Borrower actions requiring RHS approval.

CFR · 2024-01-01 · US · Title 7

(a) (1) If the proposed activity is likely to decrease the value of the security property, RHS may consent to the lease only if the borrower assigns 100 percent of the income from the lease to RHS to be applied to reduce principal and the rent to be paid is at least equal to the estimated decrease in the market value of the security. (2) If the proposed activity is not likely to decrease the value of the security property, RHS may consent to the lease if the borrower agrees to use any damage compensation received from the lessee to repair damage to the site or dwelling, or to assign it to RHS to be applied to reduce principal. (b) (1) When it is in the best interest of the Government, subordination will be permitted if: (i) The other lender will verify that the funds will be used for purposes for which an RHS loan could be made; (ii) The prior lien debt will be on terms and conditions that the borrower can reasonably be expected to meet without jeopardizing repayment of the RHS indebtedness; (iii) Any proposed development will be planned and performed in accordance with 7 CFR part 1924, subpart A or directed by the other lender in a manner which is consistent with that subpart; and (iv) An agreement is obtained in writing from the prior lienholder providing that at least 30 days prior written notice will be given to RHS before action to foreclose on the prior lien is initiated. (2) The total amount of debt permitted when RHS subordinates its interests depends on whether the b

official document · source cfr-2024 · id 7:§ 3550.159