7 CFR 762.147 - Servicing shared appreciation agreements.
(a)Lender responsibilities. The lender is responsible for:
(1) Monitoring the borrower's compliance with the shared appreciation agreement;
(2) Notifying the borrower of the amount of recapture due; and,
(3) Beginning October 1, 1999, a notice of the agreement's provisions not later than 12 months before the end of the agreement; and
(4) Reimbursing the Agency for its pro-rata share of recapture due.
(1) Recapture of any appreciation of real estate security will take place at the end of the term of the agreement, or sooner if the following occurs:
(i) On the conveyance of the real estate security (or a portion thereof) by the borrower.
(A) If only a portion of the real estate is conveyed, recapture will only be triggered against the portion conveyed. Partial releases will be handled in accordance with § 762.142(b).
(B) Transfer of title to the spouse of the borrower on the death of such borrower will not be treated as a conveyance under the agreement.
(ii) On repayment of the loan; or
(iii) If the borrower ceases farming.
(2) Calculating recapture.
(i) The amount of recapture will be based on the difference between the value of the security at the time recapture is triggered and the value of the security at the time of writedown, as shown on the shared appreciation agreement.
(ii) Security values will be determined through appraisals obtained by the lender and meeting the requirements of § 762.127.
(iii) All appraisal fees will be paid by the lender.
(iv) The amount of recapture will not exceed the amount of writedown shown on the shared appreciation agreement.
(v) If recapture is triggered within 4 years of the date of the shared appreciation agreement, the lender shall recapture 75 percent of any positive appreciation in the market value of the property securing the loan or line of credit agreement.
(vi) If recapture is triggered after 4 years from the date of the shared appreciation agreement, the lender shall recapture 50 percent of any positive appreciation in the market value of the property securing the loan or line of credit agreement.
(3) Servicing recapture debt.
(i) If recapture is triggered under the shared appreciation agreement and the borrower is unable to pay the recapture in a lump sum, the lender may:
(A) Reschedule the recapture debt with the consent of the Agency, provided the lender can document the borrower's ability to make amortized payments on the recapture debt, plus pay all other obligations. In such case, the recapture debt will not be covered by the guarantee;
(B) Pay the Agency its pro rata share of the recapture due. In such case, the recapture debt of the borrower will be covered by the guarantee; or
(C) Service the account in accordance with § 762.149.
(ii) If recapture is triggered, and the borrower is able but unwilling to pay the recapture in a lump sum, the lender will service the account in accordance with § 762.149.
(4) Paying the Agency. Any shared appreciation recaptured by the lender will be shared on a pro-rata basis between the lender and the Agency.
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.