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Code of Federal Regulations Title 7. Agriculture § 7.765.404 Transfer of security to and assumption of debt by ineligible applicants

Current as of October 02, 2022 | Updated by FindLaw Staff

(a) General.

(1) The Agency will allow the transfer of real estate and chattel security property to applicants who are ineligible for the type of loan being assumed only on Non-program loan rates and terms.

(2) The Agency will reclassify the assumed loan as a Non-program loan.

(b) Eligibility. Transferees must:

(1) Provide written documentation verifying their credit worthiness and debt repayment ability;

(2) Not have received debt forgiveness from the Agency;

(3) Not be ineligible for loans as a result of a conviction for controlled substances according to 7 CFR part 718;  and

(4) Not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718.

(c) Assumption amount. The transferee must assume the total outstanding FLP debt or if the value of the property is less than the entire amount of debt, an amount equal to the market value of the security less any prior liens. The total outstanding FLP debt will include any unpaid deferred interest that accrued on the loan to the extent that the debt does not exceed the security's market value.

(d) Downpayment. Non-program transferees must make a downpayment to the Agency of not less than 10 percent of the lesser of the market value or unpaid debt.

(e) Interest rate. The interest rate will be the Non-program interest rate in effect at the time of loan approval.

(f) Loan terms.

(1) For a Non-program loan secured by real estate, the Agency schedules repayment in 25 years or less, based on the applicant's repayment ability.

(2) For a Non-program loan secured by chattel property only, the Agency schedules repayment in 5 years or less, based on the applicant's repayment ability.

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Cite this article: FindLaw.com - Code of Federal Regulations Title 7. Agriculture § 7.765.404 Transfer of security to and assumption of debt by ineligible applicants - last updated October 02, 2022 | https://codes.findlaw.com/cfr/title-7-agriculture/cfr-sect-7-765-404/

Read this complete Code of Federal Regulations Title 7. Agriculture § 7.765.404 Transfer of security to and assumption of debt by ineligible applicants on Westlaw

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