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Loans may be made for the following purposes for a period less than two years: (Goods acquired by purchase, or retained by refinancing, from the proceeds of loans made under these purposes will be construed as “nonrecoverable goods” for the purpose of this subpart.)

Purchase of feed, seed, fertilizer, and other seasonal farm supplies.

Minor repairs to buildings and fences, repairs to farm machinery and household equipment, and the purchase of farm tools.

Payment of rent on land and buildings.

Payment of recording and filing fees, labor, professional and transportation services, and other fees and services, including utility services.

Purchase of baby chicks, feeder pigs, or other livestock of a character that will be consumed or marketed in less than 2 years.

Purchase of food, fuel, clothing, and other subsistence goods for human needs, and payment of indispensable medical services.

Payment of premiums for property insurance.

Payment of interest on chattel mortgages or other liens on perbonal property.

Payment of annual instalments on chattel mortgages or other liens against personal property. Payment of taxes on real and personal property.

Loans will be made for the shortest period consistent with the purpose of this subpart, considering the use to which the proceeds of the loan are to be put, the useful life of the goods to be purchased, and the resources and earning capacity of the borrower.* [Par. 4c, A.O. 41, rev. 1, Dec. 21, 1935, as amended by Supp. 6, May 25, 1937]

303.25 Amortization and rate of interest. Interest will be charged at the rate of 5 percent per annum on all new loans and renewals granted under the provisions of this subpart.

Loans for nonrecoverable goods will be repayable in less than 2 years in such instalments as the regional director will determine to be in accordance with the anticipated maximum ability of the borrower to repay, or in accordance with the provisions of the Farm and Home Management Plan approved for the borrower.

Loans for recoverable goods will be repayable within a period not to exceed 5 years. Provisions may be made for repayments in such instalments as the regional director may determine to be in accordance with the anticipated maximum ability of the borrower to repay or in accordance with the provisions of the Farm and Home Management Plan approved for the borrower, Provided only That the total repayments required during each year will be the same for each of the years for which such loan is made. However, when the borrower is subject to one or more of the conditions of financial stress listed below and the loan is made for a period of 5 years, the first two annual payments on the principal may be deferred in case of: (Interest, however, will be payable during the first 2 years. During the third, fourth, and fifth years the loan will be amortized by payments of principal with interest, Provided only That the total repayments required during each of the three years will be the same for each of the 3 years, during which such repayments are made.)

*For statutory citation, see note to $ 303.21.

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(a) A heavy repayment schedule arising during the first two years as a result of funds advanced for the purchase of nonrecoverable goods.

(b) The necessity of meeting heavy repayments of old debts during the first 2 years.

(c) The beginning of the borrower's farm operations under the Farm and Home Management Plan at a season of the year when cash income therefrom will be largely deferred for a period in excess of 12 months.

(d) The necessity of devoting the first year to soil improvement or other activities on which the major returns to the borrower will be deferred.*+ [Pars. 4d, 4e]

303.26 Notes and security. All loans made under this subpart will be evidenced by one or more promissory notes payable to the United States of America: Either by one or more notes in the full amount of the approved Loan Agreement, if said amount is to be paid in one advance; or by one or more notes in the amount of each advance, if the amount of the approved Loan Agreement is to be paid in two or more advances. The terms of repayment of each note shall be made to coincide with the schedule of repayments in the Loan Agreement. Advances to a client may be made in one payment or in a series of payments not to exceed four in number, timed as nearly as is practicable to the date(s) when the money will be actually needed by him. In those instances in which the full amount of the loan or a portion thereof is paid to a client in advance of the date actually needed by him, the county rural rehabilitation supervisor may, when he deems it necessary to provide assurance that the funds will be used for the purposes set forth in the Loan Agreement, require that the unused portion of the check be deposited in a bank to the credit of the borrower, subject to withdrawal with countersignature by the county rural rehabilitation supervisor. Banks in which such funds are deposited shall have their deposits insured by the Federal Deposit Insurance Corporation. In such cases, agreements of joint control shall be entered into by the client, the bank, and the county rural rehabilitation supervisor on Form FSA-RR 167, Deposit Agreement. Upon the approval of the Solicitor this form may be modified by the regional attorney to meet local conditions.

Loans for recoverable goods will be secured in the full amount of the loan by a chattel mortgage or similar lien on the property to be acquired by the borrower from the proceeds of the loan, and may be further secured by an assignment of the proceeds from the sale of farm, dairy or other livestock products, and/or by a chattel mortgage, crop lien or other similar lien on all or any part of the other chattels owned by the borrower, and/or by a mortgage or similar lien on all or any part of any real property owned by the borrower. (When the proceeds from a loan for recoverable goods are to be used in minor part for purposes 2 to acquire property which, by reason

2

These purposes concern the construction and major repairs of buildings and fences or other farm improvements essential to the successful operation of the approved Farm and Home Management Plan and the rehabilitation of the family.

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**For statutory and source citations, see no

to $ 303.21.

of local law or by reason of the use to which such property is put, becomes real property, the regional director may waive the requirement of a mortgage on such real property so acquired in cases where the full amount of the loan can be adequately secured by a chattel mortgage or similar lien on the other property to be acquired by the borrower from the proceeds of the loan and by any or all of the following types of security: An assignment of the proceeds from the sale of farm, dairy or other livestock products; a chattel mortgage, crop lien or other similar lien on all or any part of the other chattels owned by the borrower.)

Loans for nonrecoverable goods will be secured in the full amount of the loan by a chattel mortgage or similar lien on all chattels owned by the borrower or to be acquired by him from the proceeds of the loan, or by an assignment of the proceeds from the sale of farm, dairy, or other livestock products and/or crops or any part of such chattels or crops, and/or by a mortgage or similar lien on all or any part of any real property owned by the borrower.

Where the local law or the individual situation of the borrower makes a different form or type of security more desirable, the regional director may, upon the advice of the Solicitor and approval of the Administrator, prescribe a different type or form of security.

It is the policy of the Farm Security Administration to take a first lien on property which is adequate to secure all new loans and renewals of loans, but in those areas where local statutes make it impossible to secure a first lien on crops, the best lien obtainable will be taken. Where it is possible to segregate crops by definition or description to insure subsequent identification, a first lien will be taken on a part of the crops if legally permissible.

Where loans are to be made for purposes such that local statutes require taking a mortgage on real estate instead of on chattels, and where all the real estate of the borrower is encumbered by a first mortgage, a second mortgage on real estate may be taken provided this real estate is a mortgageable equity which will provide adequate security.* [Par. 4f, A.O. 41, rev. 1, Dec. 21, 1935, as amended by Supp. 2, June 8, 1936, and Supp. 7, Sept. 7, 1937]

Cross REFERENCE: For Federal Deposit Insurance Corporation, see 12 CFR Chapter III.

303.27 Recording and filing of securing documents. Borrowers from the Farm Security Administration are required to pay costs incident to the recording or filing of mortgages, liens or other legal instruments given by them to secure loans made to them under the provisions of this subpart. Rural rehabilitation supervisors, at the time of delivery of checks covering advances made on loans to borrowers of the Farm Security Administration, will collect from such borrowers the cost of recording or filing mortgages, liens or other legal instruments given by the borrowers to secure loans made to them. Rural rehabilitation supervisors will be responsible for recording and filing legal documents within the time limitations set forth under prevailing local statutes.** [Par. 5]

303.28 Encumbrances and creditors. When any of a borrower's personal property is encumbered in an amount and at interest rates

**For statutory and source citations, see note to 303.21.

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(699)

a

not excessive in view of current local values and interest rates, a loan will not be made to discharge such encumbrance. When a borrower's personal property is mortgaged in an excessive amount or at excessive interest rates, adjustment with the creditors must precede a loan; a loan otherwise proper may be made to pay off such mortgage in an amount not in excess of the current commercial value of the property. No loan will be made which will result in the payment of otherwise uncollectible debts.** [Par. 6]

303.29 Administrative authorization. (a) Regional directors are authorized to exercise discretion as to whether a loan made for purposes with different maximum periods of repayment will be composed into one loan or whether two separate loan agreements will be made to cover each different maximum period.

(b) Regional directors are authorized to make loans (up to $5000) as provided in this subpart, and to execute legal instruments and perform functions listed as follows in connection with making and discharging such loans on behalf of the Farm Security Administration: (À regional director in executing such legal instruments will sign the name of the Administrator of the Farm Security Administration and directly thereunder his own name preceded by the word “By", and followed by his title as "Regional Director".)o (1) Sign affidavits and acknowledgments relating to chattel mortgages, crop mortgages, and similar instruments; (2) sign cancelations of notes and receipts for full payment thereof, and issue satisfactions and cancelations of chattel mortgages, crop mortgages, real estate mortgages, and similar instruments; (3) give and sign such written permissions and notices as may be required by the terms of given instruments or by local law; (4) act as attorney-in-fact to execute, acknowledge, deliver and record chattel mortgages, crop mortgages, and real estate mortgages or similar instruments, and to record satisfactions and cancelations of such instruments; (5) accept and record any waiver of lien and any nondisturbance agreement obtained by the Farm Security Administration from any creditor of any borrower from the Farm Security Administration; (6) execute releases of such mortgages or other instruments of security as have been, or may be, pledged with the Farm Security Administration by a state rural rehabilitation corporation when the corporation client has paid off the note or notes secured thereby; return notes or other evidence of the indebtedness of a corporation client when the Farm Security Administration loan which they evidence has been paid; and execute assignments of security back to the state rural rehabilitation corporation in those instances where no advances have been made by the Farm Security Administration; and (7) renew or extend the time of payment of notes, subject to the terms and conditions of new loans, when such instruments were originally delivered to the Farm Security Administration by the makers thereof or when the instruments have been assigned to the Farm Security Administration by the holders thereof.** [Pars. 7a, 7b]

303.30 Delegation of authority. Regional directors are authorized to delegate to assistant regional directors in charge of rural

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**For statutory and source citations, see note to 8 303.21.

rehabilitation and/or to regional chiefs of Loan and Collections sections the authority granted to them in 8 303.29 except that the authority to approve loans exceeding one thousand dollars ($1000) and not exceeding two thousand dollars ($2000) is reserved to regional directors and may be delegated by them to assistant regional directors in charge of rural rehabilitation, or in the absence of the latter, to regional chiefs of Loan and Collections sections for stated periods covering such absences. Loans exceeding two thousand dollars ($2000) and not exceeding five thousand dollars ($5000) must be approved personally by the regional director or by an assistant regional director who has been properly designated in writing by the regional director to act for him during his temporary absence. (Such designee will sign documents with his own signature and will place under his name, "For the Regional Director"). All loans exceeding five thousand dollars ($5000) will be submitted to the Administrator for approval.

Regional directors may delegate to State rural rehabilitation directors, assistant State rural rehabilitation directors, and district and county rural rehabilitation supervisors, the authority specified in 8 303.29 (b) (1), (3), (4), and (5).

All such delegation and redelegation of authority must be made in writing, designating by name, title, and address the delegatee, and specifying the authority granted, and the same will be made a matter of record. When authority is delegated under this subpart to an assistant regional director designated to act for the regional director, a State rural rehabilitation director, an assistant regional director in charge of rural rehabilitation and/or a regional chief of a Loan and Collections section, a signed copy of the delegation of authority will be made available to the regional Finance and Control manager:

All authority hereafter delegated, under the provisions of this subpart, by regional directors to assistant regional directors in charge of rural rehabilitation, State rural rehabilitation directors, assistant State rural rehabilitation directors, regional chiefs of Loan and Collections sections, and district and county rural rehabilitation supervisors, will be exercised by such delegatees, subject to the limitations and conditions contained in this subpart and in other applicable orders and instructions of the_Farm Security Administration.* [Pars. 70, 70, 7e, A.O. 41, rev. 1, Dec. 21, 1935, as amended by Supp. 8, Sept. 15, 1937, 2 F.R. 1971]

SUBPART-LOANS TO INDIVIDUALS FOR EMERGENCY REHABILITA

TION NEEDS

303.46 General policies. It is the policy of the Farm Security Administration:

To make eligible destitute and low-income farm families self-supporting on a basis consistent with acceptable standards and local conditions by means of loans based upon Farm and Home Management Plans as outlined in $$ 303.21-303.30.

*For statutory citation, see note to 8 303.21.

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