Establishing a supervised bank account.

CFR · 2024-01-01 · US · Title 7

(a) Supervised bank accounts will be used to: (1) Assure correct use of funds are planned and released for capital purchases, construction projects, site development work, debt refinancing, or proceeds from the sale of basic security, and perfection of the Agency's security interest in assets purchased or refinanced when electronic funds transfer or treasury check processes are not practicable; (2) Protect the Agency's security interest in insurance indemnities or other loss compensation resulting from loss or damage to loan security; or (3) Assist borrowers with limited financial skills with cash management, subject to the following conditions: (i) Use of a supervised bank for this purpose will be temporary and infrequent; (ii) The need for a supervised bank account in this situation will be determined on a case-by-case basis; and (iii) The borrower agrees to the use of a supervised bank account for this purpose by executing the deposit agreement. (b) The borrower may select the financial institution in which the account will be established, provided the institution is Federally insured. If the borrower does not select an institution, the Agency will choose one. (c) Only one supervised bank account will be established for any borrower. (d) If both spouses sign an FLP note and security agreement, the supervised bank account will be established as a joint tenancy account with right of survivorship from which either borrower can withdraw funds. (e) If the funds to be deposited

official document · source cfr-2024 · id 7:§ 761.51