Security requirements.

CFR · 2024-01-01 · US · Title 7

(a) (2) The lender will obtain a lien on additional security when necessary to protect the Agency's interest. (b) (2) The lender may not require compensating balances or certificates of deposit as means of eliminating the lender's exposure on the unguaranteed portion of the loan or line of credit. However, compensating balances or certificates of deposit as otherwise used in the ordinary course of business are allowed for both the guaranteed and unguaranteed portions. (c) (d) (2) For loans with terms greater than 7 years, a lien must be taken on real estate. (3) Loans can be secured by a mortgage on leasehold properties if the lease has a negotiable value and is subject to being mortgaged. (4) The lender or Agency may require additional personal and corporate guarantees to adequately secure the loan. These guarantees are separate from, and in addition to, the personal obligations arising from members of an entity signing the note as individuals. (e) (1) Any chattel-secured guaranteed loan must have a higher lien priority (including purchase money interest) than an unguaranteed loan secured by the same chattels and held by the same lender. (2) Junior lien positions are acceptable only if the total amount of debt with liens on the security, including the debt in junior lien position, is less than or equal to 85 percent of the value of the security. Junior liens on crops or livestock products will not be relied upon for security unless the lender is involved in multiple guarante

official document · source cfr-2024 · id 7:§ 762.126