[Code of Federal Regulations]

[Title 7, Volume 14]

[Revised as of January 1, 2007]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR1965.25]



[Page 300]

 

                          TITLE 7--AGRICULTURE

 

   CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS--COOPERATIVE 

SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT OF 

                         AGRICULTURE (CONTINUED)

 

PART 1965_REAL PROPERTY--Table of Contents

 

Subpart A_Servicing of Real Estate Security for Farm Loan Programs Loans 

                       and Certain Note-Only Cases

 

Sec.  1965.25  Release of FmHA or its successor agency under Public Law 



103-354 mortgage without monetary consideration in certain cases.



    (a) Additional real estate security owned by an entity member(s). 

Real estate owned by a member(s) of an entity-borrower, which was taken 

as additional security for a loan secured by real estate, may be 

released if it is needed for the entity member(s) to finance a separate 

operation and the remaining real estate adequately secures the entity 

loan(s). A release will not be considered if a subordination can be 

approved for the same purpose. The County Supervisor will document in 

the case file why a subordination is not feasible.

    (b) Release of real estate from mortgage because of mutual mistake. 

Land or buildings included in the mortgage through mutual mistake, when 

substantiated by the facts of the situation, may be released from the 

mortgage by the State Director. The release is contingent on a 

determination of the State Director, with the advice of the OGC, that a 

mutual error existed at the time such property was included in the 

Government's mortgage.

    (c) No evidence of indebtedness. The FmHA or its successor agency 

under Public Law 103-354 mortgage may be released by the County 

Supervisor in situations where there is no evidence of an existing 

indebtedness secured by the mortgage in the records of the FmHA or its 

successor agency under Public Law 103-354 County, State, and Finance 

Offices.

    (d) Release of valueless liens. State Directors are authorized to 

release FmHA or its successor agency under Public Law 103-354 mortgages 

or other liens when the mortgages or liens have no present or 

prospective value or when their enforcement would likely be ineffectual 

or uneconomical. This includes release of a junior lien on the 

borrower's dwelling financed with an SFH loan and located on a nonfarm 

tract when the junior lien was taken as additional security for a Farmer 

Program loan(s). This authority does not extend to valueless judgment 

liens or valueless statutory redemption rights except with the consent 

of the OGC. The following information will be obtained in determining 

present or prospective value:

    (1) Appraisal report. A market value appraisal report on the 

security prepared by an FmHA or its successor agency under Public Law 

103-354 employee authorized to appraise under Sec.  761.7 of this title.

    (2) Lienholders. The names of the holders of prior liens on the 

property, the amount secured by each lien which is prior to the FmHA or 

its successor agency under Public Law 103-354, the amount of taxes or 

assessments, and other items which might constitute a prior claim. This 

information will be recorded in the running case record of the 

borrower's County Office case folder and submitted to the State Director 

for review.



[51 FR 4140, Feb. 3, 1986, as amended at 53 FR 35795, Sept. 14, 1988; 56 

FR 15830, Apr. 18, 1991; 57 FR 18681, Apr. 30, 1992; 58 FR 44752, Aug. 

25, 1993; 64 FR 62569, Nov. 17, 1999]