OneRD Guaranteed Loan Regulation; Correction
| Published date | 02 October 2020 |
| Citation | 85 FR 62195 |
| Record Number | 2020-21917 |
| Section | Rules and Regulations |
| Court | Rural Business-cooperative Service,Rural Housing Service,Rural Utilities Service |
Federal Register, Volume 85 Issue 192 (Friday, October 2, 2020)
[Federal Register Volume 85, Number 192 (Friday, October 2, 2020)]
[Rules and Regulations]
[Pages 62195-62199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21917]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 85, No. 192 / Friday, October 2, 2020 / Rules
and Regulations
[[Page 62195]]
DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service
Rural Housing Service
Rural Utilities Service
7 CFR Parts 1779, 3575, 4279, 4287, and 5001
[Docket No. RUS-19-Agency-0030]
RIN 0572-AC43
OneRD Guaranteed Loan Regulation; Correction
AGENCY: Rural Business-Cooperative Service, Rural Housing Service, and
Rural Utilities Service, Department of Agriculture (USDA).
ACTION: Final rule; technical correction.
-----------------------------------------------------------------------
SUMMARY: On July 14, 2020, Rural Development's Rural Business-
Cooperative Service, Rural Housing Service, and Rural Utilities Service
referred to as ``the Agency'' or ``Agency'' promulgated the OneRD
Guaranteed Loan regulation. Following final implementation of this
final rule, the Agency found that corrections due to error, omissions,
or need for clarity were necessary. This technical correction makes
amendments to address these necessary changes.
DATES: Effective October 1, 2020.
FOR FURTHER INFORMATION CONTACT: For questions on this document contact
Thomas P. Dickson, Regulatory Division Team 2, Rural Development
Innovation Center, U.S. Department of Agriculture, 1400 Independence
Ave. SW, Stop 1522, Washington, DC 20250; telephone, 202-690-4492;
email, [email protected].
SUPPLEMENTARY INFORMATION:
I. Need for Corrections
The Agency published a final rule on July 14, 2020, (85 FR 42494--
42580) for the purpose of implementing a unified guaranteed loan
platform for enhanced delivery of four of its existing guaranteed loan
programs: Community Facilities (CF) administered by the Rural Housing
Service; Water and Waste Disposal (WWD) administered by the Rural
Utilities Service; and, Business and Industry (B&I) and Rural Energy
for America Program (REAP) administered by the Rural Business-
Cooperative Service. The Agency discovered that errors and omissions
were made during the drafting process that impact the successful
implementation of this regulation. The following items will be
addressed in this technical correction:
The removal of Supplementary Information language referring to a
reduced guarantee in the Agency's response to a question regarding
issuance of the loan note guarantee prior to the completion of
construction. The Agency determined that the reduction is not necessary
due to implementation of other risk mitigation measures.
Modifying language at Sec. 5001.2 (e) to clarify intent.
Division B, Title I of the CARES Act supplemented existing
authority in 7 CFR part 4279 for the Business and Industry program and
was implemented after development of the OneRD final rule, but prior to
the effective date of the OneRD rule. In order to continue to
administer loans authorized under the CARES Act, 7 CFR part 4279 and
Subpart B of Part 4287 are still needed. Therefore, it is necessary to
remove Supplementary Information language and delete the amendment to
remove and reserve 7 CFR part 4279 and Subpart B of 7 CFR part 4287.
These parts continue to be necessary to originate Business & Industry
CARES Act Program loans, and service Business and Industry Cares Act
Program loans and B&I loans guaranteed by the Agency prior to October
1, 2020. Amendments have been added to revise 7 CFR 4279.1, 4279.101,
and 4287.101 accordingly.
Modification of the definition of non-regulated lending entity at
Sec. 5001.3, to remove language that does not apply nor further the
meaning of the definition.
Addition of language at Sec. 5001.102(d) to clarify that long-term
financing to pay off a lender's interim construction loan after project
completion will not be treated as debt refinancing in this section.
Addition of language at end of Sec. 5001.102(d)(3) to clarify that
(4) is included with Sec. 5001.102(d)(1) to (3).
Correction of language at Sec. 5001.115(n) and an addition of a
new paragraph (s) that was inadvertently missed.
Removal of Sec. 5001.118(b)(3) as this information was
duplicative.
Modification to the list of regulated lending entities at Sec.
5001.130(b) to include other lending entities not specified, but that
meet the eligibility requirements. This language was inadvertently left
out of the regulation during drafting.
Addition of paragraph Sec. 5001.121(a)(4) to include refinancing
as an eligible use of CF loan funds. The paragraph was inadvertently
left out during the drafting of the regulation.
Addition of paragraph Sec. 5001.121(c)(12) to include refinancing
as an eligible use of WWD loan funds. The paragraph was inadvertently
left out during the drafting of the regulation.
Addition of paragraph Sec. 5001.121(c)(12) to include refinancing
as an eligible use of B&I loan funds. The paragraph was inadvertently
left out during the drafting of the regulation.
Removal of the last sentence in Sec. 5001.202(b)(4)(ii). This
sentence was inadvertently left in during the drafting of the
regulation.
Removal of language at Sec. 5001.205(e) referencing closure of a
lender's construction loan as the reference should be to the guaranteed
loan.
Additional items were added to the list of provisional content for
a complete application at Sec. 5001.303(c). These items are included
in the program specific areas but were not included in this section.
Modifying language at Sec. 5001.408 clarifying how a lender may
obtain participation in the loan or assign all or part of the
guaranteed portion of the guaranteed loan on the secondary market and
that that any assignment by the lender of the guaranteed portion of the
loan must be accomplished in accordance with the conditions in the
lender's agreement and the assignment of the guaranteed or non-
guaranteed portion of the loan applies to all individuals, not just the
borrower as well as making changes to terminology.
Modifying language at Sec. 5001.450(b)(1) to remove duplicative
language.
Modifying language at Sec. 5001.452(b) to improve readability.
Adding language at Sec. 5001.453 to advise holders the Agency will
provide
[[Page 62196]]
a certificate of incumbency to verify the signature and title of the
Agency official who signs the assignment guarantee agreement.
Removing Sec. 5001.459(c) as it is no longer applicable.
Modifying language at Sec. 5001.511 to improve readability.
Removing Sec. 5001.515(c) as it is no longer applicable.
Removal of Sec. 5001.524(d) which allowed the Agency to terminate
the loan note guarantee for good cause. The Agency determined that this
paragraph was duplicative of other language in the regulation.
The Agency, while drafting the regulation, inadvertently used sale
and assign interchangeably when the correct term is assign. The Agency
is taking the opportunity to correct this. Various spelling and grammar
items were also corrected.
II. Corrections
In FR Doc. 2020-13991, appearing on page 42494 in the Federal
Register of Tuesday, July 14, 2020, the following corrections are made:
0
1. On page 42511, in the first column, under Subpart F--Servicing
Provisions in the third paragraph under Loan Note Guarantee
Construction titled Agency's Response: The last sentence is corrected
to read ``As this poses more risk to the Agency, it will be mitigated
with additional lender documentation and enhanced lender oversight
along with an additional lender fee.''
Chapter XLII--[Corrected]
PART 4279--GUARANTEED LOANMAKING
Subpart A--General
0
2. On page 42517, in the third column, in part 4279, remove ``Subpart
A--[Removed and Reserved]'', revise instruction 4, and add amendatory
text to read as follows:.
0
4. Amend Sec. 4279.1 by revising paragraph (a) to read as follows:
Sec. 4279.1 Introduction.
(a) As of October 1, 2020, this subpart is specifically applicable
to and only contains regulations for Business and Industry loans under
the authority of the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act) (Pub. L. 116-136) to provide B&I guarantees for loans
needed as a result of the Coronavirus Disease 2019 (COVID-19) pandemic
for working capital loan purposes to support business operations and
facilities in rural areas (B&I CARES Act Program Loans). Some of the
requirements of this subpart are waived or altered for B&I CARES Act
Program Loans. The waivers and alterations are provided in Sec.
4279.190 of this subpart. Other than B&I CARES Act Program Loans, this
subpart is no longer used for making Business and Industry (B&I) loans
guaranteed by the Agency. Subpart B of part 4287 of this chapter is
retained for servicing B&I CARES Act Program Loans and B&I loans
guaranteed by the Agency prior to October 1, 2020. Requirements for B&I
loans guaranteed by the Agency after October 1, 2020 (other than B&I
CARES Act Loans) may be found at 7 CFR part 5001.
* * * * *
Subpart B--Business and Industry Loans
0
3. On page 42518, in the first column, in part 4279, remove ``Subpart
B--[Removed and Reserved]'', revise instruction 5, and add amendatory
text to read as follows:
0
5. Amend Sec. 4279.101 by revising paragraph (a) to read as follows:
Sec. 4279.101 Introduction.
(a) Content. As of October 1, 2020, this subpart is specifically
applicable to and only contains loan processing regulations for
Business and Industry loans under the authority of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136) to
provide B&I guarantees for loans needed as a result of the Coronavirus
Disease 2019 (COVID-19) pandemic for working capital loan purposes to
support business operations and facilities in rural areas (B&I CARES
Act Program Loans). Some of the requirements of this subpart are waived
or altered for B&I CARES Act Program Loans. The waivers and alterations
are provided in Sec. 4279.190 of this subpart. This subpart is
supplemented by subpart A of this part, which contains general
guaranteed loan regulations, and subpart B of part 4287 of this
chapter, which contains loan servicing regulations. Other than the B&I
CARES Act Program Loans, this subpart is no longer used for loan
processing requirements for Business and Industry (B&I) loans
guaranteed by the Agency. Requirements for regular B&I loans (other
than the B&I CARES Act Program Loans) may be found at 7 CFR part 5001.
* * * * *
PART 4287--SERVICING
Subpart B--Servicing Business and Industry Guaranteed Loans
0
4. On page 42518, in the first column, in part 4287, remove ``Subpart
B--[Removed and Reserved]'', revise instruction 7, and add amendatory
text to read as follows:
0
7. Amend Sec. 4287.101 by revising paragraph (a) to read as follows:
Sec. 4287.101 Introduction.
(a) As of October 1, 2020, this subpart is specifically applicable
to and only contains regulations for servicing Business and Industry
(B&I) Loans guaranteed by the Agency prior to October 1, 2020 and
Business and Industry loans under the authority of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136) to
provide B&I guarantees for loans needed as a result of the Coronavirus
Disease 2019 (COVID-19) pandemic for working capital loan purposes to
support business operations and facilities in rural areas (B&I CARES
Act Program Loans). Other than B&I CARES Act Program Loans and B&I
loans guaranteed by the Agency prior to October 1, 2020, this subpart
is no longer used for servicing B&I loans guaranteed by the Agency.
Requirements for B&I loans guaranteed by the Agency after October 1,
2020 (other than B&I CARES Act Loans) may be found at 7 CFR part 5001.
0
5. On page 42518, in the first column, in part 4287, remove Instruction
7.
* * * * *
0
6. On page 42518, in the third column in the table of contents under
``Subpart F-Servicing Provisions,'' ``5001.118 [Reserved]'' is
corrected to read ``5001.518 [Reserved]''.
0
7. On page 42519, in the second column, in Sec. 5001.2, the second
sentence of paragraph (e) is revised to read as follows:
Sec. 5001.2 Structure.
* * * * *
(e) * * * Loan provisions cover interest rates, term length, loan
schedule, repayment, lender fees, loan amounts, percentage of
guarantee, and assignment of a guaranteed loan. * * *
* * * * *
0
8. On page 42523, in the second column, in Sec. 5001.3, the definition
of ``Non-regulated lending entity'' is revised to read as follows:
Sec. 5001.3 Definitions.
* * * * *
Non-regulated lending entity means a lending entity that is not
subject to supervision and examination by an agency of the United
States or a State.
* * * * *
0
9. On page 43527, in the third column, and continuing on page 42528, in
the first column, in Sec. 5001.102, revise
[[Page 62197]]
paragraph (d) introductory sentence and the last sentence of paragraph
(d)(3) to read as follows:
Sec. 5001.102 Project eligibility--general.
* * * * *
(d) Debt refinancing. The Agency can guarantee loans for debt
refinancing, as described in paragraphs (d)(1) through (5) of this
section. Longer-term financing to pay off a lender's interim
construction loan after project completion will not be treated as debt
refinancing. An eligible debt refinancing project is:
* * * * *
(3) * * * Such guaranteed debt shall not be included in the amount
of applicant lender debt when calculating the maximum percentage of the
total use of funds in the new guaranteed loan as stated in paragraph
(d)(2) of this section; and,
* * * * *
Sec. 5001.105 Corrected
0
10. On page 42530 in the second column in Sec. 5001.105 paragraph
(b)(21) is revised to read as follows:
Sec. 5001.105 Eligible B&I projects and requirements.
* * * * *
(b) * * *
(21) Development and construction of RES, including modification of
existing systems that are commercially available and that are not
otherwise eligible under REAP, or if funding is not available in the
REAP program.
* * * * *
0
11. On page 42533 in the third column in Sec. 5001.115, revise
paragraph (n) and add paragraph (s) to read as follows:
Sec. 5001.115 Ineligible projects--general.
* * * * *
(n) Owner-occupied housing.
* * * * *
(s) Self-storage facilities.
Sec. 5001.118 [Corrected]
0
12. On page 42534 in the second column in Sec. 5001.118, remove
paragraph (b)(3).
0
13. On page 42535 in the first and second columns in Sec. 5001.121 add
paragraphs (a)(4), (b)(11), and (c)(12) to read as follows:
Sec. 5001.121 Eligible uses of loan funds.
* * * * *
(a) * * *
(4) Refinancing in accordance with Sec. 5001.102(d).
(b) * * *
(11) Refinancing in accordance with Sec. 5001.102(d),
(c) * * *
(12) Refinancing in accordance with Sec. 5001.102(d).
* * * * *
0
13. On page 42538 in the first column in Sec. 5001.130, revise
paragraph (b) introductory text and add paragraph (b)(10) to read as
follows:
Sec. 5001.130 Lender Eligibility Requirements.
* * * * *
(b) Regulated lending entities. Regulated lending entities
identified in paragraphs (b)(1) through (10) of this section are
eligible to receive a loan guarantee under this part without
documentation to the Agency provided they are subject to supervision
and credit examination by the applicable agency of the United States or
a state, or were created specifically by state statute and operate
under the direct supervision of a state government authority.
* * * * *
(10) Other lending entities not specified in paragraphs (b)(1)
through (9) of this section that meet the requirements as specified in
this paragraph (b).
* * * * *
Sec. 5001.202 [Corrected]
0
14. On page 42543 in the third column and continuing onto page 42544 in
the first column in Sec. 5001.202, remove the last sentence in
paragraph (b)(4)(ii).
Sec. 5001.205 [Corrected]
0
15. On page 42545 in the third column in Sec. 5001.205, remove the
second sentence in paragraph (e)(2) introductory text.
0
16. On page 42548 in the second column in Sec. 5001.303, revise
paragraph (c)(16) and add paragraphs (c)(17) and (18) to read as
follows:
Sec. 5001.303 Applications for loan guarantee.
* * * * *
(c) * * *
(16) Certification regarding credit elsewhere in accordance with
Sec. 5001.126(b)(3) and (c)(2).
(17) Certification of significant community support in accordance
with Sec. 5001.126(b)(4) and (c)(3).
(18) Copies of organizational documents if not already provided
with a preliminary eligibility review in accordance with Sec.
5001.302.
0
17. On pages 42562 and continuing onto page 42563 in Sec. 5001.408,
revise paragraph (a), the first sentence of paragraph (a)(2),
paragraphs (a)(4) and (5), and (c), and the first sentences of
paragraphs (d)(3) and (e) introductory text to read as follows:
Sec. 5001.408 Participation or assignment of guaranteed loan.
(a) General. The lender may obtain participation in the loan or
assign all or part of the guaranteed portion of the guaranteed loan on
the secondary market subject to the conditions specified in paragraphs
(a)(1) through (5) of this section or retain the entire guaranteed
loan.
* * * * *
(2) * * * Any assignment by the lender of the guaranteed portion of
the loan must be accomplished in accordance with the conditions in the
lender's agreement and the provisions of this section. The holders and
the borrower have no rights or obligations to one another. * * *
* * * * *
(4) Prohibition. The lender must not assign or participate any
amount of the guaranteed or non-guaranteed portion of the loan to the
borrower, borrower's officers, directors, stockholders, other owners,
or to members of their immediate families, or to a parent company, an
affiliate, or a subsidiary of the borrower.
(5) Secondary market. The lender must properly close their loan and
fully disburse loan funds of a promissory note for the purposes
intended prior to assignment of the guaranteed portion of the
promissory note(s) on the secondary market. The lender can assign all
or part of the guaranteed portion of the loan only if the loan is not
in default.
(c) Distribution of proceeds. The lender must apply all loan
payments and collateral proceeds received, after payment of liquidation
expenses, to the guaranteed and unguaranteed portions of the loan on a
pro rata basis.
(d) * * *
(3) A holder, upon written notice to the lender and the Agency, may
reassign the unpaid guaranteed portion of the loan, in full, assigned
under the assignment guarantee agreement. * * *
* * * * *
(e) Rights and liabilities. When a guaranteed portion of a loan is
assigned to a holder using an assignment guarantee agreement, the
holder succeeds to all rights of the lender under the loan note
guarantee to the extent of the portion purchased. * * *
* * * * *
0
18. On page 42563 in the second column in Sec. 5001.450, revise
paragraph (b)(1) to read as follows:
Sec. 5001.450 General.
* * * * *
(b) * * *
(1) The entire loan must be secured by the same collateral with
equal lien
[[Page 62198]]
priority for the guaranteed and unguaranteed portions of the loan. The
unguaranteed portion of the guaranteed loan will neither be paid first
nor given any preference or priority over the guaranteed portion. A
parity or junior lien position in the guaranteed loan collateral may be
considered on a case-by-case basis and must be approved by the Agency.
* * * * *
0
19. On page 42564 in the third column in Sec. 5001.452, revise
paragraph (b) introductory text to read as follows:
Sec. 5001.452 Loan closing and conditions precedent to issuance of
loan note guarantee.
* * * * *
(b) Simultaneously with or immediately after the guaranteed loan
closing, the lender must provide to the Agency the guarantee fee, any
secondary market assignment documents, and the following forms and
documents:
* * * * *
0
20. On page 42566 in the first column inSec. 5001.453 revise
paragraphs (a)(1) and (3) to read as follows:
Sec. 5001.453 Issuance of the loan note guarantee.
* * * * *
(a) * * *
(1) Loan note guarantee. The Agency will provide the lender the
original loan note guarantee document which the lender must attach to
the promissory note. If the lender elected to use the multi-note
system, the Agency will issue one loan note guarantee for the set of
promissory notes.
* * * * *
(3) Certificate of incumbency and signature. The Agency will
provide the holder an executed certificate of incumbency form to verify
the signature and title of the Agency official who signed the
assignment guarantee agreement.
* * * * *
Sec. 5001.459 [Corrected]
0
21. On page 42567 in the third column in Sec. 5001.459, in the
introductory text. correct ``through (c)'' to read ``and (b)'' and on
page 42568 in the first column, remove paragraph (c).
0
22. On pages 42572 in the second column and continuing onto page 42573,
Sec. 5001.511 is revised to read as follows:
Sec. 5001.511 Repurchases from holders.
(a) General. A holder can make written demand on either the lender
or the Agency to repurchase the unpaid guarantee portion of the loan
when the borrower is in monetary default or when the lender has failed
to pay the holder its pro-rata share of any payment made by the
borrower within 30 days of the lender's receipt thereof from the
borrower. When making written demand on the lender, the holder must
concurrently send a copy of the demand letter to the Agency.
(1) The lender is encouraged to repurchase the guarantee, upon
written demand of a holder, to facilitate the accounting of funds,
resolve any loan problem, and resolve the monetary default, where and
when reasonable. The benefit to the lender is that it may re-assign the
guaranteed portion of the loan and then continue collection of its
servicing fee, if any, when the monetary default is cured.
(2) When a lender receives a written demand for repurchase from a
holder, the lender must notify any other holder and the Agency within
30 calendar days of receipt of the written demand. The lender must
inform all parties if the lender will repurchase the unpaid guaranteed
portion of the loan from the requesting holder.
(3) Upon repurchase the holder will re-assign the assignment
guarantee agreement to the lender without recourse.
(b) Repurchase by lender for loan servicing purposes. If the
lender, borrower, and holder are unable to agree to restructuring of
loan repayment, interest rate, or loan terms to resolve any loan
problem or resolve any default, and repurchase of the guaranteed
portion of the loan is necessary to adequately service the loan, the
holder must reassign the guaranteed portion of the loan to the lender.
The reassignment must be for an amount not less than the holder's
unpaid principal and accrued Interest, in accordance with Sec.
5001.450(c) of this part, on such portion less the lender's servicing
fee.
(1) Upon repurchase the holder will re-assign the assignment
guarantee agreement to the lender without recourse.
(2) The lender must not repurchase from the holder for arbitrage or
other purposes to further its own financial gain.
(3) Any repurchase from a holder may only be made after the lender
obtains the Agency's written approval.
(c) Agency repurchase. If the lender does not repurchase the
guaranteed portion from the holder, the Agency may, at its option,
purchase such guaranteed portion of the loan for loan servicing
purposes. A holder can submit a written demand to the Agency for
repurchase only if the lender declines to repurchase. If a prior
written demand was not made upon the lender, the Agency will notify the
lender and allow up to seven calendar days for the lender to exercise
their option to repurchase as provided in this section.
(1) Lender does not repurchase. If the lender does not repurchase
the unpaid guaranteed portion of a loan as provided in paragraph (a) of
this section, the Agency will, within 30 calendar days after written
demand to the Agency from the holder, purchase from the holder the
unpaid principal balance of the guaranteed portion together with
accrued interest to date of repurchase or the interest termination
date, whichever is sooner, less the lender's servicing fee. The
guarantee will pay accrued interest to the holder on the loan as
determined under Sec. 5001.450(c) of this part.
(2) Written demand content. The holder must include in its written
demand to the Agency:
(i) A copy of the written demand made upon the lender;
(ii) A copy of the lender's denial to repurchase the unpaid
guaranteed portion of the guaranteed loan;
(iii) Evidence of the right to require payment from the Agency as
provided by the holder or duly authorized agent. Such evidence must
consist of the original assignment guarantee agreement properly
assigned to the Agency without recourse including all rights, title,
and interest in the loan;
(iv) The amount due including unpaid principal, unpaid interest to
date of demand, and interest subsequently accruing from date of demand
to proposed payment date; and
(v) When the initial holder has assigned its interest, the original
assignment guarantee agreement and an original of each Agency-approved
reassignment document in the chain of ownership, with the latest
reassignment being assigned to the Agency without recourse, including
all rights, title, and interest in the guarantee.
(3) Payment. Unless otherwise agreed upon, payment will not be
later than 30 calendar days from the date of demand.
(i) Upon request by the Agency, the lender must promptly furnish
(within 30 calendar days of such request) a current statement,
certified by an appropriate authorized officer of the lender, of the
unpaid principal and interest then owed by the borrower on the loan and
the amount then owed to any holder, along with the information
necessary for the Agency to determine the appropriate amount due the
holder.
(ii) Any discrepancy between the amount claimed by the holder and
the information submitted by the lender must be resolved between the
lender and the holder before payment will be approved. The Agency will
notify both
[[Page 62199]]
parties and such conflict will suspend the running of the 30-calendar-
day payment requirement.
(iii) If a repurchase of a guaranteed loan includes the
capitalization of interest, interest accrued on the capitalized
interest will not be paid to the holder.
(4) Subrogation. When the Agency purchases a loan from a holder it
assumes all rights that were previously held by the holder.
(5) Servicing fee. When the Agency purchases the guaranteed portion
of the loan from a holder, the lender's servicing fee will stop on the
date that interest was last paid by the borrower. The lender can
neither charge a servicing fee to the Agency nor collect such fee from
the Agency.
(6) Accrued interest. If the Agency repurchases 100 percent of the
guaranteed portion of a loan and becomes the holder, interest accrual
on the loan will cease until the lender resumes remittance of the pro
rata payments to the Agency.
(7) Establishing interest termination date. When a guaranteed loan
has been delinquent more than 60 calendar days and no holder comes
forward or when the lender has accelerated the account, and subject to
the expiration of any forbearance or workout agreement, the lender, or
the Agency at its sole discretion, must issue a letter to the holder(s)
establishing the interest termination date in accordance with Sec.
5001.450(c)(2).
(8) Obligations and rights. Purchase by the Agency neither changes,
alters, or modifies any of the lender's obligations to the Agency
arising from the lender's agreement, guaranteed loan or loan note
guarantee, nor does it waive any of the Agency's rights against the
lender. The Agency will have the right to set-off against the lender
all rights inuring to the Agency as the holder of the instrument
against the Agency's obligation to the lender under the loan note
guarantee.
(9) Accelerated loan. When the lender has accelerated the loan and
the lender holds all or a portion of the guaranteed loan, an estimated
loss claim must be filed by the Lender with the Agency within 60
calendar days from the date the loan was accelerated. Accrued interest
paid to the lender in accordance with Sec. 5001.450(c)(1).
(10) Interest termination during bankruptcy. When a borrower files
a Chapter 7 liquidation plan, the lender shall immediately notify the
Agency and submit a liquidation plan. The Agency will establish an
interest termination date based on the date Interest was last paid to
the lender. When a borrower files either a Chapter 9 or Chapter 11
bankruptcy restructuring plan, the Agency and lender shall meet to
discuss the bankruptcy procedure, the ability of the borrower to meet
their restructuring plan, the lender's treatment of accruing interest,
and potentially establish an interest termination date for the
guaranteed loan. If the restructuring bankruptcy Chapter 9 or Chapter
11 is converted to a liquidation bankruptcy Chapter 7 by court order,
the interest termination date will be the date of such conversion.
Sec. 5001.515 [Corrected]
0
23. On page 42574 in the third column in Sec. 5001.515, remove
paragraph (c).
Sec. 5001.524 [Corrected]
0
24. On page 42580 in the third column in Sec. 5001.524, remove
paragraph (d).
Bette B. Brand,
Deputy Under Secretary, Rural Development.
[FR Doc. 2020-21917 Filed 9-30-20; 4:15 pm]
BILLING CODE 3410-XY-P
