serviced accordingly. For
                                                                       (4) Meet the Thermal Performance                        SFH and MFH properties, see the defi-
                                                                     Standards as outlined in exhibit D of                     nition of ‘‘Nonprogram (NP) terms.’’
                                                                     subpart A of part 1924 of this chapter,                      Inventory property. Property for
                                                                     and                                                       which title is vested in the Govern-
                                                                       (5) Are safe; that is, a hazard does not                ment and which secured an FmHA or
                                                                     exist that would endanger the safety of                   its successor agency under Public Law
                                                                     dwelling occupants.                                       103–354 loan or which was acquired
                                                                       Eligible terms. Credit terms, for other                 from another Agency for program pur-
                                                                     than SFH or MFH property sales, pre-                      poses.
                                                                     scribed in FmHA or its successor agen-                       Market value. The most probable
                                                                     cy under Public Law 103–354 program                       price which property should bring, as
                                                                     regulations for its various loan pro-                     of a specific date, in a competitive and
                                                                     grams; available only to persons/enti-                    open market, assuming the buyer and
                                                                     ties meeting eligibility requirements                     seller are prudent and knowledgeable,
                                                                     set forth for the respective loan pro-                    and the price is not affected by undue
                                                                     gram. For SFH and MFH properties,                         stimulus such as forced sale or loan in-
                                                                     see the definition of ‘‘Program terms.’’                  terest subsidy.
                                                                       Farmer program loans. This includes
                                                                                                                                  Negotiated sale. A sale in which there
                                                                     Farm Ownership (FO), Soil and Water
                                                                                                                               is a bargaining of price and/or terms.
                                                                     (SW), Recreation (RL), Economic Op-
                                                                                                                                  Nonprogram (NP) property. SFH and
                                                                     portunity (EO), Operating (OL), Emer-
                                                                     gency (EM), Economic Emergency                            MFH property acquired pursuant to the
                                                                     (EE), Special Livestock (SL), Softwood                    Housing Act of 1949, as amended, that
                                                                     Timber (ST) and Rural Housing loans                       cannot be used by a borrower to effec-
                                                                     for farm service buildings (RHF).                         tively carry out the objectives of the
                                                                       Homestead protection (FP only). The                     respective loan program; for example, a
                                                                     program which permits former Farmer                       dwelling that cannot be feasibly re-
                                                                     Program borrowers to lease their                          paired to meet the FmHA or its suc-
                                                                     former principal residence with an op-                    cessor agency under Public Law 103–354
                                                                     tion to buy. See subpart S of part 1951                   requirements for existing housing as
                                                                     of this chapter.                                          described in subpart A of part 1944 of
                                                                       Indian Reservation. All land located                    this chapter. It may contain a struc-
                                                                     within the limits of any Indian reserva-                  ture which would meet program stand-
                                                                     tion under the jurisdiction of the                        ards, however is so remotely located it
                                                                     United States notwithstanding the                         would not serve as an adequate residen-
                                                                     issuance of any patent and including                      tial unit or be an older house which is
                                                                     rights-of-way running through the res-                    excessively expensive to heat and/or
                                                                     ervation; trust or restricted land lo-                    maintain for a very-low or low-income
                                                                     cated within the boundaries of a former                   homeowner.
                                                                     reservation of a federally recognized                        Nonprogram (NP) terms. Credit terms
                                                                     Indian Tribe in the State of Oklahoma;                    for SFH or MFH property sales, offered
                                                                     or all Indian allotments the Indian ti-                   for the convenience of the Government
                                                                     tles to which have not been extin-                        to facilitate sales; more stringent than
                                                                     guished if such allotments are subject                    terms offered under FmHA or its suc-
                                                                     to the jurisdiction of a federally recog-                 cessor agency under Public Law 103–
                                                                     nized Indian Tribe.                                       354’s loan programs. Applicable when
                                                                       Ineligible terms. Credit terms, for                     the purchaser does not meet program
                                                                     other than SFH or MFH property sales,                     eligibility requirements or when the
                                                                     offered for the convenience of the Gov-                   property is classified as nonprogram
                                                                     ernment to facilitate sales; more strin-                  (NP). Loans made on NP terms are
                                                                     gent than terms offered under FmHA                        classified as NP loans and are serviced
                                                                     or its successor agency under Public                      accordingly. For property other than
                                                                     Law 103–354’s loan programs. Applica-                     SFH and MFH, see the definition of
                                                                     ble when the purchaser does not meet                      ‘‘Ineligible terms.’’
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                                                                     program eligibility requirements or                          Organization property. Property for
                                                                     when the property is classified as sur-                   which the following loans were made is

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                                                                     § 1955.103                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     considered organization property. Com-                    cessor agency under Public Law 103–354
                                                                     munity Facility (CF); Water and Waste                     employees or real estate brokers.
                                                                     Disposal (WWD); Association Recre-                          Regular sale. Sale by FmHA or its
                                                                     ation; Watershed (WS); Resource Con-                      successor agency under Public Law 103–
                                                                     servation and Development (RC&D);                         354 employees or real estate brokers
                                                                     loans to associations for Shift-In-Land                   other than by sealed bid, auction or ne-
                                                                     Use (Grazing Association); loans to as-                   gotiation.
                                                                     sociations for Irrigation and Drainage                      Safe. No hazard exists on property
                                                                     and other soil and water conservation                     which would likely endanger the health
                                                                     measures; loans to Indian Tribes and                      or safety of occupants or users.
                                                                     Tribal corporations; Rural Rental
                                                                                                                                 Sealed bid sale. A public sale in which
                                                                     Housing (RRH) to both groups and indi-
                                                                                                                               property is offered to the highest bid-
                                                                     viduals; Rural Cooperative Housing
                                                                     (RCH); Rural Housing Site (RHS);                          der by prior written bid submitted in a
                                                                     Labor Housing (LH) to both groups and                     sealed envelope.
                                                                     individuals; Business and Industry                          Servicing official. For loans to individ-
                                                                     (B&I) to both individuals and groups or                   uals, as defined in § 1955.53 of subpart B
                                                                     corporations; Rural Development Loan                      of part 1955 of this chapter, the serv-
                                                                     Fund (RDLF); Intermediary Relending                       icing official is the County Supervisor.
                                                                     Program (IRP); Nonprofit National                         For all other loans, excluding insured
                                                                     Corporations (NNC); and Economic Op-                      B&I, the servicing official is the Dis-
                                                                     portunity Cooperative (EOC). Housing-                     trict Director. For insured B&I loans,
                                                                     type (RHS, RCH, RRH and LH) organi-                       the servicing official is the State Di-
                                                                     zation property is referred to collec-                    rector.
                                                                     tively in this subpart as Multiple Fam-                     Socially    disadvantaged       applicant
                                                                     ily Housing (MFH) property.                               (SDA). An applicant who is a member
                                                                        Owner. An individual or an entity                      of a socially disadvantaged group
                                                                     which owned the farm but who may or                       whose members have been subjected to
                                                                     may not have been operating the farm                      racial, ethnic, or gender prejudice be-
                                                                     at the time the farm was taken into in-                   cause of their identity as a member of
                                                                     ventory.                                                  a group, without regard to their indi-
                                                                        Participating broker. A duly licensed                  vidual qualities. For entity SDA appli-
                                                                     real estate broker who has executed a                     cants, the majority interest in the en-
                                                                     listing agreement with FmHA or its                        tity must be held by socially disadvan-
                                                                     successor agency under Public Law 103–                    taged individuals. The Agency has
                                                                     354.                                                      identified     socially     disadvantaged
                                                                        Program property. SFH and MFH in-                      groups as Women, Blacks, American
                                                                     ventory property that can be used to                      Indians, Alaskan Natives, Hispanics,
                                                                     effectively carry out the objectives of
                                                                                                                               Asians, and Pacific Islanders.
                                                                     their respective loan programs with fi-
                                                                                                                                 Suitable property. For FSA inventory
                                                                     nancing through that program. Inven-
                                                                     tory property located in an area where                    property, real property that can be
                                                                     the designation has been changed from                     used for agricultural purposes, includ-
                                                                     rural to nonrural will be considered as                   ing those farm properties that may be
                                                                     if it were still in a rural area.                         used as a start-up or add-on parcel of
                                                                        Program terms. Credit terms for SFH                    farmland. It would also include a resi-
                                                                     or MFH property sales, prescribed in                      dence or other off-farm site that could
                                                                     FmHA or its successor agency under                        be used as a basis for a farming oper-
                                                                     Public Law 103–354 program regulations                    ation. For Agencies other than FSA,
                                                                     for its various loan programs; available                  real property that could be used to
                                                                     only to persons/entities meeting eligi-                   carry out the objectives of the Agen-
                                                                     bility requirements set forth for the re-                 cy’s loan programs with financing pro-
                                                                     spective loan program. For property                       vided through that program.
                                                                     sales other than SFH and MFH, see the                       Surplus property. For FSA inventory
                                                                     definition of ‘‘Eligible terms.’’                         property, real property that cannot be
                                                                        Regular FmHA or its successor agency                   used for agricultural purposes includ-
                                                                     under Public Law 103–354 sale. Sale                       ing nonfarm properties. For other
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                                                                     made by other than sealed bid, auction,                   agencies, property that cannot be used
                                                                     or negotiation by FmHA or its suc-                        to carry out the objectives of financing

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.105

                                                                     available through the applicable loan                       (2) The State Director is responsible
                                                                     program.                                                  for establishing an effective program
                                                                                                                               and insuring compliance with FmHA or
                                                                     [50 FR 23904, June 7, 1985]
                                                                                                                               its successor agency under Public Law
                                                                       EDITORIAL NOTE: For FEDERAL REGISTER ci-                103–354 regulations.
                                                                     tations affecting § 1955.103, see the List of               (3) District Directors are responsible
                                                                     CFR Sections Affected, which appears in the               for disposal actions for programs under
                                                                     Finding Aids section of the printed volume                their supervision and for monitoring
                                                                     and on GPO Access.
                                                                                                                               County Office compliance with FmHA
                                                                     § 1955.104      Authorities and responsibil-              or its successor agency under Public
                                                                         ities.                                                Law 103–354 regulations and State Sup-
                                                                                                                               plements.
                                                                       (a) Redelegation of authority. FmHA or                    (4) County Supervisors are respon-
                                                                     its successor agency under Public Law                     sible for timely disposal of inventory
                                                                     103–354 officials will redelegate authori-                property for programs under their su-
                                                                     ties to the maximum extent possible,                      pervision.
                                                                     consistent with program objectives and
                                                                     available resources.                                      [53 FR 27830, July 25, 1988, as amended at 66
                                                                                                                               FR 7568, Jan. 24, 2001]
                                                                       (1) Any authority in this subpart
                                                                     which is specifically provided to the                     CONSOLIDATED FARM AND RURAL DEVEL-
                                                                     Administrator or to an Assistant Ad-                       OPMENT ACT (CONACT) REAL PROP-
                                                                     ministrator may only be delegated to a                      ERTY
                                                                     State Director. The State Director can-
                                                                     not redelegate such authority.                            § 1955.105 Real      property      affected
                                                                       (2) Except as provided in paragraph                          (CONACT).
                                                                     (a)(1) of this section, the State Director                   (a) Loan types. Sections 1955.106–
                                                                     may redelegate, in writing, any author-                   1955.109 of this subpart prescribe proce-
                                                                     ity delegated to the State Director in                    dures for the sale of inventory real
                                                                     this subpart, unless specifically ex-                     property which secured any of the fol-
                                                                     cluded, to a Program Chief, Program                       lowing type of loans (referred to as
                                                                     Specialist, or Property Management                        CONACT property in this subpart):
                                                                     Specialist on the State Office staff.                     Farm Ownership (FO); Recreation (RL);
                                                                       (3) The District Director may redele-                   Soil and Water (SW); Operating (OL);
                                                                     gate, in writing, any authority dele-                     Emergency (EM); Economic Oppor-
                                                                     gated to the District Director in this                    tunity (EO); Economic Emergency
                                                                     subpart to an Assistant District Direc-                   (EE); Softwood Timber (ST); Commu-
                                                                     tor or District Loan Specialist. Au-                      nity Facility (CF); Water and Waste
                                                                     thority of District Directors in this                     Disposal (WWD); Reserve Conservation
                                                                     subpart applies to Area Loan Special-                     and Development (RC&D); Watershed
                                                                     ists in Alaska and the Director for the                   (WS); Association Recreation; EOC:
                                                                     Western Pacific Territories.                              Rural Renewal; Water Facility; Busi-
                                                                       (4) The County Supervisor may re-                       ness and Industry (B&I); Rural Devel-
                                                                     delegate, in writing, any authority del-                  opment Loan Fund (RDLF); Inter-
                                                                     egated to the County Supervisor in this                   mediary Relending Program (IRP);
                                                                     subpart to an Assistant County Super-                     Nonprofit National Corporation (NNC);
                                                                     visor, GS–7 or above, who is determined                   Irrigation and Drainage; Shift-in-Land
                                                                     by the County Supervisor to be quali-                     Use (Grazing Association); and loans to
                                                                     fied. Authority of County Supervisors                     Indian Tribes and Tribal Corporations.
                                                                     in this subpart applies to Area Loan                      Homestead Protection, as set forth in
                                                                     Specialists in Alaska, Island Directors                   Subpart S of Part 1951 of this chapter,
                                                                     in Hawaii, the Director for the Western                   is only applicable to Farmer Program
                                                                     Pacific Territories, and Area Super-                      loans as defined in § 1955.103 of this sub-
                                                                     visors in the Western Pacific Terri-                      part.
                                                                     tories and American Samoa.                                   (b) Controlled substance conviction. In
                                                                       (b) Responsibility. (1) National Office                 accordance with the Food Security Act
                                                                     program directors are responsible for                     of 1985 (Pub. L. 99–198), after December
                                                                     reviewing and providing guidance to                       23, 1985, if an individual or any mem-
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                                                                     State, District and County Offices in                     ber, stockholder, partner, or joint oper-
                                                                     disposing of inventory property.                          ator of an entity is convicted under

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                                                                     § 1955.106                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     Federal or State law of planting, culti-                  under Public Law 103–354 expects to ac-
                                                                     vating, growing, producing, harvesting,                   quire in inventory.
                                                                     or storing a controlled substance (see                      (2) The number of farms and acres
                                                                     21 CFR Part 1308, which is Exhibit C to                   other lenders expect to acquire in in-
                                                                     Subpart A of Part 1941 of this chapter                    ventory.
                                                                     and is available in any FmHA or its                         (3) The number of farms and acres
                                                                     successor agency under Public Law 103–                    that FmHA or its successor agency
                                                                     354 office, for the definition of ‘‘con-                  under Public Law 103–354 currently has
                                                                     trolled substance’’) prior to a credit                    in inventory.
                                                                     sale approval in any crop year, the in-                     (4) The number of farms and acres
                                                                     dividual or entity shall be ineligible for                other lenders currently have in inven-
                                                                     a credit sale for the crop year in which                  tory.
                                                                     the individual or member, stockholder,                      (5) The number of farms not included
                                                                     partner, or joint operator of the entity                  in paragraphs (c)(3) and (c)(4) of this
                                                                     was convicted and the four succeeding                     section which are currently listed for
                                                                     crop years. Applicants will attest on                     sale.
                                                                     Form FmHA or its successor agency                           (6) Published real estate values and
                                                                     under Public Law 103–354 410–1, ‘‘Appli-                  trend reports such as those available
                                                                     cation for FmHA or its successor agen-                    from the Economic Research Service or
                                                                     cy under Public Law 103–354 Services,’’                   professional appraisal organizations.
                                                                     that as individuals or that its mem-                        (d) Highly erodible land. If farm inven-
                                                                     bers, if an entity, have not been con-                    tory property contains ‘‘highly erod-
                                                                     victed of such crime after December 23,                   ible land,’’ as determined by the SCS,
                                                                     1985.
                                                                                                                               the lease must include conservation
                                                                       (c) Effects of farm property sales on                   practices specified by the SCS and ap-
                                                                     farm values. State Directors will ana-                    proved by FmHA or its successor agen-
                                                                     lyze farm real estate market condi-                       cy under Public Law 103–354 as a condi-
                                                                     tions within the geographic areas of                      tion for leasing. Refer to § 1955.137(d) of
                                                                     their    jurisdiction   and    determine                  this subpart for implementation re-
                                                                     whether or not the sale of the FmHA or                    quirements.
                                                                     its successor agency under Public Law
                                                                     103–354 farm inventory properties will                    [53 FR 35777, Sept. 14, 1988, as amended at 57
                                                                     have a detrimental effect on the value                    FR 19528, May 7, 1992; 58 FR 58649, Nov. 3,
                                                                     of farms within these areas. Such anal-                   1993; 62 FR 44399, Aug. 21, 1997]
                                                                     ysis will be carried out in January of
                                                                     each year and as often throughout the                     § 1955.106      Disposition of farm prop-
                                                                                                                                   erty.
                                                                     year as necessary to reflect changing
                                                                     farm real estate conditions. If the anal-                   (a) Rights of previous owner and notifi-
                                                                     yses of farm real estate conditions in-                   cation. Before property which secured a
                                                                     dicate that such sales would put down-                    Farm Credit Programs loan is taken
                                                                     ward pressure on farm real estate val-                    into inventory, the FSA county official
                                                                     ues in any area, all farm properties                      will advise the borrower-owner of
                                                                     within the area affected will be with-                    Homestead Protection rights (see sub-
                                                                     held from the market and managed in                       part S of part 1951 of this chapter.)
                                                                     accordance with the provisions of Sub-                      (b) Racial, ethnic, and gender consider-
                                                                     part B of this Part until such time that                  ation. The County Supervisor will
                                                                     a subsequent analysis indicates other-                    make a special effort to insure that
                                                                     wise. The State Director will notify, in                  prospective purchasers, who tradition-
                                                                     writing, the County Supervisor(s) serv-                   ally would not be expected to apply for
                                                                     icing those areas that are restricted                     farm ownership loan assistance because
                                                                     from selling farm inventory property.                     of existing racial, ethnic, or gender
                                                                     State Directors in consultation with                      prejudice, are informed of the avail-
                                                                     other lenders, real estate agents, auc-                   ability of the Socially Disadvantaged
                                                                     tioneers, and others in the community                     Program. Emphasis will be placed on
                                                                     will analyze all available information                    providing assistance to such socially
                                                                     such as:                                                  disadvantaged applicants in accordance
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                                                                       (1) The number of farms and acres                       with the applicable sections of subpart
                                                                     that FmHA or its successor agency                         A of part 1943 of this chapter.

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.107

                                                                       (c) Nonprogram (NP) borrowers. Non-                     publications. Either Form RD 1955–40
                                                                     program (NP) borrowers are not eligi-                     or Form RD 1955–41, ‘‘Notice of Sale,’’
                                                                     ble for Homestead Protection provi-                       will be posted in a prominent place in
                                                                     sions as set forth in subpart S of part                   the county. Maximum publicity should
                                                                     1951 of this chapter. When it is deter-                   be given to the sale under guidance
                                                                     mined that all conditions of § 1951.558(b)                provided by § 1955.146 of this subpart
                                                                     of subpart L of part 1951 of this chapter                 and care should be taken to spell out
                                                                     have been met, loans for unauthorized                     eligibility criteria. Tribal Councils or
                                                                     assistance will be treated as authorized                  other recognized Indian governing bod-
                                                                     loans and will be eligible for homestead                  ies having jurisdiction over Indian res-
                                                                     protection.                                               ervations (see § 1955.103 of this subpart)
                                                                     [53 FR 35777, Sept. 14, 1988, as amended at 58            shall be responsible for notifying those
                                                                     FR 58649, Nov. 3, 1993; 62 FR 44399, Aug. 21,             parties in § 1955.66(d)(2) of subpart B of
                                                                     1997]                                                     this part.
                                                                                                                                  (1) Price. Property will be advertised
                                                                     § 1955.107 Sale       of   FSA   property                 for sale for its appraised market value
                                                                          (CONACT).                                            based on the condition of the property
                                                                        FSA inventory property will be ad-                     at the time it is made available for
                                                                     vertised for sale in accordance with the                  sale. The market value will be deter-
                                                                     provisions of this subpart. If a request                  mined by an appraisal made in accord-
                                                                     is received from a Federal or State                       ance with § 761.7 of this title. Property
                                                                     agency for transfer of a property for                     contaminated with hazardous waste
                                                                     conservation purposes, the advertise-                     will be appraised ‘‘as improved’’ which
                                                                     ment should be conditional on that                        will be used as the sale price for adver-
                                                                     possibility. Real property will be man-                   tisement to beginning farmers or
                                                                     aged in accordance with the provisions                    ranchers.
                                                                     of subpart B of this part until sold.                        (2) Selection of purchaser. After home-
                                                                        (a) Suitable Property. Not later than                  stead protection rights have expired,
                                                                     15 days from the date of acquisition,                     suitable farmland must be sold in the
                                                                     the Agency will advertise suitable                        priority outlined in this paragraph.
                                                                     property for sale. For properties cur-                    When farm inventory property is larger
                                                                     rently under a lease, except leases to                    than family size, the property will be
                                                                     beginning farmers and ranchers under                      subdivided into suitable family size
                                                                     § 1955.66(a)(2)(iii) of subpart B of this                 farms pursuant to § 1955.140 of this sub-
                                                                     part, the property will be advertised                     part.
                                                                     for sale not later than 60 days after the                    (i) Sale to beginning farmers/ranchers.
                                                                     lease expires or is terminated. There                     Not later than 135 days from the date
                                                                     will be a preference for beginning farm-                  of acquisition, FSA will sell suitable
                                                                     ers or ranchers. The advertisement will                   farm property, with a priority given to
                                                                     contain a provision to lease the prop-                    applicants who are classified as begin-
                                                                     erty to a beginning farmer or rancher                     ning farmers or ranchers, as defined in
                                                                     for up to 18 months should FSA credit                     § 1955.103, as of the time of sale.
                                                                     assistance not be available at the time                      (ii) Random selection. The county offi-
                                                                     of sale. The first advertisement will                     cial will first determine whether appli-
                                                                     not be required to contain the sales                      cants meet the eligibility requirements
                                                                     price but it should inform potential be-                  of a beginning farmer or rancher. For
                                                                     ginning farmer or rancher applicants                      applicants who are not determined to
                                                                     that applications will be accepted                        be beginning farmers or ranchers, they
                                                                     pending completion of the advertise-                      may request that the State Executive
                                                                     ment process. When possible, the sale                     Director provide an expedited review
                                                                     of suitable FSA property should be                        and determination of whether the ap-
                                                                     handled by county officials. Farm prop-                   plicant is a beginning farmer or ranch-
                                                                     erty will be advertised for sale by pub-                  er for the purpose of acquiring inven-
                                                                     lishing, as a minimum, two weekly ad-                     tory property. This review shall take
                                                                     vertisements in at least two news-                        place not later than 30 days after de-
                                                                     papers that are widely circulated in the                  nial of the application. The State Exec-
                                                                     area in which the farm is located. Con-                   utive Director’s review decision shall
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                                                                     sideration will be given to advertising                   be final and is not administratively ap-
                                                                     inventory properties in major farm                        pealable. When there is more than one

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                                                                     § 1955.107                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     beginning farmer or rancher applicant,                    of the presence of highly erodible land
                                                                     the Agency will select by lot by placing                  and wetlands on inventory property.
                                                                     the names in a receptacle and drawing                       (b) Surplus property and suitable prop-
                                                                     names sequentially. Drawn offers will                     erty not sold to a beginning farmer or
                                                                     be numbered and those drawn after the                     rancher. Except where a lessee is exer-
                                                                     first drawn name will be held in sus-                     cising the option to purchase under the
                                                                     pense pending sale to the successful ap-                  Homestead Protection provision of sub-
                                                                     plicant. The random selection drawing                     part S of part 1951 of this chapter, sur-
                                                                     will be open to the public, and appli-                    plus property will be offered for public
                                                                     cants will be advised of the time and                     sale by sealed bid or auction within 15
                                                                     place.                                                    days from the date of acquisition in ac-
                                                                       (iii) Notification of applicants not se-                cordance with § 1955.147 or § 1955.148.
                                                                     lected to purchase suitable farmland.                     Suitable farm property which has been
                                                                     When the Agency selects an applicant                      advertised for sale to a beginning farm-
                                                                     to purchase suitable farmland, in ac-                     er or rancher in accordance with para-
                                                                     cordance with this paragraph, all appli-                  graph (a) of this section, but has not
                                                                     cants not selected will be notified in                    sold within 135 days from the date of
                                                                     writing that they were not selected.                      acquisition will be offered for public
                                                                     The outcome of the random selection                       sale by sealed bid or auction to the
                                                                     by lot is not appealable if such selec-                   highest bidder as provided in paragraph
                                                                     tion is conducted in accordance with                      (b)(1) of this section. All prospective
                                                                     this subpart.                                             buyers will be notified in writing as
                                                                       (3) Credit sale procedure. Subject to                   part of the property advertisement of
                                                                     the availability of funds, credit sale to                 the presence of any highly erodible
                                                                     program applicants will be processed as                   land, converted wetlands, floodplains,
                                                                     follows:                                                  wetlands, or other special characteris-
                                                                       (i) The interest rate charged by the                    tics of the property that may limit its
                                                                     Agency will be the lower of the interest                  use or cause an easement to be placed
                                                                     rates in effect at the time of loan ap-                   on the property.
                                                                     proval or closing.                                          (1) Advertising surplus property. FSA
                                                                       (ii) The loan limits for the requested                  will advertise surplus property for sale
                                                                     type of assistance are applicable to a                    by sealed bid or auction within 15 days
                                                                     credit sale to an eligible applicant.                     from the date of acquisition or, for
                                                                       (iii) Title clearance and loan closing                  those suitable properties not sold to
                                                                     for a credit sale and any subsequent                      beginning farmers or ranchers in ac-
                                                                     loan to be closed simultaneously must                     cordance with this section, within 135
                                                                     be the same as for an initial loan ex-                    days of the date of acquisition.
                                                                     cept that:                                                  (2) Sale by sealed bid or auction. Sur-
                                                                       (A) Form RD 1955–49, ‘‘Quitclaim                        plus real estate must be offered for
                                                                     Deed,’’ or other form of nonwarranty                      public sale by sealed bid or auction and
                                                                     deed approved by the Office of the Gen-                   must be sold no later than 165 days
                                                                     eral Counsel (OGC) will be used.                          from the date of acquisition to the
                                                                       (B) The buyer will pay attorney’s fees                  highest bidder. Preference will be given
                                                                     and title insurance costs, recording                      to a cash offer which is at least
                                                                     fees, and other customary fees unless                     *percent of the highest offer requiring
                                                                     they are included in a subsequent loan.                   credit. (*Refer to Exhibit B of RD In-
                                                                     A subsequent loan may not be made for                     struction 440.1 (available in any Agen-
                                                                     the primary purpose of paying closing                     cy office) for the current percentage.)
                                                                     costs and fees.                                           Equally acceptable sealed bid offers
                                                                       (iv) Property sold on credit sale may                   will be decided by lot.
                                                                     not be used for any purpose that will                       (3) Negotiated sale. If no acceptable
                                                                     contribute to excessive erosion of high-                  bid is received through the sealed bid
                                                                     ly erodible land or to the conversion of                  or auction process, the State Executive
                                                                     wetlands to produce an agricultural                       Director will sell surplus property at
                                                                     commodity, see Exhibit M of subpart G                     the maximum price obtainable without
                                                                     of part 1940 of this chapter. All prospec-                further public notice by negotiation
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                                                                     tive buyers will be notified in writing                   with interested parties, including all
                                                                     as a part of the property advertisement                   previous bidders. The rates and terms

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.109

                                                                     offered for a credit sale through nego-                   § 1955.108 Sale of (CONACT) property
                                                                     tiation will be within the limitations                        other than FSA property.
                                                                     established in paragraph (b) (4) of this                    Program officials will immediately
                                                                     section. A sale made through negotia-                     contact the National Office whenever
                                                                     tion will require a bid deposit of not                    they acquire real property to obtain
                                                                     less than 10 percent of the negotiated                    further instructions on the time frames
                                                                     price in the form of a cashier’s check,                   and procedures for advertising and dis-
                                                                     certified check, postal or bank money                     posing of such property.
                                                                     order, or bank draft payable to FSA.
                                                                                                                               [62 FR 44401, Aug. 21, 1997]
                                                                     Preference will be given to a cash offer
                                                                     which is at least * percent of the high-                  § 1955.109 Processing            and      closing
                                                                     est offer requiring credit. [*Refer to                        (CONACT).
                                                                     Exhibit B of RD Instruction 440.1                           (a) Determining repayment ability and
                                                                     (available in any Agency office) for the                  creditworthiness. If a credit sale is in-
                                                                     current percentage.] Equally accept-                      volved, the applicant must furnish nec-
                                                                     able offers will be decided by lot.                       essary financial information to assist
                                                                       (4) Rates and terms. Subject to the                     in determining repayment ability and
                                                                     availability of funds, rates and terms                    creditworthiness. Form FmHA or its
                                                                     for Homestead Protection will be in ac-                   successor agency under Public Law 103–
                                                                     cordance with subpart S of part 1951 of                   354 431–2, ‘‘Farm and Home Plan,’’
                                                                     this chapter. Sales of suitable property                  should be used for all eligible FSA ap-
                                                                     offered to program eligible applicants                    plicants unless the applicant has fur-
                                                                     will be on rates and terms provided in                    nished all required information in an-
                                                                     subpart A of part 1943 of this chapter.                   other acceptable format. Information
                                                                     Surplus property and suitable property                    regarding eligibility, planned develop-
                                                                     which has not been sold to program eli-                   ment and total operations will be pro-
                                                                     gible applicants will be offered for cash                 vided the same as for the respective
                                                                     or on ineligible terms in accordance                      type of FSA loan. Purchasers request-
                                                                     with subpart J of part 1951 of this chap-                 ing credit on ineligible terms, except
                                                                                                                               for C&BP, will be handled in accord-
                                                                     ter. The State Executive Director will
                                                                                                                               ance with subpart J of part 1951 of this
                                                                     determine the loan terms for surplus
                                                                                                                               chapter. For C&BP, information will be
                                                                     property within these limitations. A
                                                                                                                               provided which is similar to an applica-
                                                                     credit sale made on ineligible terms                      tion including financial information
                                                                     will be closed at the interest rate in ef-                required for the respective loan pro-
                                                                     fect at the time the credit sale was ap-                  gram to establish financial stability,
                                                                     proved. After extensive sales efforts                     creditworthiness and repayment abil-
                                                                     where no acceptable offer has been re-                    ity.
                                                                     ceived, the State Executive Director                        (b) [Reserved]
                                                                     may request the Administrator to per-                       (c) Form of payment. Payments at
                                                                     mit offering surplus property for sale                    closing will be in the form of cash,
                                                                     on more favorable rates and terms;                        cashier’s check, certified check, postal
                                                                     however, the terms may not be more                        or bank money order, or bank draft
                                                                     favorable than those legally permis-                      made payable to the Agency.
                                                                     sible for eligible borrowers. Surplus                       (d)–(e) [Reserved]
                                                                     property will be offered for sale for                       (f) Earnest money. Earnest money, if
                                                                     cash or terms that will provide the best                  any, will be used to pay purchaser’s
                                                                     net return for the Government. The                        closing costs with any balance of the
                                                                     term of financing extended may not be                     costs being paid by the purchaser. Any
                                                                     longer than the period for which the                      excess earnest money will be credited
                                                                     property will serve as adequate secu-                     to the purchase price or recognized as a
                                                                     rity. All credit sales on ineligible                      part of the purchaser’s downpayment.
                                                                     terms will be identified as NP loans.                       (g) Closing and reporting sales. Title
                                                                                                                               clearance, loan closing and property in-
                                                                     [62 FR 44399, Aug. 21, 1997, as amended at 64             surance requirements for a credit sale
                                                                     FR 62569, Nov. 17, 1999; 68 FR 7700, Feb. 18,             will be the same as for a program loan,
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                                                                     2003]                                                     except the property will be conveyed
                                                                                                                               by Form FmHA or its successor agency

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                                                                     § 1955.110                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     under Public Law 103–354 1955–49, in ac-                  do not exceed those outlined in para-
                                                                     cordance with § 1955.141(a) of this sub-                  graph (b) of this section. Adequate and
                                                                     part.                                                     timely advertising in accordance with
                                                                       (h) Classification. Credit sales on in-                 § 1955.146 of this subpart is of utmost
                                                                     eligible terms for C&BP will be classi-                   importance when this method is used.
                                                                     fied as NP loans and serviced accord-                     No earnest money will be collected in
                                                                     ingly.                                                    connection with sales by FmHA or its
                                                                       (i) [Reserved]                                          successor agency under Public Law 103–
                                                                       (j) Form FmHA or its successor agency                   354. For MFH, this method will always
                                                                     under Public Law 103–354 1910–11, ‘‘Ap-                   be used unless another method is au-
                                                                     plicant Certification, Federal Collection                 thorized by the Assistant Adminis-
                                                                     Policies for Consumer or Commercial                       trator, Housing.
                                                                     Debts.’’ The County Supervisor or Dis-                       (b) Real estate brokers. The County Of-
                                                                     trict Director must review Form                           fice will utilize the services of real es-
                                                                     FmHA or its successor agency under                        tate brokers for regular sales when
                                                                     Public Law 103–354 1910–11 ‘‘Applicant                    there are five or more properties in in-
                                                                     Certification, Federal Collection Poli-                   ventory at any one time during the cal-
                                                                     cies for Consumer or Commercial                           endar year. When real estate brokers
                                                                     Debts,’’ with the applicant, and the                      are used, first consideration will be
                                                                     form must be signed by the applicant.                     given to utilizing such services under
                                                                     [53 FR 35780, Sept. 14, 1988, as amended at 54            an exclusive broker contract as pro-
                                                                     FR 29333, July 12, 1989; 58 FR 52652, Oct. 12,            vided for in § 1955.130 of this subpart.
                                                                     1993; 60 FR 34455, July 3, 1995; 62 FR 44401,             Only when it is determined that an ex-
                                                                     Aug. 21, 1997; 68 FR 61332, Oct. 28, 2003]                clusive broker contract is not prac-
                                                                                                                               ticable, will the services of real estate
                                                                      RURAL HOUSING (RH) REAL PROPERTY                         brokers under an open listing agree-
                                                                                                                               ment be utilized. The use of real estate
                                                                     § 1955.110      [Reserved]
                                                                                                                               brokers in offices having less than five
                                                                     § 1955.111 Sale of real estate for RH                     properties in inventory at any one time
                                                                          purposes (housing).                                  during the calendar year is optional
                                                                                                                               provided staffing and workload permit
                                                                        Sections 1955.112 through 1955.120 of
                                                                                                                               diligent and timely sales by FmHA or
                                                                     this subpart pertain to the sale of ac-
                                                                                                                               its successor agency under Public Law
                                                                     quired property pursuant to the Hous-
                                                                                                                               103–354. When broker services for SFH
                                                                     ing Act of 1949, as amended, (RH prop-
                                                                                                                               are utilized, the FmHA or its successor
                                                                     erty). Single family units (generally
                                                                                                                               agency under Public Law 103–354 office
                                                                     which secured loans made under sec-
                                                                                                                               will not conduct direct sales, but will
                                                                     tion 502 or 504 of the Housing Act of
                                                                                                                               refer inquiries to the broker or list of
                                                                     1949, as amended) are referred to as
                                                                                                                               participating brokers. However, if
                                                                     SFH property. All other property is re-
                                                                                                                               FmHA or its successor agency under
                                                                     ferred to as MFH property. Notwith-
                                                                                                                               Public Law 103–354 has been approached
                                                                     standing the provisions of §§ 1955.112
                                                                                                                               by a potential buyer desiring to pur-
                                                                     through 1955.118 of this subpart,
                                                                                                                               chase a specific property and a sales
                                                                     § 1955.119 is the governing section for
                                                                                                                               contract has been accepted, the prop-
                                                                     the sale of SFH inventory property to
                                                                                                                               erty will not be listed for sale with real
                                                                     a public body or nonprofit organization
                                                                                                                               estate brokers. Earnest money held by
                                                                     to use for transitional housing for the
                                                                                                                               real estate brokers will be used to pay
                                                                     homeless.
                                                                                                                               the purchaser’s closing costs with any
                                                                     [55 FR 3942, Feb. 6, 1990]                                balance of the costs to be paid by the
                                                                                                                               purchaser. Any required earnest money
                                                                     § 1955.112 Method of sale (housing).                      deposit is exclusive of any required
                                                                        (a) Sales by FmHA or its successor                     credit report fee. Brokers may only be
                                                                     agency under Public Law 103–354. Sales                    used for MFH with authorization of the
                                                                     customarily will be made by FmHA or                       Assistant Administrator, Housing.
                                                                     its successor agency under Public Law                        (c) Sealed bid or auction. The use of
                                                                     103–354 personnel in accordance with                      sealed bids or auctions is an effective
                                                                     §§ 1955.114 and 1955.115 of this subpart                  method by which to sell inventory
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                                                                     (as appropriate) when staffing and                        property. If the State Director deter-
                                                                     workload permit and inventory levels                      mines that NP SFH property has been

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.113

                                                                     given adequate market exposure and                        sions attached to the project as part of
                                                                     that diligent sales efforts have not pro-                 the credit sale.
                                                                     duced buyers, or under unusual cir-                          (a) SFH price reduction. SFH property
                                                                     cumstances         as     outlined      in                will be appraised at any time addi-
                                                                     § 1955.115(a)(1) of this subpart, he/she                  tional market data indicates this ac-
                                                                     will authorize sale by sealed bid or auc-                 tion is warranted. If SFH inventory has
                                                                     tion unless additional sales methods                      not sold after being actively marketed,
                                                                     appear more prudent. Program SFH                          the price will be administratively re-
                                                                     property will be sold by regular sale                     duced. An administrative price reduc-
                                                                     only, unless the Assistant Adminis-                       tion will be made without changing the
                                                                     trator, Housing, authorizes sale by                       SFH appraisal. For ease in computing
                                                                     sealed bid or auction. The State Direc-                   dates for administrative price reduc-
                                                                     tor will request such authorization                       tions, each month is assumed to have
                                                                     when all reasonable marketing efforts                     thirty days. The following schedule of
                                                                     fail to produce buyers and the condi-                     administrative price reductions will be
                                                                     tions of § 1955.114(a)(6) of this subpart                 followed:
                                                                     have been met. The case file, including                      (1) Program property. If program prop-
                                                                     documentation of all marketing ef-                        erty has not sold after being actively
                                                                     forts, will be forwarded to the Assist-                   marketed at the current appraised
                                                                     ant Administrator, Housing, ATTN:                         value for 45 days during which time
                                                                     Single Family Housing Servicing and                       program applicants have exclusive
                                                                     Property Management (SFH/SPM) Di-                         rights to purchase the property, plus
                                                                     vision, to request authority to sell pro-                 an additional 30 days to any offeror,
                                                                     gram property by sealed bid or auction.                   the price will be administratively re-
                                                                     The decision to utilize a sealed bid or                   duced by 10 percent of the appraised
                                                                     auction must be carefully weighed                         value. During the first 45 days after the
                                                                     when the property is located in a sub-                    price reduction, the property will be
                                                                     division, since the resultant sale may                    actively marketed with program appli-
                                                                     have an adverse effect on surrounding                     cants having exclusive rights to pur-
                                                                     property values. Detailed guidance for                    chase the property, and at the expira-
                                                                     conducting sealed bid sales is provided                   tion of this 45-day period, the property
                                                                     in § 1955.147 of this subpart and for con-                may be sold to any offeror. If at the
                                                                     ducting auction sales in §§ 1955.131 and                  end of this 75-day period the property
                                                                     1955.148 of this subpart.                                 remains unsold, a second price reduc-
                                                                     [53 FR 27831, July 25, 1988]                              tion of 10 percent of the appraised
                                                                                                                               value will be made. During the first 45
                                                                     § 1955.113 Price (housing).                               days after the second price reduction,
                                                                        Real property will be offered or listed                the property will be actively marketed
                                                                     for its present market value, as ad-                      with program applicants having exclu-
                                                                     justed by any administrative price re-                    sive rights to purchase the property,
                                                                     ductions provided for in this section.                    and at the expiration of this 45-day pe-
                                                                     Market value will be based upon the                       riod, the property may be sold to any
                                                                     condition of the property at the time it                  offeror. If the property does not sell
                                                                     is made available for sale. However,                      within 75 days of the second price re-
                                                                     when a section 515 RRH credit sale is                     duction, further guidance is provided in
                                                                     being made to a nonprofit organization                    § 1955.114(a)(6) and Exhibit D (available
                                                                     or public body to utilize former single                   in any FmHA or its successor agency
                                                                     family dwellings as a rental or cooper-                   under Public Law 103–354 office) of this
                                                                     ative project for very-low-income resi-                   subpart.
                                                                     dents, the price will be the lesser of the                   (2) Nonprogram (NP) property. If NP
                                                                     Government’s investment or market                         property has not been sold after being
                                                                     value, less administrative price reduc-                   actively marketed for 45 days, the price
                                                                     tions, if any. Market value for multi-                    will be administratively reduced by 10
                                                                     family housing projects will be deter-                    percent of the appraised value. If the
                                                                     mined through an appraisal conducted                      property remains unsold after an addi-
                                                                     in accordance with subpart B to part                      tional 45-day period of active mar-
                                                                     1922 of this chapter. Multi-family hous-                  keting, one further price reduction of
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                                                                     ing appraisals conducted shall reflect                    10 percent of the appraised value will
                                                                     the impact of any restrictive-use provi-                  be made. If the property does not sell

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                                                                     § 1955.114                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     within 45 days of the second price re-                    these 45-day period(s), offers from oth-
                                                                     duction, further guidance is provided in                  ers may be received and held until the
                                                                     § 1955.115(a)(1) and Exhibit D (available                 first business day following the 45-day
                                                                     in any FmHA or its successor agency                       period (the 46th day) when any such
                                                                     under Public Law 103–354 office) of this                  offer(s) will be considered as received
                                                                     subpart.                                                  on the 46th day along with offers re-
                                                                        (b) MFH price reduction. For multiple-                 ceived on that same (46th) day. After
                                                                     family property, the sale price will                      the expiration of each 45-day exclusive
                                                                     only be reduced to the extent that the                    period for program applicants, program
                                                                     market value has decreased as shown                       property may be purchased by offerors
                                                                     in a current market appraisal. The Dis-                   requesting credit on program terms,
                                                                     trict Director will not reduce the price                  nonprogram (NP) terms or for cash in
                                                                     without the prior written approval of                     the order of priority set forth in para-
                                                                     the State Director. The State Director                    graph (a)(3) of this section.
                                                                     must request National Office author-                        (ii) In regular sales, an acceptable
                                                                     ization on reductions in price for mul-                   offer must be for at least the sale price.
                                                                     tiple-family property if the inventory                    No offer for less than the sale price will
                                                                     value at the time of acquisition exceed-                  be considered, accepted or held. Offers
                                                                     ed the State Director’s loan approval                     will be considered as acceptable or un-
                                                                     authority.                                                acceptable independent of any accom-
                                                                     [53 FR 27831, July 25, 1988; 54 FR 6875, Feb. 15,         panying credit request (on program or
                                                                     1989, as amended at 58 FR 38927, July 21, 1993]           NP terms).
                                                                                                                                 (iii) All offers will be date-stamped
                                                                     § 1955.114 Sales steps for program                        when received. Selection of equally ac-
                                                                           property (housing).                                 ceptable offers, considering offers in
                                                                        Program property will be sold by reg-                  the category order outlined in para-
                                                                     ular sale unless the Assistant Adminis-                   graph (a)(3) of this section, received on
                                                                     trator, Housing, authorizes another                       the same business day will be made by
                                                                     method. If the State Director deter-                      lot by placing the names in a recep-
                                                                     mines that program property has been                      tacle and drawing names sequentially.
                                                                     given adequate market exposure and                        Drawn offers will be numbered and
                                                                     that diligent sales efforts including the                 those drawn after the first drawn offer
                                                                     use of real estate brokers has not pro-                   will be held as back-up offers pending
                                                                     duced purchasers, the State Director                      sale to the successful offeror, unless
                                                                     may request the Assistant Adminis-                        the offeror has specifically noted on
                                                                     trator, Housing, to authorize sale by                     the offer that it may not be held as a
                                                                     sealed bid or public auction as specified                 back-up offer.
                                                                     in § 1955.112(c) of this subpart.                           (iv) An offer may be submitted any
                                                                        (a) Single family housing (SFH). Sale                  time after the effective date the prop-
                                                                     prices will be established in accordance                  erty is available for sale or any price
                                                                     with § 1955.113 of this subpart. The                      reduction; however, it is not considered
                                                                     County Supervisor will either offer the                   until five business days after the effec-
                                                                     property or list it with real estate bro-                 tive date. An offer received during the
                                                                     kers for regular sale under the provi-                    five business day period is considered
                                                                     sions of § 1955.112 of this subpart. See                  on the 6th day, at the same time as any
                                                                     Exhibit D of this subpart (available in                   offer received on the 6th day.
                                                                     any FmHA or its successor agency                            (v) If an offer subject to FmHA or its
                                                                     under Public Law 103–354 office) which                    successor agency under Public Law 103–
                                                                     outlines chronologically the sales steps                  354 financing is accepted, and the
                                                                     for program property.                                     offeror’s credit request is later denied,
                                                                        (1) The following provisions apply to                  the next offer (if any) will be accepted
                                                                     all offers to purchase SFH inventory                      regardless of whether the rejected ap-
                                                                     property:                                                 plicant appeals the adverse decision
                                                                        (i) Program property will be avail-                    (NP applicants do not receive appeal
                                                                     able for purchase only by program ap-                     rights). In cases involving program
                                                                     plicants for the first 45 days from the                   property, if no back-up offers are on
                                                                     date of the initial offering or listing,                  hand, the property will be reoffered/re-
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                                                                     and for the first 45 days following the                   listed for sale utilizing the balance of
                                                                     date of any reduction in price. During                    any outstanding retention period.

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.114

                                                                     Property will not be held off the mar-                    duce the credit request to the market
                                                                     ket pending the outcome of an appeal.                     value (or lower) with no change to be
                                                                       (2) Effective date and method of offer-                 made in the offered price.
                                                                     ing. When ready for sale, each property                     (iv) Offers with requests for credit on
                                                                     will be offered for sale by use of Form                   NP terms for the sale price.
                                                                     FmHA or its successor agency under                          (4) Back-up offers and notification to
                                                                     Public Law 103–354 1955–43 unless                         offerors. Back-up offers will be taken in
                                                                     FmHA or its successor agency under                        accordance with paragraph (a)(1)(iii) of
                                                                     Public Law 103–354 has on hand a                          this section. County offices utilizing
                                                                     signed offer from a program applicant                     the services of real estate brokers will
                                                                     to purchase a specific program prop-                      advise the brokers of changes in the
                                                                     erty or an offer from any offeror to                      status of the property. County offices
                                                                     purchase a specific NP property. The                      not utilizing real estate brokers will
                                                                     date the form is posted or mailed to                      advise offerors of changes in the status
                                                                     real estate brokers is the effective date                 of the property utilizing exhibit E of
                                                                     the offer for sale has begun.                             this subpart (available in any FmHA or
                                                                       Listings will provide for sales on pro-                 its successor agency under Public Law
                                                                     gram and NP terms, as appropriate.                        103–354 office) or similar format. Use of
                                                                       (3) Priority of offers. For program                     exhibit E is optional in offices utilizing
                                                                     properties, acceptable offers received                    real estate brokers.
                                                                     after the 45-day retention period speci-                    (5) Finalizing sales. Credit sales on
                                                                     fied in paragraph (a)(1)(i) of this sec-                  program terms will be made in accord-
                                                                     tion have priority in the order given in                  ance with § 1955.117 of this subpart and
                                                                     paragraphs (a)(3) (i), (ii), (iii) and (iv) of            7 CFR part 3550. Cash sales will be han-
                                                                     this section. For NP properties, accept-                  dled in accordance with § 1955.118 of
                                                                     able offers have priority in the order                    this subpart and credit sales on NP
                                                                     given in paragraphs (a)(3) (ii), (iii) and                terms will be made in accordance with
                                                                     (iv) of this section. Program applicants                  subpart J of part 1951 of this chapter.
                                                                     may purchase NP property, however,                          (6) Unsold property. If program prop-
                                                                     credit may only be extended on NP                         erty remains unsold after eight months
                                                                     terms.                                                    of active marketing, the case file, with
                                                                       (i) Offers with requests for credit on                  documentation of all marketing ef-
                                                                     program terms. An offer from an appli-                    forts, will be forwarded to the State Of-
                                                                     cant requesting credit on program                         fice for review with a recommendation
                                                                     terms in excess of the sale price will be                 of future sales efforts. The State Direc-
                                                                     considered as equally acceptable with                     tor will determine whether a request
                                                                     other acceptable offers from program                      should be made to the Assistant Ad-
                                                                     applicants and will be sold for the sale                  ministrator, Housing, to sell the prop-
                                                                     price.                                                    erty by sealed bid or auction, or wheth-
                                                                       (ii) Cash offers, in descending order                   er additional guidance such as, but not
                                                                     from highest to lowest, provided the                      limited to advertising, reappraisal, of-
                                                                     cash offer is higher than any other                       fering a special effort sales bonus, or
                                                                     offer which falls into the parameters of                  20-year amortization factor (with bal-
                                                                     paragraph (a)(3)(iii) of this section                     loon after 10 years) on NP financing
                                                                     multiplied by the current cash pref-                      may facilitate a sale.
                                                                     erence percentage listed in exhibit B of                    (b) Multiple family housing. The sale
                                                                     FmHA or its successor agency under                        price will be established in accordance
                                                                     Public Law 103–354 Instruction 440.1                      with § 1955.113 of this subpart. Notifica-
                                                                     (available in any FmHA or its suc-                        tion of known interested prospective
                                                                     cessor agency under Public Law 103–354                    offerors and advertising should be han-
                                                                     office).                                                  dled as set forth in § 1955.146 of this sub-
                                                                       (iii) Offers with requests for credit on                part. The sale information will include
                                                                     NP terms in descending order from                         a sale price, any restrictive-use provi-
                                                                     highest to lowest, for more than the                      sions the project will be subject to and
                                                                     sale price. An offer with a request for                   made part of the title, a date/time/loca-
                                                                     credit in excess of the market value of                   tion when offers will be drawn, and re-
                                                                     the property will not be accepted. If an                  quire all offerors to submit an applica-
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                                                                     offer of this type is received, the offer-                tion package comparable to that re-
                                                                     or will be given the opportunity to re-                   quired by the respective loan program,

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                                                                     § 1955.114                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     which will be reviewed by the State Di-                   40, or another appropriate form des-
                                                                     rector or designee. The sale/time/loca-                   ignated for MFH property, will be used
                                                                     tion will be established by the District                  and the property sold to the first eligi-
                                                                     Director and will allow adequate time                     ble program applicant. Any other
                                                                     for advertising and review of applica-                    method of sale must receive prior writ-
                                                                     tions to determine eligibility in ac-                     ten authorization from the Assistant
                                                                     cordance with MFH program require-                        Administrator, Housing. Cash sales of
                                                                     ments. Offerors whose applications are                    program property will remain subject
                                                                     rejected by FmHA or its successor                         to restrictive-use provisions deter-
                                                                     agency under Public Law 103–354 will                      mined needed and included in the ad-
                                                                     be notified in writing by the approval                    vertisement. The deed will contain the
                                                                     official, and for program applicants,                     applicable restrictive-use provisions.
                                                                     given appeal rights in accordance with                    Tenants and prospective tenants will
                                                                     subpart B of part 1900 of this chapter. If                receive the applicable protections for
                                                                     an application is rejected, the sale will                 the specific restrictive-use provision
                                                                     continue regardless of whether the re-                    contained in 7 CFR part 3560, subpart
                                                                     jected applicant appeals the adverse                      N.
                                                                     decision. Property will not be held                          (c) Single family inventory converted to
                                                                     pending the outcome of an appeal. An                      MFH. Written offers by nonprofit orga-
                                                                     offeror may withdraw an offer prior to                    nizations, public bodies or for-profit
                                                                     the sale date, but not on the sale date.                  entities, which have good records of
                                                                     All offers from applicants determined                     providing low income housing under
                                                                     eligible for the type loan being offered                  section 515, will be considered by
                                                                     will be considered. The District Direc-                   FmHA or its successor agency under
                                                                     tor, or delegate, and one other FmHA                      Public Law 103–354 for the purchase of
                                                                     or its successor agency under Public                      multiple SFH units for conversion to
                                                                     Law 103–354 employee will conduct the                     MFH. Section 514 credit sale mortgages
                                                                     drawing at which time the public may                      may contain repayment terms up to 33
                                                                     be present. Offers will be placed in a re-                years and section 515 credit sale mort-
                                                                     ceptacle    and    drawn    sequentially.                 gage terms may be up to 50 years.
                                                                     Drawn offers will be numbered and
                                                                                                                                  (1) The price provisions of § 1955.113
                                                                     those drawn after the first drawn will
                                                                                                                               and the processing provisions for MFH
                                                                     be held as back-up offers, unless the of-
                                                                                                                               in § 1955.117 of this subpart apply to
                                                                     feror has indicated that the offer may
                                                                                                                               such a conversion.
                                                                     not be held as back-up. Award will be
                                                                     made to the first offer drawn provided                       (2) The provisions of § 1955.130 of this
                                                                     the offer is acceptable as to the terms                   subpart pertaining to real estate bro-
                                                                     and conditions set forth in the sale no-                  kers apply, as applicable, and a com-
                                                                     tice. The successful offeror will be no-                  mission will be due in the normal man-
                                                                     tified immediately in writing by the                      ner on units which were listed with the
                                                                     approval official, return receipt re-                     broker(s).
                                                                     quested, that the successful offeror’s                       (3) Prior approval of the National Of-
                                                                     offer has been accepted even if the suc-                  fice is required before issuance of Form
                                                                     cessful offeror was present at the sale.                  AD–622, ‘‘Notice of Preapplication Re-
                                                                     The remaining offerors will each be no-                   view Action.’’ A preapplication with
                                                                     tified by letter, return receipt re-                      documentation as required by the
                                                                     quested, that their offer was not suc-                    Agency, along with the State Direc-
                                                                     cessful, but will be held as a back-up                    tor’s recommendation, will be for-
                                                                     offer. The selection of the offeror was                   warded to the National Office, Atten-
                                                                     by lot and is therefore not appealable.                   tion: Assistant Administrator, Hous-
                                                                     If an unsuccessful offeror was not                        ing, for a determination and further
                                                                     present at the sale and requests the                      guidance.
                                                                     name of the successful offeror, the                          (4) A credit sale for this purpose will
                                                                     name may be released. If the MFH                          be made according to the provisions of
                                                                     property has been listed with real es-                    7 CFR part 3560, as modified by
                                                                     tate brokers after receiving authoriza-                   § 1955.117 of this subpart, except the
                                                                     tion from the Assistant Administrator,                    units need not be contiguous, but they
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                                                                     Housing, Form FmHA or its successor                       must be located in close enough prox-
                                                                     agency under Public Law 103–354 1955–                     imity so that management costs are

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.115

                                                                     not increased nor management capa-                        outlines chronologically the sales steps
                                                                     bilities diminished because of distance.                  for NP properties.
                                                                       (5) An additional loan may be made                         (1) Sale by sealed bid or auction. If a
                                                                     simultaneously with the credit sale, or                   NP property has not sold within 150
                                                                     later, only when the property involved                    days after being offered for sale, the in-
                                                                     meets the requirements of 7 CFR part                      ventory case file with documentation
                                                                     3560, subpart K.                                          of marketing efforts will be submitted
                                                                       (d) CONACT residential property suit-                   to the State Director. The State Direc-
                                                                     able for the SFH program. When a single                   tor will authorize sale by sealed bid or
                                                                     family house acquired under the                           auction in accordance with § 1955.112(c)
                                                                     CONACT is determined to be suited for                     of this subpart unless additional sales
                                                                     the SFH program, it may be offered for                    methods appear more prudent. Use of
                                                                     sale as a SHF unit as though it had                       the sealed bid or auction method may
                                                                     been acquired under the SFH program.                      be considered as an initial sales effort
                                                                     It may, however, be sold in this man-                     under special or unusual circumstances
                                                                     ner to a program RH applicant on pro-                     such as, but not limited to, structures
                                                                     gram terms only—not for cash or on NP                     which have been substantially de-
                                                                     terms. When a house is offered for sale                   stroyed by fire or other causes.
                                                                     under this paragraph, the listing no-                        (2) Sale as chattel. If efforts to sell NP
                                                                     tices and any advertising (whether                        property by sealed bid or auction prove
                                                                     being sold by FmHA or its successor                       unsuccessful, the structure(s) may be
                                                                     agency under Public Law 103–354 or                        sold as chattel (for chattel or salvage
                                                                     through real estate brokers) must state                   value, as appropriate) when authorized
                                                                     this restriction.                                         by the State Director. When the struc-
                                                                                                                               ture is to be sold as chattel (exclusive
                                                                     [53 FR 27832, July 25, 1988, as amended at 55
                                                                     FR 3942, Feb. 6, 1990; 56 FR 2257, Jan. 22, 1991;         of land) further guidance is provided in
                                                                     58 FR 38927, July 21, 1993; 58 FR 38949, July 21,         §§ 1955.121, 1955.122 and 1955.141(b) of this
                                                                     1993; 58 FR 52652, Oct. 12, 1993; 67 FR 78329,            subpart. If no offer is received, the
                                                                     Dec. 24, 2002; 69 FR 69106, Nov. 26, 2004]                structure(s) may be demolished and re-
                                                                                                                               moved from the site and then the site
                                                                     § 1955.115 Sales steps for nonprogram                     offered for sale. If this method is uti-
                                                                          (NP) property (housing).                             lized, FmHA or its successor agency
                                                                        The appropriate FmHA or its suc-                       under Public Law 103–354 will attempt
                                                                     cessor agency under Public Law 103–354                    to have the structure removed in ex-
                                                                     office will take the following steps                      change for the salvageable materials
                                                                     after repairs, if economically feasible,                  by contract, otherwise, will solicit for
                                                                     are completed. The appraisal will be                      contracts to have the structure re-
                                                                     updated to reflect changes in market                      moved in accordance with FmHA or its
                                                                     conditions, repairs and improvements,                     successor agency under Public Law 103–
                                                                     if any. Form FmHA or its successor                        354 Instruction 2024–A (available in any
                                                                     agency under Public Law 103–354 1955–43                   FmHA or its successor agency under
                                                                     for SFH and 1955–40 for MFH will be                       Public Law 103–354 office).
                                                                     completed to offer the property for                          (3) Sale of vacant land. When FmHA
                                                                     sale. The advertising requirements and                    or its successor agency under Public
                                                                     deed restrictions in § 1955.116 of this                   Law 103–354 has vacant land in inven-
                                                                     subpart apply if the property does not                    tory which was security for an SFH
                                                                     meet FmHA or its successor agency                         loan, the land will be sold in accord-
                                                                     under Public Law 103–354 DSS stand-                       ance with this subparagraph. When the
                                                                     ards.                                                     lot meets the requirements of 7 CFR
                                                                        (a) Single Family Housing. Sales steps                 part 3550, and a program applicant de-
                                                                     will be the same as for program prop-                     sires to purchase the lot and construct
                                                                     erties as provided in § 1955.114(a) of this               a dwelling, a credit sale will not be
                                                                     subpart, except that sales must be for                    made. Instead, one section 502 loan will
                                                                     cash in accordance with § 1955.118 or                     be made which will include funds for
                                                                     credit on NP terms as provided in sub-                    the purchase of the lot and construc-
                                                                     part J of part 1951 of this chapter. See                  tion of a dwelling. Otherwise, the lot
                                                                     exhibit D of this subpart (available in                   will be sold for cash or on NP terms
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                                                                     any FmHA or its successor agency                          with a loan not to exceed ten years in
                                                                     under Public Law 103–354 office) which                    term and amortization.

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                                                                     § 1955.116                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                        (b) Multiple family housing. Sales                     following language which is contained
                                                                     steps will be the same as for program                     in Form FmHA or its successor agency
                                                                     MFH       property     as    provided    in               under Public Law 103–354 1955–44, ‘‘No-
                                                                     § 1955.114(b) of this subpart except that                 tice of Residential Occupancy Restric-
                                                                     sales must be for cash or on NP terms                     tion’’:
                                                                     as set forth in § 1955.118 of this subpart.
                                                                     Additionally, if cash offers are re-                        This property contains a dwelling unit or
                                                                                                                               units which FmHA or its successor agency
                                                                     ceived, they will be given first pref-                    under Public Law 103–354 has deemed to be
                                                                     erence by drawing from the cash offers                    inadequate for residential occupancy. The
                                                                     only. If the State Director determines                    Quitclaim Deed by which this property will
                                                                     an auction sale should be used to sell                    be conveyed will contain a covenant restrict-
                                                                     NP MFH property, authority to use                         ing the residential unit(s) on the property
                                                                     that method of sale must be requested                     from being used for residential occupancy
                                                                     from the Assistant Administrator,                         until the dwelling unit(s) is repaired, ren-
                                                                     Housing. Inventory files, including in-                   ovated or razed. This restriction is imposed
                                                                     formation on the acquisition, mar-                        pursuant to section 510(e) of the Housing Act
                                                                     keting efforts made, management of                        of 1949, as amended, 42 U.S.C. 1480. The prop-
                                                                                                                               erty must be repaired and/or renovated as
                                                                     the property, other pertinent informa-
                                                                                                                               follows:*.
                                                                     tion, a memorandum covering the facts                       * For advertisements, the sentence pre-
                                                                     of the case, and recommendations of                       ceding the asterisk may be deleted and re-
                                                                     the State Director must be submitted                      placed with the following, or similar sen-
                                                                     for review. If the housing is sold out of                 tence: ‘‘Contact FmHA or its successor agen-
                                                                     the FmHA or its successor agency                          cy under Public Law 103–354 (or any real es-
                                                                     under Public Law 103–354 program as                       tate broker/name of exclusive broker) for a
                                                                     NP property, the closing of the sale                      list of items which must be repaired/ren-
                                                                     may not take place until tenants have                     ovated.’’ For notices other than advertising,
                                                                     received all notifications and benefits                   insert those items which are necessary to
                                                                     afforded to tenants in prepaying                          make the dwelling unit(s) meet DSS stand-
                                                                                                                               ards. Examples are:
                                                                     projects in accordance with 7 CFR part
                                                                                                                                 —Replace flooring and floor joists in kitch-
                                                                     3560, subpart N.                                          en and bathroom.
                                                                     [53 FR 27833, July 25, 1988, as amended at 58               —Drill new well to provide for an adequate
                                                                     FR 38928, July 21, 1993; 58 FR 52652, Oct. 12,            and potable water supply.
                                                                     1993; 67 FR 78329, Dec. 24, 2002; 69 FR 69106,              —Hook-up to community water and sewage
                                                                     Nov. 26, 2004]                                            system now being installed.
                                                                                                                                 —Provide a functionally adequate, safe and
                                                                     § 1955.116 Requirements for sale of                       operable * system. * Insert heating, plumb-
                                                                         property not meeting decent, safe                     ing, electrical and/or sewage disposal, etc., as
                                                                         and sanitary (DSS) standards (hous-                   appropriate.
                                                                         ing).                                                   —Install *. * Insert new roof, foundation,
                                                                        For real property (exclusive of im-                    sump pump, bathroom fixtures, etc., as ap-
                                                                     provements) which is unsafe, refer to                     propriate.
                                                                     § 1955.137(e) of this subpart for further                   —Install R-* insulation in basement walls
                                                                     guidance. For all other housing inven-                    or ceiling, R-* insulation in attic, and storm
                                                                                                                               windows/doors throughout. * Insert appro-
                                                                     tory property which does not meet de-
                                                                                                                               priate R-Values to meet Thermal Perform-
                                                                     cent, safe and sanitary (DSS) stand-                      ance Standards.
                                                                     ards, the provisions of this section
                                                                     apply.                                                      (b) Sale agreements. If a housing struc-
                                                                        (a) Notices and advertising. If the in-                ture in inventory does not meet DSS
                                                                     ventory property has a single family                      standards, Form FmHA or its successor
                                                                     dwelling or MFH unit thereon which                        agency under Public Law 103–354 1955–44
                                                                     does not meet DSS standards as de-                        must be attached to Forms FmHA or
                                                                     fined in § 1955.103 of this subpart, but                  its successor agency under Public Law
                                                                     which could meet such standards                           103–354 1955–45 or FmHA or its suc-
                                                                     through the repair or renovation ac-                      cessor agency under Public Law 103–354
                                                                     tivities of the future owner, any ‘‘No-                   1955–46, as appropriate, to provide noti-
                                                                     tice of Real Property For Sale,’’ ‘‘No-                   fication of the deed restriction and re-
                                                                     tice of Sale,’’ or other advertisement                    quired repairs/renovations before the
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                                                                     used in conjunction with advertising                      dwelling can be used for residential
                                                                     the property for sale must include the                    purposes.

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.117

                                                                       (c) Quitclaim Deed. The following, the                  § 1955.117 Processing credit sales on
                                                                     original of Form FmHA or its suc-                               program terms (housing).
                                                                     cessor agency under Public Law 103–354                       The following provisions apply to all
                                                                     1955–44, or similar restrictive clause                    credit sales on program terms:
                                                                     adapted for use in an individual State                       (a) Offers. Form FmHA or its suc-
                                                                     pursuant to a State Supplement ap-                        cessor agency under Public Law 103–354
                                                                     proved by OGC must be added to the                        1955–45 will be used to document the
                                                                     Quitclaim Deed for properties which do                    offer and acceptance for regular FmHA
                                                                     not meet DSS standards at the time of                     or its successor agency under Public
                                                                     sale but which could through the re-                      Law 103–354 sales. The contract is ac-
                                                                     pair/renovation activities of the future                  cepted prior to processing Form FmHA
                                                                     owner:                                                    or its successor agency under Public
                                                                       Pursuant to section 510(e) of the Housing               Law 103–354 410–4, ‘‘Application for
                                                                     Act of 1949, as amended, 42 U.S.C. 1480(e), the           Rural Housing Assistance (Non-Farm
                                                                     purchaser (‘‘Grantee’’ herein) of the above-              Tract),’’ for SFH property with the
                                                                     described real property (the ‘‘subject prop-              provision that acceptance is subject to
                                                                     erty’’ herein) covenants and agrees with the              program approval. MFH property sales
                                                                     United States acting by and through Farm-
                                                                                                                               require an application package com-
                                                                     ers Home Administration or its successor
                                                                     agency under Public Law 103–354 (the                      parable to that submitted for the re-
                                                                     ‘‘Grantor’’ herein) that the dwelling unit(s)             spective loan program application.
                                                                     located on the subject property as of the                    (b) Processing. The FmHA or its suc-
                                                                     date of this Quitclaim Deed will not be occu-             cessor agency under Public Law 103–354
                                                                     pied or used for residential purposes until               regulations pertaining to the type of
                                                                     the item(s) listed at the end of this para-               credit being extended will be followed
                                                                     graph have been accomplished. This cov-                   in making credit sales on program
                                                                     enant shall be binding on Grantee and Grant-
                                                                     ee’s heirs, assigns and successors and will be
                                                                                                                               terms except as modified by the provi-
                                                                     construed as both a covenant running with                 sions of this section. All MFH credit
                                                                     the subject property and as equitable ser-                sales may be made for up to 100 percent
                                                                     vitude. This covenant will be enforceable by              of the current market value of the se-
                                                                     the United States in any court of competent               curity, less any prior lien. However, if
                                                                     jurisdiction. When the existing dwelling                  a profit or limited profit applicant de-
                                                                     unit(s) on the subject property complies with             sires to earn a return, the applicant
                                                                     the aforementioned standards of the Farmers               will be required to contribute at least 3
                                                                     Home Administration or its successor agen-
                                                                     cy under Public Law 103–354 or the unit(s)
                                                                                                                               percent of the purchase price as a cash
                                                                     has been completely razed, upon application               downpayment. All credit sales of RRH,
                                                                     to the Farmers Home Administration or its                 RCH, and LH properties will be subject
                                                                     successor agency under Public Law 103–354 in              to prepayment and restrictive-use pro-
                                                                     accordance with its regulations, the subject              visions specified by the respective pro-
                                                                     property may be released from the effect of               gram requirements.
                                                                     this covenant and the covenant will there-                   (c) Approval. Forms FmHA or its suc-
                                                                     after be of no further force or effect. The               cessor agency under Public Law 103–354
                                                                     property must be repaired and/or renovated
                                                                     as follows: *.’’ * Insert the same items ref-
                                                                                                                               1940–1 or RD 3560–51, as appropriate,
                                                                     erenced in the listing notice(s) and sale                 will be used to approve a credit sale
                                                                     agreement which are necessary to make the                 even though no obligation of funds is
                                                                     dwelling unit(s) meet DSS standards.                      required.
                                                                                                                                  (d) Downpayment. When a downpay-
                                                                       (d) Release of restrictive covenant.
                                                                                                                               ment is made, it will be collected at
                                                                     Upon request of the property owner for
                                                                                                                               closing.
                                                                     a release of the restrictive covenant,
                                                                                                                                  (e) Interest rate. Upon request of the
                                                                     FmHA or its successor agency under
                                                                                                                               applicant, the interest rate charged by
                                                                     Public Law 103–354 will inspect the
                                                                                                                               FmHA or its successor agency under
                                                                     property to ensure that the repairs/ren-
                                                                                                                               Public Law 103–354 will be the lower of
                                                                     ovations outlined in the restrictive
                                                                                                                               the interest rate in effect at the time
                                                                     covenant have been properly completed
                                                                                                                               of loan approval or closing. If the appli-
                                                                     or the structure(s) razed. A State Sup-
                                                                                                                               cant does not indicate a choice, the
                                                                     plement outlining the procedure for re-
                                                                                                                               loan will be closed at the rate in effect
                                                                     leasing the restrictive covenant will be
                                                                                                                               at the time of loan approval.
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                                                                     issued with the advice of OGC.                               (f) Closing costs. MFH purchasers will
                                                                     [53 FR 27834, July 25, 1988]                              pay closing costs from their own funds.

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                                                                     § 1955.118                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     Where necessary, SFH purchasers who                         (b) Credit sales. The following provi-
                                                                     qualify may be made a subsequent loan                     sions apply to MFH credit sales on NP
                                                                     to pay closing costs in an amount not                     terms:
                                                                     to exceed 1 percent of the sale price of                    (1) Offers. Form FmHA or its suc-
                                                                     the dwelling. Any closing costs which                     cessor agency under Public Law 103–354
                                                                     are legally or customarily paid by the                    1955–45 or FmHA or its successor agen-
                                                                     seller will be paid by FmHA or its suc-                   cy under Public Law 103–354 1955–46, as
                                                                     cessor agency under Public Law 103–354                    appropriate, will be used to document
                                                                     and charged to the inventory account                      the offer and acceptance. Contract ac-
                                                                     as a nonrecoverable cost items.                           ceptance is made prior to processing a
                                                                        (g) Closing sale. Title clearance, loan                request for credit on NP terms.
                                                                     closing and property insurance require-                     (2) Processing. Purchasers requesting
                                                                     ments for a credit sale, and any loan                     credit on NP terms will be required to
                                                                     closed simultaneously with the credit                     submit documentation to establish fi-
                                                                     sale, are the same as for a program                       nancial stability, repayment ability,
                                                                     loan of the same type except:                             and creditworthiness. Standard forms
                                                                        (1) The property will be conveyed in                   used to process program applications
                                                                     accordance with § 1955.141(a) of this                     may be utilized or comparable docu-
                                                                     subpart.                                                  mentation may be accepted from the
                                                                        (2) Earnest money, if any, will be                     purchaser with the servicing official
                                                                     used to pay purchaser’s closing costs                     having the discretion to determine
                                                                     with any balance of closing costs being                   what information is required to sup-
                                                                     paid from the purchaser’s personal                        port loan approval for the type prop-
                                                                     funds except as provided in paragraph                     erty involved. Individual credit reports
                                                                     (f) of this section. For SFH credit sales                 will be ordered for each individual ap-
                                                                     and MFH credit sales to nonprofit or-                     plicant and each principal within an
                                                                     ganizations or public bodies, any excess                  applicant entity in accordance with
                                                                     deposit will be refunded to the pur-                      subpart B of part 1910 of this chapter.
                                                                     chaser. For MFH credit sales to profit                    Commercial credit reports will be or-
                                                                     or limited profit buyers, any excess                      dered for profit corporations and part-
                                                                     earnest money deposit will be credited                    nerships, and organizations with a sub-
                                                                     to the purchase price and recognized as                   stantial interest in the applicant enti-
                                                                     a part of the purchaser’s initial invest-
                                                                                                                               ty in accordance with subpart C of part
                                                                     ment.
                                                                                                                               1910 of this chapter.
                                                                        (3) The County Supervisor or District
                                                                                                                                 (3) Approval. Form RD 3560–51 will be
                                                                     Director will provide the closing agent
                                                                                                                               used to approve a credit sale even
                                                                     with the necessary information for
                                                                                                                               though no obligation of funds is in-
                                                                     closing the sale. The assistance of OGC
                                                                                                                               volved. Special instructions on the FMI
                                                                     will be requested to provide closing in-
                                                                                                                               pertaining to NP credit sales will be
                                                                     structions in exceptional or complex
                                                                     cases and for all MFH sales.                              followed.
                                                                        (h) Reporting. After the sale is closed,                 (4) Downpayment. A downpayment of
                                                                     it will be reported according to                          not less than 10 percent of the purchase
                                                                     § 1955.142 of this subpart.                               price is required at closing.
                                                                                                                                 (5) Interest rate. The Section 515 RRH
                                                                     [53 FR 27834, July 25, 1988; 54 FR 6875, Feb. 15,         interest rate plus 1⁄2 percent will be
                                                                     1989, as amended at 58 FR 38928, July 21, 1993;           charged on all types of housing credit
                                                                     68 FR 61332, Oct. 28, 2003; 69 FR 69106, Nov. 26,
                                                                     2004]
                                                                                                                               sales, except SFH. Refer to exhibit B of
                                                                                                                               FmHA or its successor agency under
                                                                     § 1955.118 Processing cash sales                   or     Public Law 103–354 Instruction 440.1
                                                                         MFH credit sales on NP terms.                         (available in any FmHA or its suc-
                                                                                                                               cessor agency under Public Law 103–354
                                                                       (a) Cash sales. Cash sales will be
                                                                     closed by the servicing official col-                     office) for interest rates. Loans made
                                                                     lecting the purchase price (less any                      on NP terms will be closed at the inter-
                                                                     earnest money deposit or bid deposit)                     est rate which was in effect at the time
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                                                                     and delivering the deed to the pur-                       the loan was approved.
                                                                     chaser.

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.119

                                                                       (6) Term of note. The note amount will                     (9) Reporting. After the sale is closed,
                                                                     be amortized over a period not to ex-                     it will be reported according to
                                                                     ceed 10 years. If the State Director de-                  § 1955.142 of this subpart.
                                                                     termines more favorable terms are nec-                       (10) Classification. MFH credit sales
                                                                     essary to facilitate the sale, the note                   on NP terms will be classified as NP
                                                                     amount may be amortized using a 30-                       loans and serviced accordingly.
                                                                     year factor with payment in full (bal-                       (11) Form FmHA or its successor agency
                                                                     loon payment) due not later than 10                       under Public Law 103–354 1910–11, ‘‘Ap-
                                                                     years from the date of closing. In no                     plicant Certification, Federal Collection
                                                                     case will the term be longer than the                     Policies for Consumer or Commercial
                                                                     period for which the property will serve                  Debts.’’ The County Supervisor or Dis-
                                                                     as adequate security.                                     trict Director must review Form
                                                                       (7) Modification of security instruments.               FmHA or its successor agency under
                                                                     If applicable to the type property being                  Public Law 103–354 1910–11, ‘‘Applicant
                                                                                                                               Certification, Federal Collection Poli-
                                                                     sold, modification of security instru-
                                                                                                                               cies for Consumer or Commercial
                                                                     ments may be made. On the promissory
                                                                                                                               Debts,’’ with the applicant, and the
                                                                     note and/or security instrument (mort-
                                                                                                                               form must be signed by the applicant.
                                                                     gage or deed of trust) any covenants re-
                                                                     lating to graduation to other credit, re-                 [53 FR 27835, July 25, 1988, as amended at 54
                                                                     strictive-use    provisions     on    MFH                 FR 29333, July 12, 1989; 55 FR 3942, Feb. 6,
                                                                                                                               1990; 58 FR 38928, July 21, 1993; 58 FR 52653,
                                                                     projects, personal occupancy, inability
                                                                                                                               Oct. 12, 1993; 68 FR 61332, Oct. 28, 2003; 69 FR
                                                                     to secure other financing, and restric-                   69106, Nov. 26, 2004]
                                                                     tions on leasing may be deleted. Dele-
                                                                     tions are made by lining through only                     § 1955.119 Sale of SFH inventory prop-
                                                                     the specific inapplicable language with                       erty to a public body or nonprofit
                                                                     both the NP borrower and FmHA or its                          organization.
                                                                     successor agency under Public Law 103–                       Notwithstanding the provisions of
                                                                     354 initialing the changes.                               § 1955.111 through § 1955.118 of this sub-
                                                                       (8) Closing sale. Title clearance, loan                 part, this section contains provisions
                                                                     closing and property insurance require-                   for the sale of SFH inventory property
                                                                     ments for a credit sale are the same as                   to a public body or nonprofit organiza-
                                                                     for a program loan except:                                tion to use for transitional housing for
                                                                       (i) The property will be conveyed in                    the homeless. A public body or non-
                                                                     accordance with § 1955.141(a) of this                     profit organization is a nonprogram ap-
                                                                     subpart.                                                  plicant. All other SFH credit sales on
                                                                       (ii) The purchaser will pay his/her                     nonprogram terms will be handled in
                                                                     own closing costs. Earnest money, if                      accordance with subpart J of part 1951
                                                                                                                               of this chapter.
                                                                     any, will be used to pay purchaser’s
                                                                                                                                  (a) Method of sale. The method of sale
                                                                     closing costs with any balance of clos-
                                                                                                                               is according to § 1955.112 of this sub-
                                                                     ing costs being paid by the purchaser.
                                                                                                                               part. Upon request from a public body
                                                                     Any closing costs which are legally or
                                                                                                                               or nonprofit organization, FmHA or its
                                                                     customarily paid by the seller will be
                                                                                                                               successor agency under Public Law 103–
                                                                     paid by FmHA or its successor agency                      354 will provide a list of all SFH inven-
                                                                     under Public Law 103–354 from the                         tory property, regardless of whether it
                                                                     downpayment.                                              is listed for sale with real estate bro-
                                                                       (iii) The County Supervisor or Dis-                     kers. The list will indicate whether the
                                                                     trict Director will provide the closing                   property is program or nonprogram.
                                                                     agent with the necessary information                      Upon written notice of the organiza-
                                                                     for closing the sale. The assistance of                   tion’s intent to buy a specific property,
                                                                     OGC will be requested to provide clos-                    if it is not under a sale contract,
                                                                     ing instructions for all MFH sales.                       FmHA or its successor agency under
                                                                       (iv) When more than one property is                     Public Law 103–354 will withdraw the
                                                                     bought by the same buyer and the                          property from the market for a period
                                                                     transactions are closed at the same                       not to exceed 30 days to provide the or-
                                                                     time, a separate promissory note will                     ganization sufficient time to execute
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                                                                     be prepared for each property, but one                    Form FmHA or its successor agency
                                                                     mortgage will cover all the properties.                   under Public Law 103–354 1955–45.

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                                                                     § 1955.120                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                        (b) Price. The price of the property                   more than three points. The payment
                                                                     will be established according to                          must be a customary requirement of
                                                                     § 1955.113 of this subpart; however, a 10                 the lender for the seller within the
                                                                     percent discount of the listed price is                   community where the property is lo-
                                                                     authorized on nonprogram property.                        cated. Terms of payment will be incor-
                                                                     No discount is authorized on program                      porated in Form FmHA or its successor
                                                                     property.                                                 agency under Public Law 103–354 1955–45
                                                                        (c) Decent, safe and sanitary (DSS)                    and will be fixed as of the date the
                                                                     standards. If an organization wants to                    form is signed by the appropriate
                                                                     buy a property which does not meet                        FmHA or its successor agency under
                                                                     DSS standards, FmHA or its successor                      Public Law 103–354 official. Points will
                                                                     agency under Public Law 103–354 will                      not be paid to reduce the purchaser’s
                                                                     repair it to meet those standards, in-                    interest rate. The payment will be de-
                                                                     cluding thermal performance stand-                        ducted from the funds to be received by
                                                                     ards, unless FmHA or its successor                        FmHA or its successor agency under
                                                                     agency under Public Law 103–354 deter-                    Public Law 103–354 at closing.
                                                                     mines it is not feasible to do so accord-
                                                                                                                               [53 FR 27836, July 25, 1988. Redesignated at 55
                                                                     ing to § 1955.64(a)(1)(ii) of subpart B of
                                                                                                                               FR 3942, Feb. 6, 1990, as amended at 58 FR
                                                                     part 1955 of this chapter. The price will                 52653, Oct. 12, 1993; 68 FR 61332, Oct. 28, 2003]
                                                                     be adjusted to reflect any resulting
                                                                     change in value. Cosmetic repairs, if                                   CHATTEL PROPERTY
                                                                     needed, such as painting, floor cov-
                                                                     ering, landscaping, etc., are the respon-                 § 1955.121 Sale of acquired chattels
                                                                     sibility of the organization. Form                            (chattel).
                                                                     FmHA or its successor agency under                           Sections 1955.122 through 1955.124 of
                                                                     Public Law 103–354 1955–44, itemizing                     this subpart prescribe procedures for
                                                                     the required repairs and FmHA or its                      the sale of all acquired chattel prop-
                                                                     successor agency under Public Law 103–                    erty except real property rights. The
                                                                     354’s agreement to complete them be-                      State Director is authorized to sell ac-
                                                                     fore closing will be made a part of                       quired chattels by auction, sealed bid,
                                                                     Form FmHA or its successor agency                         regular sale or, for perishable items
                                                                     under Public Law 103–354 1955–45, the                     and crops, by negotiated sale. The
                                                                     sales contract, before it is signed. Re-                  State Director may redelegate author-
                                                                     quired repairs must be completed be-                      ity to any qualified FmHA or its suc-
                                                                     fore closing so DSS restrictions will                     cessor agency under Public Law 103–354
                                                                     not be required in the deed.                              employee.
                                                                        (d) Approval and closing. Processing
                                                                     cash sales or MFH credit sales on non-                    § 1955.122 Method of sale (chattel).
                                                                     program terms is according to § 1955.118                     Acquired chattels will be sold as ex-
                                                                     of this subpart, except as follows:                       peditiously as possible using the meth-
                                                                        (1) Earnest money deposit. No earnest                  od(s) considered most appropriate. If
                                                                     money deposit is required.                                the chattel is not sold within 180 days
                                                                        (2) Downpayment. No downpayment is                     after acquisition, assistance will be re-
                                                                     required.                                                 quested as outlined in § 1955.143 of this
                                                                        (3) Term of note. The term of the note                 subpart.
                                                                     may not exceed 30 years.                                     (a) Sale to beginning farmers or ranch-
                                                                     [55 FR 3942, Feb. 6, 1990, as amended at 58 FR            ers. Beginning farmers or ranchers ob-
                                                                     52653, Oct. 12, 1993]                                     taining special OL loan assistance
                                                                                                                               under § 1941.15 of subpart A of part 1941
                                                                     § 1955.120 Payment of points (hous-                       of this chapter will receive priority in
                                                                         ing).                                                 the purchase of farm equipment held in
                                                                        To effect regular sale of inventory                    government inventory during the com-
                                                                     SFH property to a purchaser who is fi-                    mitment period. The County Super-
                                                                     nancing the purchase of the property                      visor will notify such applicants/bor-
                                                                     with a non-FmHA or its successor                          rowers of any farm equipment held in
                                                                     agency under Public Law 103–354 loan,                     government inventory within the serv-
                                                                     the County Supervisor may authorize                       ice area of the FmHA or its successor
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                                                                     the payment by FmHA or its successor                      agency under Public Law 103–354 Coun-
                                                                     agency under Public Law 103–354 of not                    ty Office. These applicants/borrowers

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.122

                                                                     will be given 10 working days to re-                      quires, however, additional steps in the
                                                                     spond that they are interested in pur-                    event any established minimum price
                                                                     chasing any or all items of equipment                     is not obtained. Preference will be
                                                                     at the appraised fair market value es-                    given to a cash offer which is at least
                                                                     tablished by FmHA or its successor                        ll* percent of the highest offer re-
                                                                     agency under Public Law 103–354.                          quiring credit.
                                                                     FmHA or its successor agency under
                                                                     Public Law 103–354 Form Letter 1955–C–                      [* Refer to exhibit B of FmHA or its suc-
                                                                     1 will be used to notify applicants/bor-                  cessor agency under Public Law 103–354 In-
                                                                     rowers of the availability of farm                        struction 440.1 (available in any FmHA or its
                                                                                                                               successor agency under Public Law 103–354
                                                                     equipment in FmHA or its successor
                                                                                                                               office) for the current percentage.]
                                                                     agency under Public Law 103–354 inven-
                                                                     tory. The equipment must be essential                       (e) Negotiated sale. Perishable ac-
                                                                     to the success of the operation de-                       quired items and crops (except timber)
                                                                     scribed in the loan application in order                  and chattels for which no acceptable
                                                                     for the applicant to have an oppor-                       bid was received from auction or sealed
                                                                     tunity to purchase such equipment.                        bid methods may be sold by direct ne-
                                                                     The County Supervisor will determine                      gotiation for the best price obtainable.
                                                                     what equipment is essential.                              No public notice is required to nego-
                                                                       (b) Regular sale. Chattels will be sold                 tiate with interested parties including
                                                                     by FmHA or its successor agency under                     prior bidders. Justification for the use
                                                                     Public Law 103–354 employees at mar-                      of this method of sale will be docu-
                                                                     ket value to program applicants. Form
                                                                                                                               mented.
                                                                     FmHA or its successor agency under
                                                                                                                                 (f) Notification. In many States the
                                                                     Public Law 103–354 440–21, ‘‘Appraisal of
                                                                     Chattel Property,’’ will be used when                     original owner of the chattel property
                                                                     appraising chattels for regular sale.                     must personally be notified of the sale
                                                                       (c) Auctions. Section 1955.148 of this                  date and method of sale within a cer-
                                                                     subpart provides detailed guidance on                     tain time prior to the sale. The State
                                                                     auctions applicable to the sale of chat-                  Director then will issue a State supple-
                                                                     tels, as supplemented by this section.                    ment clearly stating what notices are
                                                                       (1) Established public auction. An es-                  to be sent, if any. County Supervisor
                                                                     tablished public auction is an auction                    will review State supplements to deter-
                                                                     that is widely advertised and held on a                   mine what notices must be sent to the
                                                                     regularly scheduled basis at the same                     previous owner of the chattel property
                                                                     facility. This method of sale is particu-                 prior to FmHA or its successor agency
                                                                     larly suited for the sale of commod-                      under Public Law 103–354 taking action
                                                                     ities, farm machinery and livestock.                      to sell the property.
                                                                     No additional public notice of sale is
                                                                                                                               No public notice is required to nego-
                                                                     required other than that commonly
                                                                                                                               tiate with interested parties including
                                                                     used by the facility. This is the pre-
                                                                                                                               prior bidders. Justification for the use
                                                                     ferred method of disposal.
                                                                       (2) Other auctions. Other auctions,                     of this method of sale will be docu-
                                                                     whether conducted by FmHA or its                          mented. A copy of the sale instrument
                                                                     successor agency under Public Law 103–                    (Form FmHA or its successor agency
                                                                     354 employees or fee auctioneers, are                     under Public Law 103–354 1955–47, ‘‘Bill
                                                                     suitable for on-premises sales, for sale                  of Sale ‘A’—Sale of Government Prop-
                                                                     of dissimilar chattels, and for the sale                  erty’’) will be kept in the County or
                                                                     of chattels in conjunction with the                       District Office inventory file. Sale pro-
                                                                     auction of real property. A minimum of                    ceeds will be remitted according to
                                                                     5 days public notice will be given prior                  FmHA or its successor agency under
                                                                     to the date of auction.                                   Public Law 103–354 Instruction 1951–B
                                                                       (d) Sealed bid sales. Section 1955.147 of               (available in any FmHA or its suc-
                                                                     this subpart provides detailed guidance                   cessor agency under Public Law 103–354
                                                                     on sealed bid sales applicable to the                     office). A State Supplement, when
                                                                     sale of chattels. When it is believed                     needed, will be prepared with the as-
                                                                     that financing will have to be provided
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                                                                                                                               sistance of OGC to provide additional
                                                                     through a credit sale, this method has
                                                                     advantages over auction sales. It re-

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                                                                     § 1955.123                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     guidance on negotiated sales and to in-                   this chapter. County Supervisors, Dis-
                                                                     sure compliance with State laws.                          trict Directors, and State Directors are
                                                                     [50 FR 23904, June 7, 1985, as amended at 53              authorized to approve or disapprove
                                                                     FR 35780, Sept. 14, 1988; 58 FR 48290, Sept. 15,          chattel sales on ineligible terms in ac-
                                                                     1993; 58 FR 58650, Nov. 3, 1993; 62 FR 44401,             cordance with the respective type of
                                                                     Aug. 21, 1997; 68 FR 61332, Oct. 28, 2003]                program approval authorities in ex-
                                                                                                                               hibit E of FmHA or its successor agen-
                                                                     § 1955.123 Sale procedures (chattel).
                                                                                                                               cy under Public Law 103–354 Instruc-
                                                                        (a) Sales. Although cash sales are pre-                tion 1901–A (available in any FmHA or
                                                                     ferred in the sale of chattels, credit                    its successor agency under Public Law
                                                                     sales may be used advantageously in                       103–354 office.)
                                                                     the sale of chattels to eligible pur-                       (b) Receipt of payment. Payment will
                                                                     chasers and to facilitate sales of high-                  be by cashier’s check, certified check,
                                                                     priced chattels. Chattel sales will be                    postal or bank money order or personal
                                                                     made to eligible purchasers in accord-
                                                                                                                               check (not in excess of $500) made pay-
                                                                     ance with the provisions of this chap-
                                                                                                                               able to the agency. Cash may be ac-
                                                                     ter. Preference will be given to a cash
                                                                                                                               cepted if it is not possible for one of
                                                                     offer which is at least * percent of the
                                                                                                                               these forms of payment to be used.
                                                                     highest offer requiring credit. (*Refer
                                                                                                                               Third party checks are not acceptable.
                                                                     to exhibit B of FmHA or its successor
                                                                     agency under Public Law 103–354 In-                       If full payment is not received at the
                                                                     struction 440.1 (available in any FmHA                    time of sale, the offer will be docu-
                                                                     or its successor agency under Public                      mented by Form RD 1955–45 or Form
                                                                     Law 103–354 office) for the current per-                  RD 1955–46 where the chattel is sold
                                                                     centage.) Credit sales made to ineli-                     jointly with real estate by regular sale.
                                                                     gible purchasers will require not less                      (c) Transfer of title. Title will be
                                                                     than a 10 percent downpayment with                        transferred to a purchaser in accord-
                                                                     the remaining balance amortized over                      ance with § 1955.141(b) of this subpart.
                                                                     a period not to exceed 5 years. The in-                     (d) Reporting sale. Sales will be re-
                                                                     terest rate for ineligible purchasers                     ported in accordance with § 1955.142 of
                                                                     will be the current ineligible interest                   this subpart.
                                                                     rate for Farmer Programs property set                       (e) Reporting and disposal of inventory
                                                                     forth in exhibit B of FmHA or its suc-                    property not sold. Refer to §§ 1955.143 and
                                                                     cessor agency under Public Law 103–354                    1955.144 of this subpart for additional
                                                                     Instruction 440.1 (available in any                       guidance in disposing of problem prop-
                                                                     FmHA or its successor agency under                        erty.
                                                                     Public Law 103–354 office). Form FmHA
                                                                     or its successor agency under Public                      [50 FR 23904, June 7, 1985, as amended at 58
                                                                                                                               FR 52653, Oct. 12, 1993; 58 FR 58650, Nov. 3,
                                                                     Law 103–354 431–2, in conjunction with
                                                                                                                               1993; 68 FR 61332, Oct. 28, 2003]
                                                                     Form FmHA or its successor agency
                                                                     under Public Law 103–354 440–32, ‘‘Re-                    § 1955.124 Sale with inventory real es-
                                                                     quest for Statement of Debts and Col-                         tate (chattel).
                                                                     lateral,’’ may be used to show financial
                                                                     capability. For Farmer Programs,                            Inventory chattel property may be
                                                                     County Supervisors, District Directors,                   sold with inventory real estate if a
                                                                     and State Directors are authorized to                     higher aggregate price can be obtained.
                                                                     approve or disapprove chattel sales on                    Proceeds from a joint sale will be ap-
                                                                     eligible terms in accordance with the                     plied to the respective inventory ac-
                                                                     respective loan approval authorities in                   counts based on the value of the prop-
                                                                     exhibit C of FmHA or its successor                        erty sold. Form FmHA or its successor
                                                                     agency under Public Law 103–354 In-                       agency under Public Law 103–354 440–21
                                                                     struction 1901–A (available in any                        will be used to determine the value of
                                                                     FmHA or its successor agency under                        the chattel property. The offer for the
                                                                     Public Law 103–354 office). Applicants                    sale of the chattels will be documented
                                                                     who have been determined ineligible,                      by incorporating the terms and condi-
                                                                     and eligible applicants who have their                    tions of the sale of Form FmHA or its
                                                                     application disapproved, will be noti-                    successor agency under Public Law 103–
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                                                                     fied of the opportunity to appeal in ac-                  354 1955–45 or Form FmHA or its suc-
                                                                     cordance with subpart B of part 1900 of                   cessor agency under Public Law 103–354

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.130

                                                                     1955–46, and may be accepted by the ap-                     (2) If the contractor is not a certified
                                                                     propriate approval official based upon                    appraiser and a certified appraiser is
                                                                     the combined final sale price.                            not available, the contractor may qual-
                                                                                                                               ify or may use other qualified apprais-
                                                                     §§ 1955.125–1955.126         [Reserved]                   ers, if the contractor can establish that
                                                                                                                               he/she or that the appraiser meets the
                                                                       USE OF CONTRACTORS TO DISPOSE OF                        criteria for a certification in a Na-
                                                                              INVENTORY PROPERTY                               tional or State appraisal society.
                                                                                                                                 (3) The appraiser has recent, rel-
                                                                     § 1955.127 Selection and use of con-                      evant, documented appraisal experi-
                                                                         tractors to dispose of inventory
                                                                         property.                                             ence or training, or other factors clear-
                                                                                                                               ly establish the appraiser’s qualifica-
                                                                       Sections 1955.128 through 1955.131 pre-                 tions.
                                                                     scribe procedures for contracting for
                                                                     services to facilitate disposal of inven-                 [58 FR 58650, Nov. 3, 1993]
                                                                     tory property. FmHA or its successor                      § 1955.129     Business brokers.
                                                                     agency under Public Law 103–354 In-
                                                                     struction 2024–A (available in any                          The services of business brokers or
                                                                     FmHA or its successor agency under                        business opportunity brokers may be
                                                                     Public Law 103–354 office) is applicable                  authorized by the appropriate Assist-
                                                                     for procurement of nonpersonal serv-                      ant Administrator in lieu of or in addi-
                                                                     ices.                                                     tion to real estate brokers for the sale
                                                                                                                               of businesses as a whole, including
                                                                     [53 FR 27836, July 25, 1988]                              goodwill and chattel, when:
                                                                                                                                 (a) The primary use of the structure
                                                                     § 1955.128      Appraisers.                               included in the sale is other than resi-
                                                                       (a) Real property. The State Director                   dential;
                                                                     may authorize the County Supervisor                         (b) The business broker is duly li-
                                                                     or District Director to procure fee ap-                   censed by the respective state; and
                                                                     praisals of inventory property, except                      (c) The primary function of the busi-
                                                                     MFH properties, to expedite the sale of                   ness is other than farming or ranching.
                                                                     inventory real or chattel property.
                                                                     (Fee appraisals of MFH properties will                    § 1955.130     Real estate brokers.
                                                                     only be authorized by the Assistant                         Contracting authority for the use of
                                                                     Administrator, Housing, when unusual                      real estate brokers is prescribed in Ex-
                                                                     circumstances preclude the use of a                       hibit D of FmHA or its successor agen-
                                                                     qualified FmHA or its successor agency                    cy under Public Law 103–354 Instruc-
                                                                     under Public Law 103–354 MFH ap-                          tion 2024–A (available in any FmHA or
                                                                     praiser.) The decision will be based on                   its successor agency under Public Law
                                                                     the availability of comparables, the ca-                  103–354 office). Brokers who are man-
                                                                     pability and availability of personnel,                   aging custodial or inventory property
                                                                     and the number and type of properties                     may also participate in sales activities
                                                                     (such as large farms and business prop-                   under the same conditions offered
                                                                     erty) requiring valuation. For Farmer                     other brokers. Brokers must be prop-
                                                                     Programs real estate properties, all                      erly licensed in the State in which they
                                                                     contract (fee) appraisers should include                  do business.
                                                                     the sales comparison, income (when ap-                      (a) Type of listings. The State Direc-
                                                                     plicable), and the cost approach to                       tor may authorize use of exclusive list-
                                                                     value. All FmHA or its successor agen-                    ings during any calendar year. Since
                                                                     cy under Public Law 103–354 real estate                   the Agency receives many more mar-
                                                                     contract appraisers must be certified                     keting services for its commission dol-
                                                                     as State-Certified General Appraisers.                    lar and saves time listing the property
                                                                       (b) Chattel property. For Farmer Pro-                   with only one broker, it is strongly
                                                                     grams chattel appraisals, the con-                        recommended that all County Offices
                                                                     tractor/appraiser completing the report                   be authorized the use of exclusive bro-
                                                                     must meet at least one of the following                   kers.
                                                                     qualifications:                                             (1) Exclusive broker contract. An exclu-
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                                                                       (1) Certification by a National or                      sive broker contract provides for the
                                                                     State appraisal society.                                  selection of one broker by competitive

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                                                                     § 1955.130                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     negotiation who will be the only au-                      change, relisting, sale cancellation, re-
                                                                     thorized broker for the FmHA or its                       strictions on sale, etc.
                                                                     successor agency under Public Law 103–                      (c) Priority of offers. All offers re-
                                                                     354 office awarding the contract within                   ceived during the same business day
                                                                     a defined area and for specific property                  will be considered as having been re-
                                                                     or type of property. Criteria will be                     ceived at the same time. The successful
                                                                     specified in the solicitation together                    offer from among equally acceptable
                                                                     with a numerical weighting system to                      offers within each category will be de-
                                                                     be used (usually 1–100). Responses will                   termined by lot by FmHA or its suc-
                                                                     be calculated on the basis of the cri-                    cessor agency under Public Law 103–
                                                                     teria such as personal qualifications,                    354. Priority rules for specific cat-
                                                                     membership in Multiple Listing Serv-                      egories of property are:
                                                                     ice (MLS), previous experience with                         (1) Program SFH. See § 1955.114(a) of
                                                                     FmHA or its successor agency under                        this subpart.
                                                                     Public Law 103–354 sales, advertising                       (2) Program MFH. Offers will be con-
                                                                     plans, proposed innovative promotion                      sidered from program applicants only.
                                                                     methods, and financial capability. The                      (3) NP SFH. See § 1955.115(a) of this
                                                                     responsibilities of the broker under an                   subpart.
                                                                     exclusive broker contract exceed those                      (4) NP MFH. See § 1955.115(b) of this
                                                                     of the open listing agreement and                         subpart.
                                                                     therefore, an exclusive broker contract                     (5) Suitable and surplus FSA CONACT.
                                                                     is the preferred method of listing prop-                  See § 1955.107 of this subpart.
                                                                     erties.                                                     (6) Suitable and Surplus Non-FSA
                                                                       (2) Open listing. Open listing agree-                   CONACT. See § 1955.108 of this subpart.
                                                                     ments provide for any licensed real es-                     (d) Price. No offer for less than the
                                                                     tate broker to provide sales services for                 listed price will be accepted during the
                                                                     any property listed under the terms                       period of regular sale.
                                                                     and conditions of Form FmHA or its                          (e) Earnest money. The broker will
                                                                     successor agency under Public Law 103–                    collect earnest money in the amount
                                                                     354 1955–42, ‘‘Open Real Property Mas-                    specified in paragraph (e)(1) of this sec-
                                                                     ter Listing Agreement.’’ If this method                   tion when a sale contract is executed.
                                                                     is used, a newspaper advertisement will                   The earnest money will be retained by
                                                                     be published at least once yearly, or a                   the broker until contract closing, with-
                                                                     notice sent to all real estate brokers in                 drawal, cancellation, or rejection by
                                                                     the counties served by the FmHA or its                    FmHA or its successor agency under
                                                                     successor agency under Public Law 103–                    Public Law 103–354. When a contract is
                                                                     354 office, informing brokers that sales                  cancelled because FmHA or its suc-
                                                                     services are being requested. The ad-                     cessor agency under Public Law 103–354
                                                                     vertising will be substantially similar                   rejects the offeror’s application for
                                                                     to the example given in Exhibit B of                      credit, the earnest money will be re-
                                                                     this subpart (available in any FmHA or                    turned to the offeror. When a contract
                                                                     its successor agency under Public Law                     closes, the broker will make the ear-
                                                                     103–354 office). An open listing agree-                   nest money available to be used toward
                                                                     ment may be executed at any time dur-                     closing costs, or in the case of a cash
                                                                     ing the year, but must be effective                       sale it may be returned to the pur-
                                                                     prior to the broker showing the prop-                     chaser. For MFH sales to profit or lim-
                                                                     erty. When this method is used, the                       ited profit buyers, any excess earnest
                                                                     FmHA or its successor agency under                        money deposit will be credited to the
                                                                     Public Law 103–354 office is responsible                  purchaser’s initial investment.
                                                                     for ensuring that adequate advertising                      (1) Amount. The amount of earnest
                                                                     is performed to effectively market the                    money collected will be:
                                                                     property.                                                   (i) For single family properties or
                                                                       (b) Listing notices. Forms FmHA or its                  MFH projects of 2 to 5 units, $50.
                                                                     successor agency under Public Law 103–                      (ii) For all property other than that
                                                                     354 1955–40 or FmHA or its successor                      covered in paragraph (e)(1)(i) of this
                                                                     agency under Public Law 103–354 1955–                     section, the greater of the estimated
                                                                     43, as appropriate, will be used to pro-                  closing costs shown on the notice of
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                                                                     vide brokers with notice of initial list-                 listing (Form FmHA or its successor
                                                                     ing, withdrawal, price change, terms                      agency under Public Law 103–354 1955–

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.131

                                                                     40) or 1⁄2 of 1 percent of the purchase                   to persons living in his/her or sales-
                                                                     price.                                                    person(s) immediate household or to
                                                                       (2) Offeror default. When a contract is                 legal entities in which the broker or
                                                                     cancelled due to offeror default, the                     salesperson(s) have an interest if the
                                                                     earnest money will be delivered to and                    sale is contingent upon receiving
                                                                     retained by the agency as full liq-                       FmHA or its successor agency under
                                                                     uidated damages.                                          Public Law 103–354 credit. If credit is
                                                                       (f) Commission—(1) Amount—(i) Exclu-                    not being extended in these instances
                                                                     sive broker contract. FmHA or its suc-                    (a cash sale), a commission will be
                                                                     cessor agency under Public Law 103–354                    paid. Under an exclusive broker con-
                                                                     may not set the commission rate in an                     tract, if a cooperating broker pur-
                                                                     exclusive broker solicitation/contract.
                                                                                                                               chases the property and is receiving
                                                                     The rate of commission will be one of
                                                                                                                               FmHA or its successor agency under
                                                                     the evaluation criteria in the solicita-
                                                                     tion. However, any broker who submits                     Public Law 103–354 credit, one-half the
                                                                     an offer with a commission rate lower                     respective commission will be paid to
                                                                     than the typical rate for such services                   the exclusive broker. Commissions will
                                                                     in the area must provide documenta-                       be paid at closing if sufficient cash to
                                                                     tion that they have successfully sold                     cover the commission is paid by the
                                                                     properties at the lower rate with no                      purchaser. Otherwise, the commission
                                                                     compromise in services. The solicita-                     will be paid by the appropriate FmHA
                                                                     tion/contract will explicitly detail this                 or its successor agency under Public
                                                                     policy.                                                   Law 103–354 official by completing
                                                                       (ii) Open listing agreement. A uniform                  Form AD–838 and processing Form
                                                                     fee or commission schedule, by prop-                      FmHA or its successor agency under
                                                                     erty type, will be established by the                     Public Law 103–354 838–B for payment
                                                                     servicing official within a given sales                   in accordance with the respective
                                                                     area. The commission rate to be paid                      FMI’s, and charged to the inventory
                                                                     will be the typical rate for such serv-                   account as a nonrecoverable cost.
                                                                     ices in the sales area and will not ex-                     (g) Nondiscrimination. Brokers who
                                                                     ceed or be lower than commissions paid                    execute listing agreements with FmHA
                                                                     for similar types of services provided                    or its successor agency under Public
                                                                     by the broker to other sellers of simi-                   Law 103–354 shall certify to non-
                                                                     lar property.
                                                                                                                               discrimination practices as provided in
                                                                       (2) Special effort sales bonuses. The
                                                                                                                               Form FmHA or its successor agency
                                                                     servicing official may request author-
                                                                                                                               under Public Law 103–354 1955–42. In ad-
                                                                     ization from the State Director to pay
                                                                     fixed amount bonuses for special effort                   dition, all brokers participating in the
                                                                     property, such as a property with a                       sale of property shall sign the non-
                                                                     value so low that the commission alone                    discrimination certification on Form
                                                                     does not warrant broker interest or                       FmHA or its successor agency under
                                                                     property that has been held in inven-                     Public Law 103–354 1955–45.
                                                                     tory for an extended period of time                       [53 FR 27836, July 25, 1988, as amended at 55
                                                                     where it is believed that an added                        FR 3943, Feb. 6, 1990; 62 FR 44401, Aug. 21,
                                                                     bonus will create additional efforts by                   1997; 68 FR 61332, Oct. 28, 2003]
                                                                     the broker to sell the property. The
                                                                     State Director may authorize use of                       § 1955.131     Auctioneers.
                                                                     short-term (not to exceed three
                                                                                                                                 The services of licensed auctioneers,
                                                                     months) special effort sales bonuses on
                                                                                                                               if required, may be used to conduct
                                                                     a group, county, district or state-wide
                                                                                                                               auction sales as described in § 1955.148
                                                                     basis, if it appears necessary to facili-
                                                                     tate the sale of nonprogram property.                     of this subpart and procured by com-
                                                                       (3) Payment of commission. Payment of                   petitive negotiation under the con-
                                                                     a broker’s commission is contingent on                    tracting authority of Exhibit C to
                                                                     the closing of the sale and will not be                   FmHA or its successor agency under
                                                                     paid until the sale has closed and title                  Public Law 103–354 Instruction 2024–A
                                                                     has passed to the purchaser. No com-                      (available in any FmHA or its suc-
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                                                                     mission will be paid where the sale is                    cessor agency under Public Law 103–354
                                                                     to the broker, broker’s salesperson(s),                   office).

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                                                                     § 1955.132                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                       (a) Selection criteria. The auctioneer                  ducted by FmHA or its successor agen-
                                                                     should be selected by evaluating cri-                     cy under Public Law 103–354 employees
                                                                     teria such as proposed sales dates, loca-                 or by contract with individuals, organi-
                                                                     tion, advertising, broker cooperation,                    zations or other entities. Prior to initi-
                                                                     innovations, mechanics of sale, sample                    ation of a pilot project, FmHA or its
                                                                     advertising, personal qualifications, fi-                 successor agency under Public Law 103–
                                                                     nancial capability, private sector fi-                    354 will publish notice in the FEDERAL
                                                                     nancing and license/bonding.                              REGISTER of its nature, scope, and du-
                                                                       (b) Commission. FmHA or its suc-                        ration.
                                                                     cessor agency under Public Law 103–354                    [55 FR 3943, Feb. 6, 1990]
                                                                     may not set the commission rate in an
                                                                     auctioneer solicitation/contract. The                     § 1955.133 Nondiscrimination.
                                                                     rate of commission will be one of the
                                                                                                                                  (a) Title VI provisions. If the inventory
                                                                     evaluation criteria in the solicitation.
                                                                                                                               real property to be sold secured a loan
                                                                     However, any offeror that submits an
                                                                                                                               that was subject to Title VI of the Civil
                                                                     offer with a commission rate lower
                                                                                                                               Rights Act of 1964, and the property
                                                                     than the typical rate for such services
                                                                                                                               will be used for its original or similar
                                                                     in the area must include documenta-
                                                                                                                               purpose, or if FmHA or its successor
                                                                     tion that they have successfully sold                     agency under Public Law 103–354 ex-
                                                                     properties at the lower rate with no                      tends credit and the property then be-
                                                                     compromise in services. The solicita-                     comes subject to Title VI, the buyer
                                                                     tion/contract will explicitly detail this                 will sign Form FmHA or its successor
                                                                     policy. Commissions will be paid at                       agency under Public Law 103–354 400–4.
                                                                     closing if sufficient cash to cover the                   ‘‘Assurance Agreement.’’ The instru-
                                                                     commission is paid by the purchaser.                      ment of conveyance will contain the
                                                                     Otherwise, the commission will be paid                    following statement:
                                                                     by the appropriate FmHA or its suc-
                                                                     cessor agency under Public Law 103–354                      The property described herein was ob-
                                                                     official completing Form AD–838 and                       tained or improved through Federal finan-
                                                                                                                               cial assistance. This property is subject to
                                                                     processing Form FmHA or its suc-                          the provisions of Title VI of the Civil Rights
                                                                     cessor agency under Public Law 103–354                    Act of 1964 and the regulations issued pursu-
                                                                     838–B for payment in accordance with                      ant thereto for so long as the property con-
                                                                     the respective FMI’s, and charged to                      tinues to be used for the same or similar pur-
                                                                     the inventory account as a nonrecover-                    poses for which the Federal financial assist-
                                                                     able cost.                                                ance was extended.
                                                                       (c) Auctioneer restriction. The auc-                      (b) Affirmative Fair Housing Marketing
                                                                     tioneer, his/her sales agents, cooper-                    Plan. Exclusive listing brokers or auc-
                                                                     ating brokers or persons living in his,                   tioneers selling SFH properties having
                                                                     her or their immediate household are                      5 or more properties in the same sub-
                                                                     restricted from bidding or from subse-                    division listed or offered for sale at the
                                                                     quent purchase of any property sold or                    same time will prepare and submit to
                                                                     offered at the auctioneer’s sale for a                    FmHA or its successor agency under
                                                                     period of one year from the auction                       Public Law 103–354 an acceptable Form
                                                                     date.                                                     HUD 935.2, ‘‘Affirmative Fair Housing
                                                                     [50 FR 23904, June 7, 1985, as amended at 53              Marketing Plan,’’ for each such sub-
                                                                     FR 27837, July 25, 1988]                                  division in accordance with § 1901.203(c)
                                                                                                                               of Subpart E of Part 1901 of this chap-
                                                                                             GENERAL                           ter.
                                                                                                                                 (c) Equal Housing Opportunity logo.
                                                                     § 1955.132 Pilot projects.                                All FmHA or its successor agency
                                                                        FmHA or its successor agency under                     under Public Law 103–354 and con-
                                                                     Public Law 103–354 may conduct pilot                      tractor sale advertisements will con-
                                                                     projects to test policies and procedures                  tain the Equal Housing Opportunity
                                                                     for the management and disposition of                     logo.
                                                                     inventory property which deviate from
                                                                     the provisions of this subpart, but are                   § 1955.134 Loss, damage, or existing
                                                                     not inconsistent with the provisions of                        defects in inventory real property.
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                                                                     the authorizing statute or other appli-                      (a) Property under contract. If a bid or
                                                                     cable Acts. A pilot project may be con-                   offer has been accepted by the FmHA

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.136

                                                                     or its successor agency under Public                      Only the prorata share of assessment
                                                                     Law 103–354 and through no fault of ei-                   installments for property improve-
                                                                     ther party, the property is lost or dam-                  ments (water, sewer, curb and gutter,
                                                                     aged as a result of fire, vandalism, or                   etc.) accrued as of the date property is
                                                                     an act of God between the time of ac-                     sold will be paid by FmHA or its suc-
                                                                     ceptance of the bid or offer and the                      cessor agency under Public Law 103–354
                                                                     time the title of the property is con-                    for inventory property. At the closing,
                                                                     veyed by FmHA or its successor agency                     payment of taxes and assessment in-
                                                                     under Public Law 103–354, FmHA or its                     stallments due to be paid by FmHA or
                                                                     successor agency under Public Law 103–                    its successor agency under Public Law
                                                                     354 will reappraise the property. The                     103–354 will be paid from cash proceeds
                                                                     reappraised value of the property will                    FmHA or its successor agency under
                                                                     serve as the amount FmHA or its suc-                      Public Law 103–354 is to receive as a re-
                                                                     cessor agency under Public Law 103–354                    sult of the sale or by voucher and will
                                                                     will accept from the purchaser. How-                      be accomplished by one of the fol-
                                                                     ever, if the actual loss based on the re-                 lowing:
                                                                     duction in market value of the prop-                        (a) For purchasers receiving FmHA
                                                                     erty as determined by FmHA or its                         or its successor agency under Public
                                                                     successor agency under Public Law 103–                    Law 103–354 credit and required to es-
                                                                     354 is less than $500, payment of the                     crow, FmHA or its successor agency
                                                                     full purchase price is required. In the                   under Public Law 103–354’s share of ac-
                                                                     event the two parties cannot agree                        crued taxes and assessment install-
                                                                     upon an adjusted price, either party, by                  ments will be deposited in the pur-
                                                                     mailing notice in writing to the other,                   chaser’s escrow account.
                                                                     may terminate the contract of sale,                         (b) For purchasers not required to es-
                                                                     and the bid deposit or earnest money,                     crow, accrued taxes and assessment in-
                                                                     if any, will be returned to the offeror.                  stallments may be:
                                                                       (b) Existing defects. FmHA or its suc-
                                                                                                                                 (i) Paid to the local taxing authority
                                                                     cessor agency under Public Law 103–354
                                                                                                                               if they will accept payment at that
                                                                     does not provide any warranty on prop-
                                                                                                                               time; or
                                                                     erty sold from inventory. Subsequent
                                                                     loans may be made, in accordance with                       (ii) Paid to the purchaser. If appro-
                                                                     applicable loan making regulations for                    priate, for program purchasers, the
                                                                     the respective loan program, to correct                   funds can be deposited in a supervised
                                                                     defects.                                                  bank account until the taxes can be
                                                                                                                               paid.
                                                                     [50 FR 23904, June 7, 1985, as amended at 53                (c) Except for SFH, deducted from
                                                                     FR 27837, July 25, 1988]                                  the sale price (which may result in a
                                                                     § 1955.135 Taxes on inventory real                        promissory note less than the sale
                                                                         property.                                             price), if acceptable to the purchaser.
                                                                        Where FmHA or its successor agency                     [56 FR 6953, Feb. 21, 1991]
                                                                     under Public Law 103–354 owned prop-
                                                                     erty is subject to taxation, taxes and                    § 1955.136 Environmental Assessment
                                                                     assessment installments will be pro-                          (EA) and Environmental Impact
                                                                                                                                   Statement (EIS).
                                                                     rated between FmHA or its successor
                                                                     agency under Public Law 103–354 and                         (a) Prior to a final decision on some
                                                                     the purchaser as of the date the title is                 disposal actions, an environmental as-
                                                                     conveyed in accordance with the condi-                    sessment must be made and when nec-
                                                                     tions of Forms FmHA or its successor                      essary, an enviornmental impact state-
                                                                     agency under Public Law 103–354 1955–45                   ment. Detailed guidance on when and
                                                                     or FmHA or its successor agency under                     how to prepare an EA or an EIS is
                                                                     Public Law 103–354 1955–46. The pur-                      found in Subpart G of Part 1940 of this
                                                                     chaser will be responsible for paying                     Chapter. Assessments must be made for
                                                                     all taxes and assessment installments                     those proposed conveyances that meet
                                                                     accruing after the title is conveyed.                     one of the following criteria:
                                                                     The County Supervisor or District Di-                       (1) The conveyance is controversial
                                                                     rector will advise the taxing authority                   for environmental reasons and/or is
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                                                                     of the sale, the purchaser’s name, and                    qualified within those categories de-
                                                                     the description of the property sold.                     scribed in § 1955.137 of this subpart.

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                                                                     § 1955.137                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                       (2) The FmHA or its successor agency                    cial flood or mudslide hazard area as
                                                                     under Public Law 103–354 approval offi-                   defined in, subpart B of part 1806 of this
                                                                     cial has reason to believe that convey-                   chapter will not be sold for residential
                                                                     ance would result in a change in use of                   purposes unless determined by the
                                                                     the real property. For example, farm-                     county official or district director to
                                                                     land would be converted to a nonfarm                      be safe (that is, any hazard that exists
                                                                     use; or an industrial facility would be                   would not likely endanger the safety of
                                                                     changed to a different industrial use                     dwelling occupants).
                                                                     that would produce increased gaseous,                       (3) Limitations placed on financial as-
                                                                     liquid or solid wastes over the former                    sistance. (i) Financial assistance is lim-
                                                                     use or changes in the type or contents                    ited to property located in areas where
                                                                     of such wastes. Assessments are not re-                   flood insurance is available. Flood in-
                                                                     quired for conveyance where the real                      surance must be provided at closing of
                                                                     property would be retained in its                         loans on program-eligible and nonpro-
                                                                     former use within the reasonably fore-                    gram (NP)-ineligible terms. Appraisals
                                                                     seeable future.                                           of property in flood or mudslide hazard
                                                                       (b) When an EA or EIS is prepared it                    areas will reflect this condition and
                                                                     shall address the requirements of De-                     any restrictions on use. Financial as-
                                                                     partmental Regulation 9500–3, ‘‘Land                      sistance for substantial improvement
                                                                     Use Policy,’’ in connection with the                      or repair of property located in a flood
                                                                     conversion to other uses of prime and                     or mudslide hazard area is subject to
                                                                     unique farmlands, farmlands of state-                     the limitations outlined in, paragraph
                                                                     wide or local importance, prime forest                    3b (1) and (2) of Exhibit C of subpart G
                                                                     and prime rangelands, the alteration of                   of part 1940.
                                                                     wetlands or flood plains, or the cre-                       (ii) Pursuant to the requirements of
                                                                     ation of nonfarm uses beyond the                          the Coastal Barrier Resources Act
                                                                     boundaries of existing settlements.                       (CBRA) and except as specified in para-
                                                                                                                               graph (a)(3)(v) of this section, no credit
                                                                     § 1955.137 Real property located in                       sales will be provided for property lo-
                                                                         special areas or having special                       cated within a CBRS where:
                                                                         characteristics.                                        (A) It is known that the purchaser
                                                                       (a) Real property located in flood,                     plans to further develop the property;
                                                                     mudslide hazard, wetland or Coastal Bar-                    (B) A subsequent loan or any other
                                                                     rier Resources System (CBRS)—(1) Use re-                  type of Federal financial assistance as
                                                                     strictions.  Executive    Order    11988,                 defined by the CBRA has been re-
                                                                     ‘‘Floodplain Management,’’ and Execu-                     quested for additional development of
                                                                     tive Order 11990, ‘‘Protection of Wet-                    the property;
                                                                     lands,’’ require the conveyance instru-                     (C) The sale is inconsistent with the
                                                                     ment for inventory property con-                          purpose of the CBRA; or
                                                                     taining floodplains or wetlands which                       (D) The property to be sold was the
                                                                     is proposed for lease or sale to specify                  subject of a previous financial trans-
                                                                     those uses that are restricted under                      action that violated the CBRA.
                                                                     identified Federal, State and local                         (iii) For purposes of this section, ad-
                                                                     floodplains or wetlands regulations as                    ditional development means the expan-
                                                                     well as other appropriate restrictions.                   sion, but not maintenance, replace-
                                                                     The restrictions shall be to the uses of                  ment-in-kind, reconstruction, or repair
                                                                     the property by the lessee or purchaser                   of any roads, structures or facilities.
                                                                     and any successors, except where pro-                     Water and waste disposal facilities as
                                                                     hibited by law. Applicable restrictions                   well as community facilities may be
                                                                     will be incorporated into quitclaim                       repaired to the extent required to meet
                                                                     deeds in a format similar to that con-                    health and safety requirements, but
                                                                     tained in Exhibits H and I of RD In-                      may not be improved or expanded to
                                                                     struction 1955–C (available in any                        serve new users, patients or residents.
                                                                     Agency office). A listing of all restric-                   (iv) A sale which is not in conflict
                                                                     tions will be included in the notices re-                 with the limitations in paragraph
                                                                     quired in paragraph (a)(2) of this sec-                   (a)(3)(ii) of this section shall not be
                                                                     tion.                                                     completed until the approval official
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                                                                       (2) Notice of hazards. Acquired real                    has consulted with the appropriate Re-
                                                                     property located in an identified spe-                    gional Director of the U.S. Fish and

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.137

                                                                     Wildlife Service and the Regional Di-                     wetland or converted wetland on inven-
                                                                     rector concurs that the proposed sale                     tory property.
                                                                     does not violate the provisions of the                      (ii) After receiving the wetland deter-
                                                                     CBRA.                                                     mination from NRCS, FSA will review
                                                                       (v) Any proposed sale that does not                     the determination for each inventory
                                                                     conform to the requirements of para-                      property and determine if any of the
                                                                     graph (a)(3)(ii) of this section must be                  wetlands or converted wetlands identi-
                                                                     forwarded to the Administrator for re-                    fied by NRCS were considered cropland
                                                                     view. Approval will not be granted un-                    on the date the property was acquired
                                                                     less the Administrator determines,                        or were used for farming at any time
                                                                     through consultation with the Depart-                     during the period beginning on the date
                                                                     ment of Interior, that the proposed sale                  5 years before the property was ac-
                                                                     does not violate the provisions of the                    quired and ending on the date the prop-
                                                                     CBRA.                                                     erty was acquired. Property will be
                                                                       (b) Wetlands located on FSA inventory                   considered to have been used for farm-
                                                                     property. Perpetual wetland conserva-                     ing if it was primarily used for agricul-
                                                                     tion easements (encumbrances in                           tural purposes including but not lim-
                                                                     deeds) to protect and restore wetlands                    ited to such uses as cropland, pasture,
                                                                     or converted wetlands that exist on                       hayland, orchards, vineyards and tree
                                                                     suitable or surplus inventory property                    farming.
                                                                     will be established prior to sale of such                   (iii) After FSA has completed the de-
                                                                     property. The provisions of paragraphs                    termination of whether the wetlands or
                                                                     (a) (2) and (3) of this section also apply,               converted wetlands located on an in-
                                                                     as does paragraph (a)(1) of this section                  ventory property were used for crop-
                                                                     insofar as floodplains are concerned.                     land or farming, the U.S. Fish and
                                                                     This requirement applies to either cash                   Wildlife Service (FWS) will be con-
                                                                     or credit sales. Similar restrictions                     tacted. Based on the technical consid-
                                                                     will be included in leases of inventory                   erations of the potential functions and
                                                                     properties to beginning farmers or                        values of the wetlands on the property,
                                                                     ranchers. Wetland conservation ease-                      FWS will identify those wetlands or
                                                                     ments will be established as follows:                     converted wetlands that require pro-
                                                                       (1) All wetlands or converted wet-                      tection with a wetland conservation
                                                                     lands located on FSA inventory prop-                      easement along with the boundaries of
                                                                     erty which were not considered crop-                      the required wetland conservation
                                                                     land on the date the property was ac-                     easement. FWS may also make other
                                                                     quired and were not used for farming at                   recommendations if needed for the pro-
                                                                     any time during the period beginning                      tection of important resources such as
                                                                     on the date 5 years before the property                   threatened or endangered species dur-
                                                                     was acquired and ending on the date                       ing this review.
                                                                     the property was acquired will receive                      (4) The wetland conservation ease-
                                                                     a wetland conservation easement.                          ment will provide for access to other
                                                                       (2) All wetlands or converted wet-                      portions of the property as necessary
                                                                     lands located on FSA inventory prop-                      for farming and other uses.
                                                                     erty that were considered cropland on                       (5) The appraisal of the property
                                                                     the date the property was acquired or                     must be updated to reflect the value of
                                                                     were used for farming at any time dur-                    the land due to the conservation ease-
                                                                     ing the period beginning on the date 5                    ment on the property.
                                                                     years before the property was acquired                      (6) Easement areas shall be described
                                                                     and ending on the date the property                       in accordance with State or local laws.
                                                                     was acquired will not receive a wetland                   If State or local law does not require a
                                                                     conservation easement.                                    survey, the easement area can be de-
                                                                       (3) The following steps should be                       scribed by rectangular survey, plat
                                                                     taken in determining if conservation                      map, or other recordable methods.
                                                                     easements are necessary for the protec-                     (7) In most cases the FWS shall be re-
                                                                     tion of wetlands or converted wetland                     sponsible for easement management
                                                                     on inventory property:                                    and administration responsibilities for
                                                                       (i) NRCS will be contacted first to                     such areas unless the wetland ease-
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                                                                     identify the wetlands or converted wet-                   ment area is an inholding in Federal or
                                                                     lands and wetland boundaries of each                      State property and that entity agrees

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                                                                     § 1955.137                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     to assume such responsibility, or a                       lic or private interest. The Advisory
                                                                     State fish and wildlife agency having                     Council on Historic Preservation must
                                                                     counterpart responsibilities to the                       be consulted by the State Director or
                                                                     FWS is willing to assume easement                         State Executive Director after the dis-
                                                                     management and administration re-                         cussions with the SHPO are concluded
                                                                     sponsibilities. The costs associated                      regardless of whether or not an agree-
                                                                     with such easement management re-                         ment is reached.
                                                                     sponsibilities shall be the responsi-                        (4) Any restrictions that are devel-
                                                                     bility of the agency that assumes ease-                   oped on the use of the property as a re-
                                                                     ment management and administration.                       sult of the above consultations must be
                                                                       (8) County officials are encouraged to                  made known to a potential bidder or
                                                                     begin the easement process before the                     purchaser through a notice procedure
                                                                     property is taken into inventory, if                      similar to that in § 1955.13(a)(2) of this
                                                                     possible, in order to have the program                    subpart.
                                                                     completed before the statutory time                          (d) Highly erodible farmland. (1) The
                                                                     requirement for sale.                                     FSA county official will determine if
                                                                       (c) Historic preservation. (1) Pursuant                 any inventory property contains highly
                                                                     to the requirements of the National                       erodible land as defined by the NRCS
                                                                     Historic Preservation Act and Execu-                      and, if so, what specific conservation
                                                                     tive Order 11593, ‘‘Protection and En-                    practices will be made a condition of a
                                                                     hancement of the Cultural Environ-                        sale of the property.
                                                                     ment,’’ the Agency official responsible                      (2) If the county official does not con-
                                                                     for the conveyance must determine if                      cur in the need for a conservation prac-
                                                                     the property is listed on or eligible for                 tice recommended by NRCS, any dif-
                                                                     listing on the National Register of His-                  ferences shall be discussed with the
                                                                     toric Places. (See subpart F of part 1901                 recommending NRCS office. Failure to
                                                                     of this chapter for additional guid-                      reach an agreement at that level shall
                                                                     ance.) The State Historic Preservation                    require the State Executive Director to
                                                                     Officer (SHPO) must be consulted                          make a final decision after consulta-
                                                                     whenever one of the following criteria                    tion with the NRCS State Conserva-
                                                                     are met:                                                  tionist.
                                                                       (i) The property includes a structure                      (3) Whenever NRCS technical assist-
                                                                     that is more than 50 years old.                           ance is requested in implementing
                                                                       (ii) Regardless of age, the property is                 these requirements and NRCS responds
                                                                     known to be of historical or archae-                      that it cannot provide such assistance
                                                                     ological importance; has apparent sig-                    within a time frame compatible with
                                                                     nificant architectural features; or is                    the proposed sale, the sale arrange-
                                                                     similar to other Agency properties that                   ments will go forward. The sale will
                                                                     have been determined to be eligible.                      proceed, conditioned on the require-
                                                                       (iii) An environmental assessment is                    ment that a purchaser will imme-
                                                                     required prior to a decision on the con-                  diately contact (NRCS) have a con-
                                                                     veyance.                                                  servation plan developed and comply
                                                                       (2) If the result of the consultations                  with this plan. The county official will
                                                                     with the SHPO is that a property may                      monitor the borrower’s compliance
                                                                     be eligible or that it is questionable, an                with the recommendations in the con-
                                                                     official determination must be ob-                        servation plan. If problems occur in ob-
                                                                     tained from the Secretary of the Inte-                    taining NRCS assistance, the State Ex-
                                                                     rior.                                                     ecutive Director should consult with
                                                                       (3) If a property is listed on the Na-                  the NRCS State Conservationist.
                                                                     tional Register or is determined eligi-                      (e) Notification to purchasers of inven-
                                                                     ble for listing by the Secretary of Inte-                 tory property with reportable under-
                                                                     rior, the Agency official responsible for                 ground storage tanks. If the Agency is
                                                                     the conveyance must consult with the                      selling inventory property containing a
                                                                     SHPO in order to develop any nec-                         storage tank which was reported to the
                                                                     essary restrictions on the use of the                     Environmental        Protection     Agency
                                                                     property so that the future use will be                   (EPA) pursuant to the provisions of
                                                                     compatible with preservation objec-                       § 1955.57 of subpart B of this part, the
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                                                                     tives and which does not result in an                     potential purchaser will be informed of
                                                                     unreasonable economic burden to pub-                      the reporting requirement and provided

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.139

                                                                     a copy of the report filed by the Agen-                   erable under the State’s provisions of
                                                                     cy.                                                       redemption.
                                                                        (f) Real property that is unsafe. If the                 (c) The signed original statement
                                                                     Agency has in inventory, real property,                   will be filed in the purchaser’s County
                                                                     exclusive of any improvements, that is                    or District Office case file.
                                                                     unsafe, that is it does not meet the def-                   (d) If real estate brokers or auc-
                                                                     inition of ‘‘safe’’ as contained in                       tioneers are engaged to sell the prop-
                                                                     § 1955.103 of this subpart and which can-                 erty, the County Supervisor or District
                                                                     not be feasibly made safe, the State Di-                  Director will inform them of the re-
                                                                     rector or State Executive Director will                   demption rights of the borrower and
                                                                     submit the case file, together with doc-                  the conditions under which the prop-
                                                                     umentation of the hazard and a rec-                       erty may be sold.
                                                                     ommended course of action to the Na-                        (e) The State Director, with prior ap-
                                                                     tional Office, ATTN: appropriate Dep-                     proval of OGC, will issue a State sup-
                                                                     uty Administrator, for review and                         plement incorporating the require-
                                                                     guidance.                                                 ments of this section and providing ad-
                                                                        (g) Real property containing hazardous                 ditional guidance appropriate for the
                                                                     waste contamination. All inventory                        State.
                                                                     property must be inspected for haz-                       [50 FR 23904, June 7, 1985, as amended at 53
                                                                     ardous waste contamination either                         FR 27837, July 25, 1988]
                                                                     through the use of a preliminary haz-
                                                                     ardous waste site survey or Trans-                        § 1955.139 Disposition of real property
                                                                     action Screen Questionnaire. If pos-                           rights and title to real property.
                                                                     sible contamination is noted, a Phase I                      (a) Easements, rights-of-way, develop-
                                                                     or II environmental assessment will be                    ment rights, restrictions or the equivalent
                                                                     completed per the advice of the State                     thereof. The State Director is author-
                                                                     Environmental Coordinator.                                ized to convey these rights for con-
                                                                                                                               servation purposes, roads, utilities, and
                                                                     [62 FR 44401, Aug. 21, 1997, as amended at 68             other purposes as follows:
                                                                     FR 7700, Feb. 18, 2003]
                                                                                                                                  (1) Except as provided in paragraph
                                                                     § 1955.138 Property subject to redemp-                    (a)(3) of this section, easements or
                                                                         tion rights.                                          rights-of-way may be conveyed to pub-
                                                                                                                               lic bodies or utilities if the conveyance
                                                                       If, under State law, FmHA or its suc-                   is in the public interest and will not
                                                                     cessor agency under Public Law 103–                       adversely affect the value of the real
                                                                     354’s interest may be sold subject to re-                 estate. The consideration must be ade-
                                                                     demption rights, the property may be                      quate for the inventory property being
                                                                     sold provided there is no apparent like-                  released or for a purpose which will en-
                                                                     lihood of its being redeemed.                             hance the value of the real estate. If
                                                                       (a) A credit sale of a program or suit-                 there is to be an assessment as a result
                                                                     able property subject to redemption                       of the conveyance, relative values must
                                                                     rights may be made to a program appli-                    be considered, including any appro-
                                                                     cant when the property meets the                          priate adjustment to the property’s
                                                                     standards for the respective loan pro-                    market value, and adequate consider-
                                                                     gram. In areas where State law does                       ation must be received for any reduc-
                                                                     not provide for full recovery of the cost                 tion in value.
                                                                     of repairs during the redemption pe-                         (2) Except as provided in paragraph
                                                                     riod, a program sale is generally pre-                    (a)(3) of this section easements or
                                                                     cluded unless the property already                        rights-of-way may be sold by negotia-
                                                                     meets program standards.                                  tion for market value to any purchaser
                                                                       (b) Each purchaser will sign a state-                   for cash without giving public notice if
                                                                     ment acknowledging that:                                  the conveyance would not change the
                                                                       (1) The property is subject to redemp-                  classification from program/suitable to
                                                                     tion rights according to State law, and                   NP or surplus, nor decrease the value
                                                                       (2) If the property is redeemed, own-                   by more than the price received.
                                                                     ership and possession of the property                        (3) For FSA properties only, ease-
                                                                     would revert to the previous owner and                    ments, restrictions, development rights
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                                                                     likely result in loss of any additional                   or similar legal rights may be granted
                                                                     investment in the property not recov-                     or sold separately from the underlying

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                                                                     § 1955.139                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     fee or sum of all other rights possessed                  to be addressed in formulating such a
                                                                     by the Government if such conveyances                     request include the intended conserva-
                                                                     are for conservation purposes and are                     tion purpose(s) and the environmental
                                                                     transferred to a State, a political sub-                  importance of the affected property,
                                                                     division of a State, or a private non-                    the impact to the Government’s finan-
                                                                     profit organization. Easements may be                     cial interest, the financial resources of
                                                                     granted or sold to a Federal agency for                   the potential purchaser or grantee and
                                                                     conservation purposes as long as the                      its normal method of acquiring similar
                                                                     requirements of § 1955.139(c)(2) of this                  property rights, the likely impact to
                                                                     subpart are followed. If FSA has an af-                   environment should the property inter-
                                                                     firmative responsibility such as pro-                     est not be sold or granted and any
                                                                     tecting an endangered species as pro-                     other relevant factors or concerns
                                                                     vided for in paragraph (a)(3(v) of this                   prompting the State Director’s re-
                                                                     section,      the    requirements      in
                                                                                                                               quest.
                                                                     § 1955.139(c) of this subpart do not
                                                                                                                                 (iv) Property interests under this
                                                                     apply.
                                                                        (i) Conservation purposes include but                  paragraph may be conveyed by negotia-
                                                                     are not limited to protecting or con-                     tion with any eligible recipient with-
                                                                     serving the following environmental                       out giving public notice if the convey-
                                                                     resources or land uses:                                   ance would not change program/suit-
                                                                        (A) Fish and wildlife habitats of                      able property to NP or surplus. Con-
                                                                     local, regional, State, or Federal im-                    veyances shall include terms and con-
                                                                     portance,                                                 ditions which clearly specify the prop-
                                                                        (B) Floodplain and wetland areas as                    erty interest(s) being conveyed as well
                                                                     defined in Executive Orders 11988 and                     as all appropriate restrictions and al-
                                                                     11990,                                                    lowable uses. The conveyances shall
                                                                        (C) Highly erodible land as defined by                 also require the owner of such interest
                                                                     SCS,                                                      to permit the FmHA or its successor
                                                                        (D) Important farmland, prime forest                   agency under Public Law 103–354, and
                                                                     land, or prime rangeland as defined in                    any person or government entity des-
                                                                     Departmental Regulation 9500–3, Land                      ignated by the FmHA or its successor
                                                                     Use Policy,                                               agency under Public Law 103–354, to
                                                                        (E) Aquifer recharge areas of local,                   have access to the affected property for
                                                                     regional or State importance,                             the purpose of monitoring compliance
                                                                        (F) Areas of high water quality or                     with terms and conditions of the con-
                                                                     scenic value, and                                         veyance. To the maximum extent pos-
                                                                        (G) Historic and cultural properties.                  sible, the conveyance should designate
                                                                        (ii) Development rights may be sold                    an organization or government entity
                                                                     for conservation purposes for their                       for monitoring purposes. In developing
                                                                     market value directly to a unit of local                  the conveyance, the approval official
                                                                     or State governmental or a private                        shall consult with any State or Federal
                                                                     nonprofit organization by negotiation.                    agency having special expertise regard-
                                                                        (iii) An easement, restriction or the
                                                                                                                               ing the environmental resource(s) or
                                                                     equivalent thereof may be granted or
                                                                                                                               land uses to be protected.
                                                                     sold for less than market value to a
                                                                     unit of local, State, Federal govern-                       (v) For FP cases except when FmHA
                                                                     ment or a private nonprofit organiza-                     or its successor agency under Public
                                                                     tion for conservation purposes. If such                   Law 103–354 has an affirmative respon-
                                                                     a conveyance will adversely affect the                    sibility to place a conservation ease-
                                                                     FmHA or its successor agency under                        ment upon a farm property, easements
                                                                     Public Law 103–354 financial interest,                    under the authority of this paragraph
                                                                     the State Director will submit the pro-                   will not be established unless either
                                                                     posal to the Administrator for approval                   the rights of all prior owner(s) have
                                                                     unless the State Director has been del-                   been met or the prior owner(s) consents
                                                                     egated approval authority in writing                      to the easement. Examples of instances
                                                                     from the Administrator to approve                         where an affirmative responsibility ex-
                                                                     such transactions based upon dem-                         ists to place an easement on a farm
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                                                                     onstrated capability and experience in                    property include wetland and flood-
                                                                     processing such conveyances. Factors                      plain conservation easements required

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.139

                                                                     by § 1955.137 of this subpart or ease-                    notice will be furnished to the pur-
                                                                     ments designed as environmental miti-                     chaser.
                                                                     gation measures and required in the                         (3) The value of such rights, interests
                                                                     implementation of Subpart G of Part                       or leases will be considered when the
                                                                     1940 of this chapter for the purpose of                   property is appraised.
                                                                     protecting federally designated impor-                      (c) Transfer of FSA inventory property
                                                                     tant environmental resources. These                       for conservation purposes. (1) In accord-
                                                                     resources include: Listed or proposed                     ance with the provisions of this para-
                                                                     endangered or threatened species, list-                   graph, FSA may transfer, to a Federal
                                                                     ed or proposed critical habitats, des-                    or State agency for conservation pur-
                                                                     ignated or proposed wilderness areas,                     poses (as defined in paragraph (a)(3)(i)
                                                                     designated or proposed wild or scenic                     of this section), inventory property, or
                                                                     rivers, historic or archaeological sites                  an interest therein, meeting any one of
                                                                     listed or eligible for listing on the Na-                 the following three criteria and subject
                                                                     tional Register of Historic Places,                       only to the homestead protection
                                                                     coastal barriers included in Coastal                      rights of all previous owners having
                                                                     Barrier Resource Systems, natural                         been met.
                                                                     landmarks listed on national Registry                       (i) A predominance of the land being
                                                                     of Natural Landmarks, and sole source                     transferred has marginal value for ag-
                                                                     aquifer recharge as designated by the                     ricultural production. This is land that
                                                                     Environmental Protection Agency.                          NRCS has determined to be either
                                                                       (vi) For FP cases whenever a request                    highly erodible or generally not used
                                                                     is made for an easement under the au-                     for cultivation, such as soils in classes
                                                                     thority of this paragraph and such re-                    IV, V, VII or VIII of NRCS’s Land Ca-
                                                                     quest overlaps an area upon which                         pability Classification, or
                                                                     FmHA or its successor agency under                          (ii) A predominance of land is envi-
                                                                     Public Law 103–354 has an affirmative                     ronmentally sensitive. This is land
                                                                     responsibility to place an easement,                      that meets any of the following cri-
                                                                     that required portion of the easement,                    teria:
                                                                                                                                 (A) Wetlands, as defined in Executive
                                                                     either in terms of geographical extent
                                                                                                                               Order 11990 and USDA Regulation 9500.
                                                                     or content, will not be considered to
                                                                                                                                 (B) Riparian zones and floodplains as
                                                                     adversely impact the value of the farm
                                                                                                                               they pertain to Executive Order 11988.
                                                                     property.
                                                                                                                                 (C) Coastal barriers and zones as they
                                                                       (4) A copy of the conveyance instru-                    pertain to the Coastal Barrier Re-
                                                                     ment will be retained in the County or                    sources Act or Coastal Zone Manage-
                                                                     District Office inventory file. The                       ment Act.
                                                                     grantee is responsible for recording the                    (D) Areas supporting endangered and
                                                                     instrument.                                               threatened wildlife and plants (includ-
                                                                       (b) Mineral and water rights, mineral                   ing proposed and candidate species),
                                                                     lease interests, air rights, and agricultural             critical habitat, or potential habitat
                                                                     or other leases. (1) Mineral and water                    for recovery pertaining to the Endan-
                                                                     rights, mineral lease interests, mineral                  gered Species Act.
                                                                     royalty interests, air rights, and agri-                    (E) Fish and wildlife habitats of
                                                                     cultural and other lease interests will                   local, regional, State or Federal impor-
                                                                     be sold with the surface land and will                    tance on lands that provide or have the
                                                                     not be sold separately, except as pro-                    potential to provide habitat value to
                                                                     vided in paragrah (a) of this section                     species of Federal trust responsibility
                                                                     and in § 1955.66(a)(2)(iii) of Subpart B of               (e.g., Migratory Bird Treaty Act, Anad-
                                                                     Part 1955 of this chapter. If the land is                 romous Fish Conservation Act).
                                                                     to be sold in separate parcels, any                         (F) Aquifer recharges areas of local,
                                                                     rights or interests that apply to each                    regional, State or Federal importance.
                                                                     parcel will be included with the sale.                      (G) Areas of high water quality or
                                                                       (2) Lease or royalty interests not                      scenic value.
                                                                     passing by deed will be assigned to the                     (H) Areas containing historic or cul-
                                                                     purchaser when property is sold. The                      tural property; or
                                                                     County Supervisor or District Director,                     (iii) A predominance of land with spe-
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                                                                     as applicable, will notify the lessee or                  cial management importance. This is
                                                                     payor of the assignment. A copy of this                   land that meets the following criteria:

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                                                                     § 1955.139                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                       (A) Lands that are in holdings, lie ad-                 the property is located as well as at
                                                                     jacent to, or occur in proximity to,                      least one elected official of the county
                                                                     Federally or State-owned lands or in-                     in which the property is located. The
                                                                     terest in lands.                                          notification should provide informa-
                                                                       (B) Lands that would contribute to                      tion on the request and solicit any
                                                                     the regulation of ingress or egress of                    comments regarding the proposed
                                                                     persons or equipment to existing Fed-                     transfer. All procedural requirements
                                                                     erally or State-owned conservation                        in paragraph (c) (3) of this section must
                                                                     lands.                                                    be completed in 75 days.
                                                                       (C) Lands that would provide a nec-                       (5) Determining priorities for trans-
                                                                     essary buffer to development if such                      fer or inventory lands.
                                                                     development would adversely affect the
                                                                                                                                 (i) A Federal entity will be selected
                                                                     existing Federally or State-owned
                                                                                                                               over a State entity.
                                                                     lands.
                                                                       (D) Lands that would contribute to                        (ii) If two Federal agencies request
                                                                     boundary identification and control of                    the same land tract, priority will be
                                                                     existing conservation lands.                              given to the Federal agency that owns
                                                                       (2) When a State or Federal agency                      or controls property adjacent to the
                                                                     requests title to inventory property,                     property in question or if this is not
                                                                     the State Executive Director will make                    the case, to the Federal agency whose
                                                                     a preliminary determination as to                         mission or expertise best matches the
                                                                     whether the property can be trans-                        conservation purposes for which the
                                                                     ferred.                                                   transfer would be established.
                                                                       (3) If a decision is made by the State                    (iii) In selecting between State agen-
                                                                     Executive Director to deny a transfer                     cies, priority will be given to the State
                                                                     request by a Federal or State agency,                     agency that owns or controls property
                                                                     the requesting agency will be informed                    adjacent to the property in question or
                                                                     of the decision in writing and informed                   if that is not the case, to the State
                                                                     that they may request a review of the                     agency whose mission or expertise best
                                                                     decision by the FSA Administrator.                        matches the conservation purpose(s)
                                                                       (4) When a State or Federal agency                      for which the transfer would be estab-
                                                                     requests title to inventory property                      lished.
                                                                     and the State Executive Director de-                        (6) In cases where land transfer is re-
                                                                     termines that the property is suited for                  quested for conservation purposes that
                                                                     transfer, the following actions must be                   would contribute directly to the fur-
                                                                     taken prior to approval of the transfer:                  therance of International Treaties or
                                                                       (i) At least two public notices must                    Plans (e.g., Migratory Bird Treaty Act
                                                                     be provided. These notices will be pub-                   or North American Waterfowl Manage-
                                                                     lished in a newspaper with a wide cir-
                                                                                                                               ment Plan), to the recovery of a listed
                                                                     culation in the area in which the re-
                                                                                                                               endangered species, or to a habitat of
                                                                     quested property is located. The notice
                                                                                                                               National importance (e.g., wetlands as
                                                                     will provide information on the pro-
                                                                                                                               addressed in the Emergency Wetlands
                                                                     posed use of the property by the re-
                                                                                                                               Resources Act), priority consideration
                                                                     questing agency and request any com-
                                                                                                                               will be given to land transfer for con-
                                                                     ments concerning the negative or posi-
                                                                     tive aspects of the request. A 30-day                     servation purposes, without reimburse-
                                                                     comment period should be established                      ment, over other land disposal alter-
                                                                     for the receipt of comments.                              natives.
                                                                       (ii) If requested, at least one public                    (7) An individual property may be
                                                                     meeting must be held to discuss the re-                   subdivided into parcels and a parcel
                                                                     quest. A representative of the request-                   can be transferred under the require-
                                                                     ing agency should be present at the                       ments of this paragraph as long as the
                                                                     meeting in order to answer questions                      remaining parcels to be sold make up a
                                                                     concerning the proposed conservation                      viable sales unit, suitable or surplus.
                                                                     use of the property. The date and time                    [50 FR 23904, June 7, 1985, as amended at 51
                                                                     for a public meeting should be adver-                     FR 13479, Apr. 21, 1986; 53 FR 27838, July 25,
                                                                     tised.
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                                                                                                                               1988; 53 FR 35781, Sept. 14, 1988; 57 FR 36592,
                                                                       (iii) Written notice must be provided                   Aug. 14, 1992; 62 FR 44403, Aug. 21, 1997; 68 FR
                                                                     to the Governor of the State in which                     61332, Oct. 28, 2003]

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.144

                                                                     § 1955.140 Sale in parcels.                                 (e) Interest credit and rental assistance
                                                                        (a) Individual property subdivided. An                 for MFH property. Interest credit and
                                                                     individual property, other than Farm                      rental assistance may be granted to
                                                                     Credit Programs property, may be of-                      program applicants purchasing MFH
                                                                     fered for sale as a whole or subdivided                   properties in accordance with the pro-
                                                                     into parcels as determined by the State                   visions of 7 CFR part 3560, subpart F.
                                                                     Director. For MFH property, guidance                      [53 FR 27838, July 25, 1988, as amended at 56
                                                                     will be requested from the National Of-                   FR 2257, Jan. 22, 1991; 57 FR 36592, Aug. 14,
                                                                     fice for all properties other than RHS                    1992; 60 FR 34455, July 3, 1995; 69 FR 69106,
                                                                     projects. When farm inventory prop-                       Nov. 26, 2004]
                                                                     erty is larger than a family-size farm,
                                                                     the county official will subdivide the                    §§ 1955.142–1955.143      [Reserved]
                                                                     property into one or more tracts to be
                                                                     sold in accordance with § 1955.107 of this                § 1955.144 Disposal of NP or surplus
                                                                     subpart. Division of the land or sepa-                        property to, through, or acquisition
                                                                     rate sales of portions of the property,                       from other agencies.
                                                                     such as timber, growing crops, inven-                       (a) Property which cannot be sold. If
                                                                     tory for small business enterprises,                      NP or surplus real or chattel property
                                                                     buildings, facilities, and similar items                  cannot be sold (or only token offers are
                                                                     may be permitted if a better total price                  received for it), the appropriate Assist-
                                                                     for the property can be obtained in this                  ant Administrator shall give consider-
                                                                     manner. Environmental effects should                      ation to disposing of the property to
                                                                     also be considered pursuant to subpart                    other Federal Agencies or State or
                                                                     G of part 1940 of this chapter. Any ap-                   local governmental entities through
                                                                     plicable State laws will be set forth in                  the General Services Administration
                                                                     a State supplement and will be com-
                                                                                                                               (GSA). Chattel property will be re-
                                                                     plied with in connection with the divi-
                                                                                                                               ported to GSA using Standard Form
                                                                     sion of land. Subdivision of acquired
                                                                                                                               120, ‘‘Report of Excess Personal Prop-
                                                                     property will be reported on Form RD
                                                                     1955–3C, ‘‘Acquired Property—Subdivi-                     erty,’’ with transfer documented by
                                                                     sion,’’ in accordance with the FMI.                       Standard Form 122, ‘‘Transfer Order
                                                                        (b) Grouping of individual properties.                 Excess Personal Property.’’ Real prop-
                                                                     The county official for FCP cases, and                    erty will be reported to GSA using
                                                                     the State Director for all other cases,                   Standard Form 118, ‘‘Report of Excess
                                                                     may authorize the combining of two or                     Real Property,’’ Standard Form 118A,
                                                                     more individual properties into a sin-                    ‘‘Buildings, Structures, Utilities and
                                                                     gle parcel for sale as a suitable pro-                    Miscellaneous Facilities (Schedule A),’’
                                                                     gram property.                                            Standard Form 118B, ‘‘Land (Schedule
                                                                                                                               B)’’ and Standard Form 118C, ‘‘Related
                                                                     [62 FR 44403, Aug. 21, 1997]
                                                                                                                               Personal Property (Schedule B), ’’ with
                                                                     § 1955.141 Transferring title.                            final disposition documented by a ‘‘Re-
                                                                                                                               ceiving Report,’’ executed by the re-
                                                                        (a)–(c) [Reserved]
                                                                                                                               cipient with original forwarded to the
                                                                        (d) Rent increases for MFH property.
                                                                                                                               Finance Office and a copy retained in
                                                                     After approval of a credit sale for an
                                                                                                                               the inventory file. Forms and prepara-
                                                                     occupied MFH project, but prior to
                                                                                                                               tion instructions will be obtained from
                                                                     closing, the purchaser will prepare a
                                                                     realistic budget for project operation                    the appropriate GSA Regional Office by
                                                                     (and a utility allowance, if applicable)                  the State Office.
                                                                     to determine if a rent increase may be                      (b) Urban Homesteading Program
                                                                     needed to continue or place project op-                   (UH). Section 810 of the Housing and
                                                                     erations on a sound basis. 7 CFR part                     Community Development Act of 1979,
                                                                     3560, subpart E will be followed in proc-                 as amended, authorizes the Secretary
                                                                     essing the request for a rent increase.                   of Housing and Urban Development
                                                                     In processing the rent increase, the                      (HUD) to pay for acquired FmHA or its
                                                                     purchaser will have the same status as                    successor agency under Public Law 103–
                                                                     a borrower. An approved rent increase                     354 single family residential properties
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                                                                     will be effective on or after the date of                 sold through the HUD-UH Program.
                                                                     closing.                                                  Local governmental units may make

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                                                                     § 1955.145                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     application through HUD to partici-                       tion of adjacent land or an alternate
                                                                     pate in the UH Program. State Direc-                      site, in order to cure title defects or en-
                                                                     tors will be notified by the Assistant                    croachments or where structures have
                                                                     Administrator for Housing, when local                     been built on the wrong land and where
                                                                     governmental units in their States                        it is economically feasible, the State
                                                                     have obtained funding for the UH Pro-                     Director may authorize the acquisition
                                                                     gram. The notification will provide                       of additional land at a price not in ex-
                                                                     specific guidance in accordance with                      cess of its market value.
                                                                     the ‘‘Memorandum of Agreement be-                            (c) Easements or rights-of-way. The
                                                                     tween the Farmers Home Administra-                        State Director may authorize the ac-
                                                                     tion or its successor agency under Pub-                   quisition of easements, rights-of-way
                                                                     lic Law 103–354 and the Secretary of                      or other interests in land to cure title
                                                                     Housing and Urban Development’’                           defects, encroachments or in order to
                                                                     dated October 2, 1981. (See Exhibit C of                  make NP property a program property,
                                                                     this subpart.) A Local Urban Home-                        if economically feasible.
                                                                     steading Agency (LUHA) is authorized                      [53 FR 27839, July 25, 1988]
                                                                     a 10 percent discount of the listed price
                                                                     on any SFH nonprogram property for                        § 1955.146 Advertising.
                                                                     the UH Program. No discount is au-                           (a) General. When property is being
                                                                     thorized on program property.                             sold by FmHA or its successor agency
                                                                     [50 FR 23904, June 7, 1985, as amended at 53              under Public Law 103–354 or through
                                                                     FR 27839, July 25, 1988; 55 FR 3943, Feb. 6,              real estate brokers, it is the servicing
                                                                     1990]                                                     official’s responsibility to ensure ade-
                                                                       EDITORIAL NOTE: At 60 FR 34455, July 3,                 quate advertising of property to
                                                                     1995, § 1955.144 was amended by removing the              achieve a timely sale. The primary
                                                                     second through the fourth sentences. How-                 means of advertisements are newspaper
                                                                     ever, there are no undesignated paragraphs                advertisements in accordance with
                                                                     in the 1995 edition of this volume.                       FmHA or its successor agency under
                                                                                                                               Public Law 103–354 Instruction 2024–F
                                                                     § 1955.145 Land acquisition to effect                     (available in any FmHA or its suc-
                                                                          sale.
                                                                                                                               cessor agency under Public Law 103–354
                                                                        The State Director is authorized to                    office), public notice using Form
                                                                     acquire land which is necessary to ef-                    FmHA or its successor agency under
                                                                     fect sale of inventory real property.                     Public Law 103–354 1955–41, ‘‘Notice of
                                                                     This action must be considered only on                    Sale,’’ and notification of known inter-
                                                                     a case-by-case basis and may not be un-                   ested parties. Other innovative means
                                                                     dertaken primarily to increase the fi-                    are encouraged, such as the use of a
                                                                     nancial return to the Government                          bulletin board to display photographs
                                                                     through speculation. The State Direc-                     of inventory properties for sale with a
                                                                     tor’s authority under this section may                    brief synopsis of the property attached;
                                                                     not be redelegated. For MFH and other                     posting Forms FmHA or its successor
                                                                     organization-type loans, prior approval                   agency under Public Law 103–354 1955–40
                                                                     must be obtained from the appropriate                     or FmHA or its successor agency under
                                                                     Assistant Administrator prior to land                     Public Law 103–354 1955–43, as appro-
                                                                     acquisition.                                              priate, in the reception area to attract
                                                                        (a) Alternate site. Where real property                applicant and broker interest; posting
                                                                     has been determined to be NP due to                       notices of sale at employment centers;
                                                                     location and where it is economically                     door-to-door distribution of sales no-
                                                                     feasible to relocate the structure                        tices at apartment complexes; radio
                                                                     thereby making it a program property,                     and/or television spots; group meetings
                                                                     the State Director may authorize the                      with potential applicants/investors/real
                                                                     acquisition of a suitable parcel of land                  estate brokers; and advertisements in
                                                                     to relocate the structure if economi-                     magazines and other periodicals. If
                                                                     cally feasible. The remaining NP parcel                   FmHA or its successor agency under
                                                                     of land will be sold for its market                       Public Law 103–354 personnel are not
                                                                     value.                                                    available to perform these services,
                                                                        (b) Additional land. Where real prop-                  FmHA or its successor agency under
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                                                                     erty has been determined NP for rea-                      Public Law 103–354 may contract for
                                                                     sons that may be cured by the acquisi-                    such services in accordance with

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                                                                     RHS, RBS, RUS, FSA, USDA                                                                       § 1955.147

                                                                     FmHA or its successor agency under                        the minimum sale price acceptable. In
                                                                     Public Law 103–354 Instruction 2024–A                     determining a minimum sale price, the
                                                                     (available in any FmHA or its suc-                        State Director will consider the length
                                                                     cessor agency under Public Law 103–354                    of time the property has been in inven-
                                                                     office).                                                  tory, previous marketing efforts, the
                                                                       (b) Large-value and complex properties.                 type property involved, and potential
                                                                     Advertising for MFH, B&I and other                        purchasers. Program financing will be
                                                                     large-value or complex properties                         offered on sales of program and suit-
                                                                     should also be placed in appropriate                      able property. For NP or surplus prop-
                                                                     newspapers and publications designed                      erty, credit may be extended to facili-
                                                                     to reach the type of particular pur-                      tate the sale. When a group of prop-
                                                                     chasers most likely to be interested in                   erties is to be sold at one time, adver-
                                                                     the inventory property. The State Di-                     tising may indicate that FmHA or its
                                                                     rector will assist the District Director                  successor agency under Public Law 103–
                                                                     in determining the scope of advertising                   354 will consider bids on an individual
                                                                     necessary to adequately market these                      property or a group of properties and
                                                                     properties. Advertising for MFH and                       FmHA or its successor agency under
                                                                     other complex properties must also in-                    Public Law 103–354 will accept the bid
                                                                     clude appropriate language stressing                      or bids which are in the best financial
                                                                     the need to obtain and submit com-                        interest of the Government. Credit,
                                                                     plete application materials for the type                  however, may not exceed the market
                                                                     program involved.                                         value of the property nor may the term
                                                                       (c) MFH restrictive-use provisions. Ad-                 exceed the period for which the prop-
                                                                     vertisements for multi-family housing                     erty will serve as adequate security.
                                                                     projects will advise prospective pur-                     Sealed bids will be made on Form
                                                                     chasers of any restrictive-use require-                   FmHA or its successor agency under
                                                                     ments that will be attached to the                        Public Law 103–354 1955–46 with any ac-
                                                                     project and added to the title of the                     companying deposit in the form of
                                                                     property.                                                 cashier’s check, certified check, postal
                                                                       (d) Racial and socio-economic consider-                 or bank money order or bank draft
                                                                     ations. In accordance with the policies                   payable to FmHA or its successor agen-
                                                                     set forth in § 1901.203(c) of subpart E of                cy under Public Law 103–354. For pro-
                                                                     part 1901 of this chapter, the approval                   gram and suitable property, the min-
                                                                     official will make a special effort to in-                imum deposit will be the same as out-
                                                                     sure that those prospective purchasers                    lined in § 1955.130(e)(1) of this subpart.
                                                                     in the marketing area who tradition-                      For NP or surplus property, the min-
                                                                     ally would not be expected to apply for                   imum deposit will be ten percent (10%).
                                                                     housing assistance because of existing                    The bid will be considered delivered
                                                                     racial or socio-economic patterns are                     when actually received at the FmHA or
                                                                     reached.                                                  its successor agency under Public Law
                                                                       (e) Rejected application for SFH loan. If               103–354 office. All bids will be date and
                                                                     an application for a SFH loan is being                    time stamped. Advertisements and no-
                                                                     rejected because income is too high, a                    tices will request bidders to submit
                                                                     statement should be included in the re-                   their bid in a sealed envelope marked
                                                                     jection letter that inventory properties                  as follows:
                                                                     may be available for which they may                       SEALED BID OFFER lllll*lllll.’’
                                                                     apply.                                                    (*Insert ‘‘PROPERTY IDENTIFICATION
                                                                                                                               NUMBER lllll).
                                                                     [50 FR 23904, June 7, 1985, as amended at 53
                                                                     FR 27839, July 25, 1988; 58 FR 38928, July 21,              (a) Opening bids. Sealed bids will be
                                                                     1993]                                                     held in a secured file before bid opening
                                                                                                                               which will be at the place and time
                                                                     § 1955.147 Sealed bid sales.                              specified in the notice. The bid opening
                                                                        This section provides guidance on the                  will be public and usually held at the
                                                                     sale of all FmHA or its successor agen-                   FmHA or its successor agency under
                                                                     cy under Public Law 103–354 inventory                     Public Law 103–354 office. The County
                                                                     property, except suitable FP real prop-                   Supervisor, District Director, or State
                                                                     erty which will not be sold by sealed                     Director or his/her designee will open
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                                                                     bid. Before a sealed bid sale, the State                  the bids with at least one other FmHA
                                                                     Director will determine and document                      or its successor agency under Public

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                                                                     § 1955.148                                                            7 CFR Ch. XVIII (1–1–09 Edition)

                                                                     Law 103–354 employee present. Each bid                    cessor agency under Public Law 103–354
                                                                     received will be tabulated showing the                    official approving the sale.
                                                                     name and address of the bidder, the                         (e) Failure to close. If a successful bid-
                                                                     amount of the bid, the amount and                         der fails to perform under the terms of
                                                                     form of the deposit, and any conditions                   the offer, the bid deposit will be re-
                                                                     of the bid. The tabulation will be                        tained as full liquidated damages. How-
                                                                     signed by the County Supervisor, Dis-                     ever, if a credit sale complying with
                                                                     trict Director or State Director or his/                  the FmHA or its successor agency
                                                                     her designee and retained in the inven-                   under Public Law 103–354 notice is an
                                                                     tory file.                                                element of the offer and FmHA or its
                                                                       (b) Successful bids. The highest com-                   successor agency under Public Law 103–
                                                                     plying bid meeting the minimum es-                        354 disapproves the credit application,
                                                                                                                               then the bid deposit will be returned to
                                                                     tablished price will be accepted by the
                                                                                                                               the otherwise successful bidder. Upon
                                                                     approval official; however, it will be
                                                                                                                               determination that the successful bid-
                                                                     subject to loan approval by the appro-
                                                                                                                               der will not close, the State Director
                                                                     priate official when a credit sale is in-
                                                                                                                               may authorize either another sealed
                                                                     volved. For SFH and FP (surplus prop-
                                                                                                                               bid or auction sale of direct negotia-
                                                                     erty) sales, preference will be given to
                                                                                                                               tions with the next highest bidder, all
                                                                     a cash offer on NP or surplus property
                                                                                                                               available unsuccessful bidders, or other
                                                                     sales which is at least ll*ll percent
                                                                                                                               interested parties.
                                                                     of the highest offer requiring credit                       (f) No acceptable bid. Where no accept-
                                                                     [*Refer to Exhibit B of FmHA or its                       able bid is received although adequate
                                                                     successor agency under Public Law 103–                    competition is evident, the State Di-
                                                                     354 Instruction 440.1 (available in any                   rector may authorize a negotiated sale
                                                                     FmHA or its successor agency under                        in accordance with § 1955.108(d) of this
                                                                     Public Law 103–354 office) for the cur-                   subpart.
                                                                     rent percentage.] Otherwise, equal bids
                                                                     will be accepted by public lot drawing.                   [50 FR 23904, June 7, 1985, as amended at 53
                                                                     For program or suitable property sales,                   FR 27839, July 25, 1988; 54 FR 6875, Feb. 15,
                                                                                                                               1989; 55 FR 3943, Feb. 6, 1990; 68 FR 61332, Oct.
                                                                     no preference will be given to program                    28, 2003]
                                                                     purchasers unless two identical high
                                                                     bids are received, in which case the bid                  § 1955.148 Auction sales.
                                                                     from the program purchaser will re-                          This section provides guidance on the
                                                                     ceive preference. If a bid is received                    sale of all inventory property by auc-
                                                                     from any purchaser with a request for                     tion, except FSA real property. Before
                                                                     credit that (considering any deposit)                     an auction, the State Director, with
                                                                     exceeds the market value of the prop-                     the advice of the National Office for or-
                                                                     erty or requests a term which exceeds                     ganizational property, will determine
                                                                     the period for which the property will                    and document the minimum sale price
                                                                     serve as adequate security, the bidder                    acceptable. In determining a minimum
                                                                     will be given the opportunity to reduce                   sale price, the State Director will con-
                                                                     the credit request and/or term with no                    sider the length of time the property
                                                                     accompanying change in the offered                        has been in inventory, previous mar-
                                                                     price.                                                    keting efforts, the type property in-
                                                                       (c) Unsuccessful bids. Deposits of un-                  volved, and potential purchasers. Pro-
                                                                     successful bidders will be returned by                    gram financing will be offered on sales
                                                                     certified mail with letter of expla-                      of program and property. For NP prop-
                                                                     nation, return receipt requested. If                      erty, credit may be offered to facilitate
                                                                     there were no acceptable bids, the let-                   the sale. Credit, however, may not ex-
                                                                     ter will advise each bidder of any an-                    ceed the market value of the property
                                                                     ticipated negotiations for the sale of                    nor may the term exceed the period for
                                                                     the property and deposits will be re-                     which the property will serve as ade-
                                                                     turned.                                                   quate security. For program property
                                                                       (d) Disqualified bids. Any bid that                     sales, no preference will be given to
                                                                     does not comply with the terms of the                     program purchasers. The State Direc-
                                                                     offer will be disqualified. Minor devi-                   tor will also consider whether an Agen-
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                                                                     ations and defects in bid submission                      cy employee will conduct an auction or
                                                                     may be waived by the FmHA or its suc-                     whether the services of a professional

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                                                                     RHS, RBS, RUS, FSA, USDA                                                    Pt. 1955, Subpt. C, Exh. A

                                                                     auctioneer are necessary due to the                       quest of the State Director with rec-
                                                                     complexity of the sale. When the serv-                    ommendation of the appropriate pro-
                                                                     ices of a professional auctioneer are ad-                 gram Assistant Administrator or upon
                                                                     visable, the services will be procured                    request initiated by the appropriate
                                                                     by contract in accordance with RD In-                     program Assistant Administrator. Re-
                                                                     struction 2024-A (available in any                        quests for exceptions must be made in
                                                                     Agency Office). Chattel property may                      writing and supported with documenta-
                                                                     be sold at public auction that is widely                  tion to explain the adverse effect, pro-
                                                                     advertised and held on a regularly                        pose alternative courses of action, and
                                                                     scheduled basis without solicitation.
                                                                                                                               show how the adverse effect will be
                                                                     Form RD 1955–46 will be used for auc-
                                                                     tion sales. At the auction, successful                    eliminated or minimized if the excep-
                                                                     bidders will be required to make a bid                    tion is granted.
                                                                     deposit. For program and suitable                           (b) The Administrator may authorize
                                                                     property, the bid deposit will be the                     withholding sale of surplus farm inven-
                                                                     same as outlined in § 1955.130(e)(1) of                   tory property temporarily upon mak-
                                                                     this subpart. For NP property sales, a                    ing a determination that sales would
                                                                     bid deposit of 10 percent is required.                    likely depress real estate market and
                                                                     Deposits will be in the form of cashier’s                 preclude obtaining at that time the
                                                                     check, certified check, postal or bank                    best price for such land.
                                                                     money order or bank draft payable to
                                                                     the Agency, cash or personal checks                       § 1955.150     State supplements.
                                                                     may be accepted when deemed nec-                            State Supplements will be prepared
                                                                     essary for a successful auction by the                    with the assistance of OGC as nec-
                                                                     person conducting the auction. Where
                                                                                                                               essary to comply with State laws or
                                                                     credit sales are authorized, all notices
                                                                                                                               only as specifically authorized in this
                                                                     and publicity should provide for a
                                                                     method of prior approval of credit and                    Instruction to provide guidance to
                                                                     the credit limit for potential pur-                       FmHA or its successor agency under
                                                                     chasers. This may include submission                      Public Law 103–354 officials. State Sup-
                                                                     of letters of credit or financial state-                  plements applicable to MFH, B&I, and
                                                                     ments prior to the auction. The auc-                      CP must have prior approval of the Na-
                                                                     tioneer should not accept a bid which                     tional Office. Request for approval for
                                                                     requests credit in excess of the market                   those affecting MFH must include com-
                                                                     value. When the highest bid is lower                      plete justification, citations of State
                                                                     than the minimum amount acceptable                        law, and an opinion from OGC.
                                                                     to the Agency, negotiations should be
                                                                     conducted with the highest bidder or in                   EXHIBIT A TO SUBPART C OF PART 1955—
                                                                     turn, the next highest bidder or other                       NOTICE OF FLOOD, MUDSLIDE HAZ-
                                                                     persons to obtain an executed bid at                         ARD OR WETLAND AREA
                                                                     the predetermined minimum.
                                                                                                                               TO:llll
                                                                     [62 FR 44404, Aug. 21, 1997, as amended at 68             DATE:llll
                                                                     FR 61332, Oct. 28, 2003]                                    This is to notify you that the real property
                                                                                                                               located at llllll is in a floodplain, wet-
                                                                     § 1955.149 Exception authority.                           land or area identified by the Federal Insur-
                                                                        (a) The Administrator may, in indi-                    ance Administration of the Federal Emer-
                                                                     vidual cases, make an exception to any                    gency Management Agency as having special
                                                                     requirement or provision of this sub-                     flood or mudslide hazards. This identifica-
                                                                     part or address any omission of this                      tion means that the area has at least one
                                                                     subpart which is not inconsistent with                    percent chance of being flooded or affected
                                                                     the authorizing statute or other appli-                   by mudslide in any given year. For
                                                                     cable law if the Administrator deter-                     floodplains and wetlands on the property, re-
                                                                                                                               strictions are being imposed. Specific des-
                                                                     mines that the Government’s interest
                                                                                                                               ignation(s) of this property is(are) (special
                                                                     would be adversely affected or the im-                    flood) (mudslide hazard) (wetland)*. The fol-
                                                                     mediate health and/or safety of tenants                   lowing restriction(s) on the use of the prop-
                                                                     or the community are endangered if                        erty will be included in the conveyance and
                                                                     there is no adverse effect on the Gov-
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                                                                                                                               shall apply to the purchasers, purchaser’s
                                                                     ernment’s interest. The Administrator                     heirs, assigns and successors and shall be
                                                                     will exercise this authority upon re-                     construed as both a covenant running with

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                                                                     Pt. 1956                                                              7 CFR Ch. XVIII (1–1–09 Edition)
                                                                     the property and as equitable servitude sub-              1956.84 Approval or rejection.
                                                                     ject to release by the Farmers Home Admin-                1956.85 Payments and receipts.
                                                                     istration or its successor agency under Pub-              1956.86–1956.95 [Reserved]
                                                                     lic Law 103–354 (FmHA or its successor agen-              1956.96 Delinquent adjustment agreements.
                                                                     cy under Public Law 103–354) when/if no                   1956.97 Disposition of promissory notes.
                                                                     longer applicable:                                        1956.98 [Reserved]
                                                                     (INSERT RESTRICTIONS)                                     1956.99 Exception authority.
                                                                                                                               1956.100 OMB control number.
                                                                       The FmHA or its successor agency under
                                                                     Public Law 103–354 will increase the number                Subpart C—Debt Settlement—Community
                                                                     of acres placed under easement, if requested
                                                                                                                                         and Business Programs
                                                                     in writing, provided that the request is sup-
                                                                     ported by a technical recommendation of the               1956.101 Purposes.
                                                                     U.S. Fish and Wildlife Service. Where addi-               1956.102 Application of policies.
                                                                     tional acreage is accepted by FmHA or its                 1956.103–1956.104 [Reserved]
                                                                     successor agency under Public Law 103–354                 1956.105 Definitions.
                                                                     for conservation easement, the purchase                   1956.106–1956.108 [Reserved]
                                                                     price of the inventory farm will be adjusted              1956.109 General requirements for debt set-
                                                                     accordingly.                                                  tlement.
                                                                     llllllllllllllllllllllll                                  1956.110 Joint debtors.
                                                                     (County Supervisor, District Director or                  1956.111 Debtors in bankruptcy.
                                                                     Real Estate Broker)                                       1956.112 Debts ineligible for settlement.
                                                                     ACKNOWLEDGEMENTllll                                       1956.113–1956.117 [Reserved]
                                                                     DATE:llll                                                 1956.118 Approval authority.
                                                                       I hereby acknowledge receipt of the notice              1956.119–1956.123 [Reserved]
                                                                     that the above stated real property is in a               1956.124 Compromise and adjustment.
                                                                     (special flood) (mudslide hazard) (wetland) *             1956.125–1956.129 [Reserved]
                                                                     area and is subject to use restrictions as                1956.130 Cancellation.
                                                                     above cited. [Also, if I purchase the property            1956.131–1956.135 [Reserved]
                                                                     through a credit sale, I agree to insure the              1956.136 Chargeoff.
                                                                     property     against    loss   from    (floods)           1956.137 [Reserved]
                                                                     (mudslide) * in accordance with requirements              1956.138 Processing.
                                                                     of the FmHA or its successor agency under                 1956.139 Collections.
                                                                     Public Law 103–354.]                                      1956.140–1956.141 [Reserved]
                                                                     llllllllllllllllllllllll                                  1956.142 Delinquent adjustment agreements.
                                                                     (Prospective Purchaser)                                   1956.143 Debt restructuring—hospitals and
                                                                     * Delete the hazard that does not apply.                      health care facilities.
                                                                                                                               1956.144 [Reserved]
                                                                     [57 FR 31644, July 17, 1992]                              1956.145 Disposition of essential FmHA or
                                                                                                                                   its successor agency under Public Law
                                                                         PART 1956—DEBT SETTLEMENT                                 103–354 records.
                                                                                                                               1956.146 [Reserved]
                                                                                                                               1956.147 Debt settlement under the Federal
                                                                                   Subpart A [Reserved]                            Claims Collection Act.
                                                                                                                               1956.148 Exception authority.
                                                                       Subpart B—Debt Settlement—Farm Loan                     1956.149 [Reserved]
                                                                         Programs and Multi-Family Housing                     1956.150 OMB control number.
                                                                     Sec.                                                        AUTHORITY: 5 U.S.C. 301; 7 U.S.C. 1989; 31
                                                                     1956.51 Purpose.                                          U.S.C. 3711; 42 U.S.C. 1480.
                                                                     1956.52–1956.53 [Reserved]                                  SOURCE: 51 FR 45434, Dec. 18, 1986, unless
                                                                     1956.54 Definitions.                                      otherwise noted.
                                                                     1956.55–1956.56 [Reserved]
                                                                     1956.57 General provisions.
                                                                     1956.58–1956.65 [Reserved]                                            Subpart A [Reserved]
                                                                     1956.66 Compromise and adjustment of non-
                                                                         judgment debts.                                       Subpart B—Debt Settlement—Farm
                                                                     1956.67 Debts which the debtor is able to pay
                                                                         in full but refuses to do so.                            Loan Programs and Multi-
                                                                     1956.68 Compromise or adjustment without                     Family Housing
                                                                         debtor’s signature.
                                                                     1956.69 [Reserved]                                          SOURCE: 56 FR 10147, Mar. 11, 1991, unless
                                                                     1956.70 Cancellation.                                     otherwise noted.
                                                                     1956.71 Settling uncollectible recapture re-
                                                                         ceivables.                                            § 1956.51 Purpose.
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                                                                     1956.72–1956.74 [Reserved]
                                                                     1956.75 Chargeoff.                                           This subpart delegates authority and
                                                                     1956.76–1956.83 [Reserved]                                prescribes policy and procedures for

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