Subordination of security.

CFR · 2024-01-01 · US · Title 7

When a borrower requests Rural Development to subordinate a security instrument so that another creditor or (a) (1) The request must be for subordination of a specific amount of the Rural Development indebtedness. (2) It must be determined that the borrower cannot refinance its Rural Development debt in accordance with subpart F of part 1951 of this chapter. (3) The transaction will further the purposes for which the Rural Development loan was made, not adversely affect the borrower's debt-paying ability, and result in the Rural Development debt being adequately secured. (4) The terms and conditions of the prior lien will be such that the borrower can reasonably be expected to meet them as well as the requirements of all other debts. (5) Any proposed development work will be planned and performed according to § 1942.18 of subpart A of part 1942 of this chapter or in a manner directed by the creditor which reasonably attains the objectives of that section. (6) All contracts, pay estimates, and change orders will be reviewed and concurred in by the State Director. (7) In cases involving land purchase, the Rural Development will obtain a mortgage on the purchased land. (8) When the transaction involves more than $10,000 or the approval official considers it necessary, a present market value appraisal report will be obtained. However, a new report need not be obtained if there is an appraisal report not over one year old which permits a proper determination of the present market

official document · source cfr-2024 · id 7:§ 1951.222