Subordinations or junior liens against security property.

CFR · 2024-01-01 · US · Title 7

(a) (1) If a lien is placed against property serving as security for an Agency loan without prior Agency consent, the Agency will declare the borrower to be in default and will pursue liquidation of the borrower's loans in accordance with the procedures specified in § 3560.457, unless an agreement can be reached between the borrower and the Agency to work out removal of the lien or post approve the lien. (2) Subordinations or junior liens need not encompass the entire site, (e.g., a subordination or junior lien requested to permit an interim lender to advance construction funds may only cover the portion of the site proposed for construction.) (3) The subordination or junior lien must be for a specific amount. (4) The subordination or junior lien must not adversely impact the Agency's ability to service the loan according to the requirements of this part. (b) (1) The action will enable the borrower to obtain financial resources for improvements or repairs on the security property that are consistent with the purposes of the Agency loan secured by the property. (2) The action will not adversely impact the borrower's financial condition and the borrower's ability to repay the Agency loan being secured by the property. (3) The action will not result in basic rents at the security property that exceed conventional rents for comparable units in the area. (4) The terms and conditions of the credit to be secured by the subordination or junior lien are not expected to adversely affec

official document · source cfr-2024 · id 7:§ 3560.409