7 CFR 1901.508 - Servicing of insured notes outstanding with investors.

§ 1901.508 Servicing of insured notes outstanding with investors.
The Director, or the insured loan officer of the Finance Office, is authorized in connection with the sale of any insured note to execute required documents on behalf of FmHA or its successor agency under Public Law 103-354 and to take other appropriate action, including, but not limited to, acknowledging notice of sale of an insured note, or requiring an insured holder to sell an insured note to FmHA or its successor agency under Public Law 103-354 in connection with any voluntary conveyance or foreclosure, or transfer related to liquidation of the borrower's account or any other servicing action so related. Upon recommendation by the State Director that purchase of an insured note is necessary for any servicing action not related to liquidation of the borrower's account, authorization may be given by the National Office to request the Director, Finance Office, to require a holder to sell an insured note to FmHA or its successor agency under Public Law 103-354.
(a) Assignments—(1) Effective date of assignment. When an insured note is sold by a private holder to a private buyer, notice of such sale executed by the seller must be given to and acknowledged by FmHA or its successor agency under Public Law 103-354 in order for the sale to be binding on FmHA or its successor agency under Public Law 103-354, as to FmHA or its successor agency under Public Law 103-354, the effective date of the sale will be the acknowledgment date specified in the acknowledgement of notice executed by FmHA or its successor agency under Public Law 103-354.
(2) Assignment to FmHA or its successor agency under Public Law 103-354 at request of FmHA or its successor agency under Public Law 103-354. At any time FmHA or its successor agency under Public Law 103-354 considers it necessary for proper servicing of the loan, FmHA or its successor agency under Public Law 103-354 may require, in writing, a private holder to sell an insured note to FmHA or its successor agency under Public Law 103-354.
(3) Assignment to FmHA or its successor agency under Public Law 103-354 at option of holder. A private holder at any time during the option period may require, in writing, FmHA or its successor agency under Public Law 103-354 to purchase an insured note.
(4) Price. If FmHA or its successor agency under Public Law 103-354 is the buyer of an insured note, the price will be the par value as of the effective date of the sale. In other cases, the price will be determined by an agreement between the parties.
(b) Sale of insured notes by private holders to private buyers. (1) On receipt of notice from a private holder of intention to assign an insured note, the Director, Finance Office, will send the holder:
(i) Form FmHA or its successor agency under Public Law 103-354 471-7 “Notice and Acknowledgment of Sale of Insured or Guaranteed Loan.”
(ii) A statement of the unpaid principal. If requested the Director, Finance Office, will furnish a statement of account instead of or in addition to a statement of the unpaid principal.
(iii) Appropriate information on how to complete the assignment.
(2) If the Director, Finance Office, is informed that an insured note has been assigned and FmHA or its successor agency under Public Law 103-354 is requested to recognize the assignment, the Director, Finance Office, will send the assignor Form FmHA or its successor agency under Public Law 103-354 471-7, with directions for its execution.
(3) On receipt of Form FmHA or its successor agency under Public Law 103-354 471-7 properly executed by the assignor, the Director, Finance Office, will complete and execute the acknowledgment section of the form. The Director, Finance Office, will retain the original of the form, have two facsimile copies made and send one to the assignor, and one to the assignee. For any correction or other change to be made in the record of the name or address of a private holder, or of a designated agent of a private holder, a request will be made to FmHA or its successor agency under Public Law 103-354 in writing.
(4) As of the date of the acknowledgment, executed by the Director, Finance Office, on Form FmHA or its successor agency under Public Law 103-354 471-7 the Director, Finance Office, will transfer the insured note from the assignor to the assignee as the insured holder on the records of FmHA or its successor agency under Public Law 103-354. The name and address of the assignee will be recorded by FmHA or its successor agency under Public Law 103-354 exactly as they appear on Form FmHA or its successor agency under Public Law 103-354 471-7.
(5) Payments transmitted by FmHA or its successor agency under Public Law 103-354 on or after the acknowledgment date shown on Form FmHA or its successor agency under Public Law 103-354 471-7 will be transmitted to the assignee. The Director, Finance Office, will give notice to the assignor and the assignee of any payments transmitted by FmHA or its successor agency under Public Law 103-354 to the assignor before the acknowledgment date and after either the date of sale, or the date of the statement of account, whichever is earlier. However, FmHA or its successor agency under Public Law 103-354 will not be liable for any failure to give such notice.
(c) Assignment of insured notes to FmHA or its successor agency under Public Law 103-354—(1) Assignment at the request of the holder. For assignment of an insured note to FmHA or its successor agency under Public Law 103-354 during the option period at the request of the holder, the following procedure will apply:
(i) The holder will endorse the insured note as follows: “Pay to the order of the United States of America. Without recourse.” The holder will then deliver the endorsed note, together with the insurance agreement, to the Director, Finance Office.
(ii) On receipt of the endorsed note with the accompanying insurance agreement, the Director, Finance Office, will acknowledge receipt of the note and process payment to the assignor of the par value of the note as of the date of the Treasury check.
(2) Assignment at the request of FmHA or its successor agency under Public Law 103-354. The procedure for assigning an insured note at the request of FmHA or its successor agency under Public Law 103-354 will be the same as that prescribed in paragraph (c)(1) of this section, except that the Director, Finance Office, will send a written request to the holder requiring that the insured note be assigned to FmHA or its successor agency under Public Law 103-354 and delivered to the Director, Finance Office, with the accompanying insurance agreement. The Director, Finance Office, will explain that the assignment is necessary to enable FmHA or its successor agency under Public Law 103-354 to service the account properly and will give the holder all necessary information as to the manner of making the assignment and the amount to be paid by FmHA or its successor agency under Public Law 103-354.
(d) Replacement of called or fully paid notes. Certain insurance endorsements contain a clause or rider providing for a replacement note when the original note is paid in full, or is called by FmHA or its successor agency under Public Law 103-354. This provision applies to loans sold for a fixed period of 10 years or longer for loans sold on or after December 1, 1969, and a fixed period of 15 years or longer for loans sold before December 1, 1969. If a note is paid in full or called by the Government and the lender is entitled to a replacement note, the lender may obtain a certificate of beneficial ownership in lieu of the replacement note. The certificate will carry the rates and terms applicable to the replacement note.
(e) Death of a noteholder. The Finance Office should be notified of the death of a holder of an insured note. The following documents should be forwarded with the notice if available:
(1) A certified copy of the death certificate.
(2) A certified copy of the court order appointing the Administrator or Executor (include the mailing address of the Administrator or Executor). The Finance Office will notify the person submitting the notice and/or documentation if any other records or documents are needed, and will provide any additional instructions that are needed. Legal opinions and advice will be obtained by the Finance Office as needed from the Regional Attorney.

Title 7 published on 2014-01-01

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U.S. Code: Title 7 - AGRICULTURE
U.S. Code: Title 16 - CONSERVATION
U.S. Code: Title 42 - THE PUBLIC HEALTH AND WELFARE
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