7 CFR 762.143 - Servicing distressed accounts.

§ 762.143 Servicing distressed accounts.

(a) A borrower is in default when 30 days past due on a payment or in violation of provisions of the loan documents.

(b) In the event of a borrower default, SEL and CLP lenders will:

(1) Report to the Agency in accordance with § 762.141.

(2) Determine whether it will repurchase the guaranteed portion from the holder in accordance with § 762.144, if the guaranteed portion of the loan was sold on the secondary market.

(3) Arrange a meeting with the borrower within 15 days of default (45 days after payment due date for monetary defaults) to identify the nature of the delinquency and develop a course of action that will eliminate the delinquency and correct the underlying problems. Non-monetary defaults will be handled in accordance with the lender's note, loan agreements and any other applicable loan documents.

(i) The lender and borrower will prepare a current balance sheet and cash flow projection in preparation for the meeting. If the borrower refuses to cooperate, the lender will compile the best financial information available.

(ii) The lender or the borrower may request the attendance of an Agency official. If requested, the Agency official will assist in developing solutions to the borrower's financial problems.

(iii) The lender will summarize the meeting and proposed solutions on the Agency form for guaranteed loan borrower default status completed after the meeting. The lender will indicate the results on this form for the lender's consideration of the borrower for interest assistance in conjunction with rescheduling under § 762.145(b).

(iv) The lender must decide whether to restructure or liquidate the account within 90 days of default, unless the lender can document circumstances that justify an extension by the Agency.

(v) The lender may not initiate foreclosure action on the loan until 60 days after eligibility of the borrower to participate in the interest assistance programs has been determined by the Agency. If the lender or the borrower does not wish to consider servicing options under this section, this should be documented, and liquidation under § 762.149 should begin.

(vi) If a borrower is current on a loan, but will be unable to make a payment, a restructuring proposal may be submitted in accordance with § 762.145 prior to the payment coming due.

(c) PLP lenders will service defaulted loans according to their lender's agreement.

[ 64 FR 7378, Feb. 12, 1999, as amended at 72 FR 63297, Nov. 8, 2007]

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United States Code
U.S. Code: Title 7 - AGRICULTURE

Title 7 published on 10-May-2017 03:42

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 7 CFR Part 762 after this date.

  • 2016-10-21; vol. 81 # 204 - Friday, October 21, 2016
    1. 81 FR 72686 - EZ Guarantee Program and Micro Lender Program (MLP) Status
      GPO FDSys XML | Text
      DEPARTMENT OF AGRICULTURE, Farm Service Agency
      Final rule.
        Effective Date: October 21, 2016. Comment Dates: We will consider comments on the Paperwork Reduction Act that we receive by: December 20, 2016. We will consider comments on the regulatory changes that we receive by: January 19, 2017.
      7 CFR Parts 761 and 762