7 CFR § 766.357 - Involuntary liquidation of real property and chattel.
(a) General. The Agency will liquidate the borrower's security if:
(1) The borrower does not satisfy the account in accordance with §§ 766.355 and 766.356, as appropriate;
(2) The involuntary liquidation is in the Agency's financial interest.
(b) Foreclosure on loans secured by real property.
(1) The Agency will charge the borrower's account for all recoverable costs incurred in connection with the foreclosure and sale of the property.
(2) If the Agency acquires the foreclosed property, the Agency will credit the borrower's account in the amount of the Agency's bid except when incremental bidding was used, in which case the amount of credit will be the maximum bid that was authorized. If the Agency does not acquire the foreclosed property, the Agency will credit the borrower's account in accordance with State law and guidance from the Regional OGC.
(3) Notwithstanding paragraph (b)(2), for an American Indian borrower whose real property secures an FLP loan and is located within the confines of a Federally-recognized Indian reservation, the Agency will credit the borrower's account in the amount that is the greater of:
(i) The market value of the security; or
(ii) The amount of the FLP debt against the property.
(4) After the date of foreclosure, the borrower or former owner retains no statutory, implied, or inherent right of possession to the property beyond those rights granted by State law.
(5) If an unpaid balance on the FLP loan remains after the foreclosure sale of the property, the Agency will service the account in accordance with part 761, subpart F of this chapter and part 3 of this title.
(c) Foreclosure of loans secured by chattel.
(1) The Agency will charge the borrower's account for all recoverable costs incurred by the Agency as a result of the repossession and sale of the property.
(2) The Agency will apply the proceeds from the repossession sale to the borrower's account less prior liens and all authorized liquidation costs.
(3) If an unpaid balance on the FLP loan remains after the sale of the repossessed property, the Agency will service the account in accordance with part 761, subpart F of this chapter and part 3 of this title.