Rule2026-18164
Driving Efficiency in Farm Loan Delivery
Primary source
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Published
September 4, 2026
Effective
October 1, 2026
Issuing agencies
Agriculture DepartmentFarm Service Agency
Abstract
The Farm Service Agency (FSA) is amending the Farm Loan Program (FLP) regulations to permanently implement the Application Fast Track (AFT) process, which expedites underwriting for certain direct loan applicants by using financial benchmarks and historical repayment data to identify applicants least likely to default. This rule also includes regulatory changes intended to improve program efficiency and support IT modernization efforts consisting of minor policy changes, clarifications, and technical corrections. These changes are part of FSA's ongoing effort to deliver farmer-focused programs in the most efficient and cost-effective manner possible.
Full Text
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<title>Federal Register, Volume 91 Issue 171 (Friday, September 4, 2026)</title>
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[Federal Register Volume 91, Number 171 (Friday, September 4, 2026)]
[Rules and Regulations]
[Pages 56741-56775]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-18164]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 91, No. 171 / Friday, September 4, 2026 /
Rules and Regulations
[[Page 56741]]
DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Parts 761, 762, 763, 764, 765, 766, 767, 768, 770, 772, 773,
774
[Docket No. FSA-2026-0463]
RIN 0560-AI89
Driving Efficiency in Farm Loan Delivery
AGENCY: Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: The Farm Service Agency (FSA) is amending the Farm Loan
Program (FLP) regulations to permanently implement the Application Fast
Track (AFT) process, which expedites underwriting for certain direct
loan applicants by using financial benchmarks and historical repayment
data to identify applicants least likely to default. This rule also
includes regulatory changes intended to improve program efficiency and
support IT modernization efforts consisting of minor policy changes,
clarifications, and technical corrections. These changes are part of
FSA's ongoing effort to deliver farmer-focused programs in the most
efficient and cost-effective manner possible.
DATES: Effective date: October 1, 2026.
FOR FURTHER INFORMATION CONTACT: Matthew Henderson; telephone: (202)
720-5847; email: <a href="/cdn-cgi/l/email-protection#0865697c7c606d7f26606d666c6d7a7b67663a487d7b6c69266f677e"><span class="__cf_email__" data-cfemail="81ece0f5f5e9e4f6afe9e4efe5e4f3f2eeefb3c1f4f2e5e0afe6eef7">[email protected]</span></a>. Individuals who require
alternative means of communication should contact the USDA Target
Center at (202) 720-2600 (voice and text telephone (TTY)) or dial 711
for Telecommunications Relay Service (both voice and text telephone
users can initiate this call from any telephone).
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. AFT Implementation
III. IT Modernization
IV. Other Regulatory Changes
A. Minor Policy Changes Limited to Direct Loans
1. Age of Real Estate Appraisals for Direct Loans
2. Repayment Terms for Direct Loans
3. Borrower Training Provisions
4. Conversion of EM Loans to Non-Program Rates and Terms
5. Limited Resource Reviews
6. Direct Loan Subordinations
7. Appraisals for Security Released Without Compensation
8. Certified Mailing Requirements
9. Request To Extend Balloon Installment
10. Real Estate Evaluations and Related Definitions
B. Minor Policy Changes Limited to Guaranteed Loans
1. Delegated Authority for Certain Guaranteed Lenders
2. Concurrence Requirements for Unguaranteed Loans or Advances
3. Annual Analyses for Guaranteed Loans
4. Real Estate Evaluations for Guaranteed Loans
C. Minor Policy Changes Affecting Both Direct and Guaranteed
Loans
1. Crop Insurance Requirements
D. Clarifications and Technical Corrections Limited to Direct
Loans
1. Farm Assessments
2. Additional Security for Direct FO Loans
3. Youth Loan Clarification
4. Direct OL Security
5. Application of Loan Payment Proceeds
6. Deferred, Non-Capitalized Interest
7. Releases Without Compensation
8. Updates to Form FSA-2510
9. Removal of Obsolete Net Recovery Buyout Recapture Agreements
10. Unauthorized Assistance Clarification
11. Equitable Relief
12. Removal of Obsolete Provisions
E. Clarifications and Technical Corrections Limited to
Guaranteed Loans
1. Definition of Adequate Security
F. Clarifications and Technical Corrections Affecting Both
Direct and Guaranteed Loans
1. Delegation of Authority for FSA Employees
2. Updates to CFR References
3. References to Chattel Property
4. Definitions of Administrative Appraisal Review, Market Value,
and Potential Liquidation Value
V. Regulatory Analyses
A. Notice and Comment and Effective Date
B. Executive Orders 12866, 13563, and 14192
C. Environmental Review
D. Executive Order 13175
E. Unfunded Mandates Reform Act
F. Paperwork Reduction Act Requirements
G. E-Government Act Compliance
I. Background
FSA makes and services direct and guaranteed loans to farmers and
ranchers who are unable to obtain sufficient commercial credit at
reasonable rates and terms. FSA also provides direct loan borrowers
with credit counseling and supervision to help improve their financial
management and increase their likelihood of success. FSA loan
applicants typically include:
<bullet> Beginning farmers who do not yet meet commercial lenders'
underwriting requirements; and
<bullet> Established farmers who have experienced financial
setbacks due to natural disasters or other economic conditions.
FSA loans are tailored to meet the specific needs of farmers and
may be used to purchase personal property, acquire farmland, finance
agricultural production, or address other operational needs. The
Consolidated Farm and Rural Development Act (CONACT, Pub. L. 87-128, as
amended; 7 U.S.C. 1921-2009cc-18) provides the authority for most FLP
loans, including farm ownership (FO), operating (OL), and emergency
(EM) loans.
In August 2023, FSA launched the AFT pilot program to provide
expedited loan processing for low-risk direct loan applicants (88 FR
51260-51265). FSA extended the pilot on September 30, 2024 (89 FR
79504), and again on December 31, 2025 (90 FR 61362). AFT offers an
alternative underwriting process for applicants who meet specified
financial benchmarks and have a favorable repayment history, enabling
accelerated application processing. The pilot initially operated in 166
service centers and was subsequently expanded; AFT has been available
to all qualifying customers nationwide since January 1, 2024. The AFT
pilot has substantially improved processing times for all customers
without any notable impact on portfolio performance or loan repayment.
During the pilot period from August 2023 through the present time, an
average of 23 percent of direct loan customers qualified for AFT, and
application processing time for those customers decreased by
approximately 8 calendar days. These efficiencies translate into an
estimated annual savings of 58,000 staff hours, allowing staff to
devote additional time to assisting other applicants.
This rule permanently implements AFT and makes other regulatory
[[Page 56742]]
changes as part of FSA's ongoing efforts to improve the timeliness and
efficiency of program delivery. This action represents a step in FSA's
broader initiative to deliver assistance to farmers and ranchers more
efficiently.
This rule also facilitates IT modernization efforts for guaranteed
loans and makes other regulatory changes to reduce administrative
burdens, improve program access, and enhance overall program
efficiency. The regulatory changes are organized into two groups: (1)
minor policy changes; and (2) clarifications and technical corrections.
Each group includes changes that apply only to direct loans, only to
guaranteed loans, or to both direct and guaranteed loans.
Most of the regulatory changes in this rule do not substantially
alter existing policy and are anticipated to affect a relatively small
number of farmers. However, some changes are more substantial and will
affect many direct and guaranteed loan customers. These changes include
provisions that grant delegated authority to certain guaranteed
lenders, clarify direct loan collateral valuation policies, and
facilitate improvements to loan servicing processes. The delegated
authority provisions streamline the process for preferred lenders--who
are the most experienced and highest-performing participants in the
guaranteed loan program--to obtain an FSA loan guarantee. The
clarifications to collateral valuation for direct loans ensure that FSA
loans remain adequately secured while reducing the time required to
close loans. The loan servicing updates ensure that flexibilities
related to direct loan collateral subordinations (subordination allows
another lender to be paid before the Government in the event of
liquidation) remain available to producers who fully comply with their
loan agreements, while still protecting the Government's security
interest.
The CONACT requires that all FLP applicants and loans meet
specified eligibility, security, and feasibility requirements. This
rule ensures that FLP regulations remain aligned with the CONACT while
reflecting producer needs and modernizing underwriting standards.
Although many of the changes in this rule are technical corrections or
clarifications, this rule also includes minor FLP policy updates that
respond to customer needs and incorporate modernized processes that
more closely align with commercial agricultural lending practices.
Throughout this rule, any reference to ``farm'' or ``farmer'' also
includes ``ranch'' or ``rancher,'' respectively.
II. AFT Implementation
FSA developed and piloted AFT, which uses data analytics to improve
loan-making efficiencies. AFT uses a hybrid approach modeled after
scoring tools used by commercial lenders and is designed to improve
processing times for applicants who demonstrate low expected default
risk based on specific financial benchmarking criteria and favorable
repayment history.
To develop AFT, FSA analyzed hundreds of financial variables
associated with over 100,000 direct loans to identify the common
characteristics of borrowers with strong repayment histories. A
streamlined approach was developed to determine which financial
variables are most consistently associated with borrowers who exhibit
strong repayment performance, while remaining consistent with FSA's
business process constraints. These financial variables were used to
develop a statistical regression model and a scoring tool to identify
applicants with the highest probability of successful loan repayment.
The model identified 24 percent of all direct loan applicants as
eligible for AFT.
The AFT scoring tool does not use projected cash flow data. For
applicants who meet or exceed the minimum AFT scoring threshold, the
scoring tool provides sufficient assurance of the applicant's ability
to repay. All applicants must still submit a cash flow budget. However,
for those applicants later approved through the AFT process, FSA staff
are not required to conduct the traditional manual verification of
projected income and expenses associated with conventional projected
cash flow analysis.
The absence of a cash flow analysis by FSA requires loans approved
through AFT to have equally amortized installments after the first
year, as a detailed cash flow analysis would otherwise be necessary to
justify additional unequal installments. Loans approved through AFT are
also limited to FSA's standard interest rates for the respective loan
program, including the joint financing rates as provided in 7 CFR
764.154(a)(3), and are not eligible for further subsidized, limited
resource interest rates. Since AFT is designed for the highest-
performing borrowers, these standard rates and terms generally provide
sufficient opportunity to build an adequate equity base. However,
borrowers who believe they need additional unequal installments or
limited resource interest rates may opt out of having their request
processed through AFT, which makes those flexible options available to
them.
This rule incorporates AFT into FSA's regulations, ensuring that
FSA can continue offering this type of alternative underwriting process
to applicants who meet established financial benchmarks. The types of
loan transactions eligible for AFT are specified in 7 CFR 764.401 and
include all loan transactions other than EM, youth loans (YL), and
loans made in conjunction with other servicing actions. Formalizing AFT
through regulation will not affect application submission requirements,
eligibility requirements, authorized loan purposes, or security
requirements for direct loan applicants.
III. IT Modernization
USDA is modernizing the IT systems that support FLP to expedite
loan delivery. This multi-year effort will begin with the guaranteed
loan program and later extend to all FLP loans. The modernized system
will enable electronic submission of loan applications and supporting
documents, replacing the Agency's largely paper-based process, and will
support electronic delivery of lender notifications and other materials
that have traditionally required manual processing.
This rule makes several changes to support implementation of the
modernized IT system for guaranteed loans, including clarifying that
applications may be submitted electronically or by paper. It also
specifies that lender notifications issued during application intake
may be provided electronically or in paper form, consistent with the
method of application submission.
In addition, this rule updates regulatory provisions to allow the
electronic delivery and acceptance of loan approval documents, loan
guarantee documents, and guaranteed loan servicing documents. It also
removes prior requirements that obligated guaranteed lenders to
identify specific branches covered by their lender status. Eliminating
these requirements will support implementation of the modernized IT
system and reduce administrative burden, as lender status will now
apply to the institution as a whole.
IV. Other Regulatory Changes
In addition to making AFT permanent and facilitating IT
modernization, FSA is making discretionary regulatory changes to
clarify and amend existing processes and requirements to support
farmer-focused program delivery. FSA has determined that clarifying
[[Page 56743]]
information in the regulation will make it easier for borrowers to
understand program requirements. Certain amendments and technical
corrections do not constitute policy changes and are discussed in more
detail later in this rule. This rule also updates cross references
where necessary throughout the regulations and corrects minor
grammatical errors.
As previously outlined, the regulatory changes in this rule are
organized into two groups: (1) minor policy changes; and (2)
clarifications and technical corrections. Each group includes changes
that apply only to direct loans, only to guaranteed loans, or to both
direct and guaranteed loans. The following discussion provides
additional detail on the amendments identified as minor policy changes.
Below that, clarifications and technical corrections are discussed, in
that order.
A. Minor Policy Changes Limited to Direct Loans
1. Age of Real Estate Appraisals for Direct Loans
Under current regulations, a real estate appraisal for a direct
loan must have been completed within the previous 18 months at the time
the Agency makes an approval decision. This requirement was originally
intended to ensure that the value of real estate used to secure the
loan reflects current market information and up-to-date property
information. Appraisals for guaranteed loans, however, have
historically allowed greater flexibility regarding the age of the
appraisal.
Economic analysis shows that farm real estate values are relatively
stable over the long term, with observed fluctuations generally showing
increases rather than decreases in value. Therefore, commercial
industry practice permits the use of an older real estate appraisal
when the lender can document specific conditions related to the subject
property. For FSA guaranteed loans, lenders may already rely on a real
estate appraisal older than 18 months if: (1) the lender can document
that market conditions have remained stable or improved; (2) the
property is in the same or better condition; and (3) the property's
value has remained the same or increased.
With this rule, FSA will apply a similar policy to direct loans and
increase the acceptable age of a real estate appraisal for direct loans
in 7 CFR 761.7. Allowing the use of real estate appraisals older than
18 months old will reduce the number of new appraisals that FSA must
fund and will shorten loan processing and closing times. Before relying
on an older appraisal, the authorized Agency official must document the
three criteria listed above to ensure that the use of such appraisal
does not increase Agency risk. This rule also establishes a maximum
threshold prohibiting the use of any appraisal more than 36 months old
for direct loans. This provision is intended to support and strengthen
the Agency's risk-mitigation efforts.
2. Repayment Terms for Direct Loans
FSA regulations for most direct loan programs currently specify
that the first installment will be an interest-only payment due 12
months after loan closing, unless the loan applicant submits a written
request for an alternative repayment arrangement. FSA data indicate
that the majority of direct loan applicants request an alternative
arrangement that allows them to begin repaying loan principal within
the first 12 months after receiving their loan. Since most direct loan
applicants elect not to use the interest-only installment, FSA is
amending 7 CFR 764.154, 764.254, and 764.354 to remove the requirement
that borrowers must submit a written request if they choose not to use
an interest-only installment in the first year of a direct loan.
Interest-only installments and other flexible repayment terms will
continue to be available to borrowers. This change only removes the
written-request requirement for borrowers who choose to begin repaying
principal with their first installment or who choose to have their
first installment due less than 12 months after loan closing.
3. Borrower Training Provisions
FSA regulations generally require recipients of direct loans to
complete a financial training course within 2 years of receiving their
loan. Borrowers may request a waiver of this requirement if they have
previously completed a similar training course or can demonstrate
sufficient financial management skills and operational experience.
Currently, borrowers must request a training waiver in writing,
separate from their loan application, which creates an unnecessary
administrative burden because most FSA applicants request a waiver.
This rule removes the requirement that borrowers submit a separate
written request for a financial training waiver in 7 CFR 764.453 and
764.454. FSA will continue to evaluate each borrower's eligibility for
a waiver using the existing criteria and inform the borrower as to any
need for financial training.
4. Conversion of EM Loans to Non-Program Rates and Terms
Congress designed FSA direct loans to be a temporary source of
credit to enable farmers to start or maintain their operations until
they are able to qualify for commercial credit at reasonable rates and
terms. Consistent with this purpose, FSA periodically reviews the
financial condition of direct loan borrowers to determine whether they
are able to graduate to commercial credit. When FSA determines that a
borrower is financially capable of graduation, the borrower is required
to actively seek and apply for commercial credit to refinance their FSA
debt. Failure to do so constitutes non-monetary default.
When a borrower is in non-monetary default for failure to graduate,
FSA has allowed FO and OL borrowers to convert their loans to non-
program rates and terms to avoid acceleration and foreclosure. Non-
program rates and terms generally match those available from commercial
lenders and are not subsidized like typical FSA interest rates. As a
result, allowing a capable borrower to convert their FO or OL loans to
non-program rates and terms effectively eliminates the Government
subsidy and achieves an outcome comparable to graduation.
When this policy was originally implemented for FO and OL loans (89
FR 65020, August 8, 2024), the regulation inadvertently did not include
the corresponding amendment for EM loans in 7 CFR 765.102. This rule
corrects that omission and clarifies that EM loans may be converted to
non-program rates and terms when a borrower fails to graduate.
5. Limited Resource Reviews
FSA may offer a direct loan applicant a ``limited resource rate''
when the applicant is unable to develop a feasible farm operating plan
at the regular interest rate but can do so, with a positive cash flow,
at a lower, limited resource rate. Once a borrower receives a loan with
a limited resource rate, the Agency is required to periodically review
the borrower's financial condition to determine whether the reduced
rate continues to be needed for the operation to remain viable. A
``limited resource review'' is conducted as part of the broader
``operational review'' process, which is a structured assessment of an
existing direct loan borrower's farming operation to evaluate
compliance, efficiency, and accuracy, and requires extensive
documentation. An operational review identifies risks and corrects
operational gaps, which
[[Page 56744]]
may result in repayment or restructuring actions when necessary.
In 2025, FSA revised its administrative guidance to clarify that
operational reviews are required, for most borrowers, every 3 years. To
align the regulatory requirements with this updated guidance, this rule
amends 7 CFR 761.105 and 765.51 to change the required frequency of
limited resource reviews from every 2 years to every 3 years.
6. Direct Loan Subordinations
FSA regulations allow the Agency to subordinate its lien position
to a commercial lender to facilitate new financing for a mutual
customer in certain circumstances. The new loan may be either an FSA-
guaranteed loan or an unguaranteed commercial loan. Although many
commercial lenders are willing to provide credit to farmers who have
existing FSA direct loans, most lender policies and regulatory
standards require the lender to obtain a first lien position on the
proposed loan security. As a result, borrowers may request that FSA
subordinate its lien position in favor of the commercial lender so the
new loan can be repaid first upon sale of the loan security.
Subordination allows borrowers to access necessary additional credit
while maintaining adequate security for the FSA loan through
established safeguards that govern the circumstances in which
subordinations may be approved.
Existing regulations require borrowers requesting an FSA
subordination to a commercial lender to submit a farm operating plan
and cash flow budget and require FSA to analyze that cash flow budget
with the same level of scrutiny applied to applications for additional
direct loan funds. However, the primary consideration in evaluating
such a subordination request involves the adequacy of loan collateral
given FSA's new lien position after the subordination is executed.
Since FSA is not extending new credit, the borrower's repayment
schedule for their FSA loan(s) remains the same. Additionally,
commercial lenders extending the new credit are required to
independently verify the borrower's repayment capacity to service the
new debt. Therefore, any additional cash flow analysis by FSA is
redundant and unnecessary.
This rule removes the requirement for direct loan borrowers to
submit, and for FSA to conduct, a financial feasibility review of a
separate cash flow projection and farm operating plan when a direct
loan subordination is requested in 7 CFR 761.105 and 765.205. All other
requirements for direct loan subordinations will remain unchanged,
including, but not limited to, the stipulations that the borrower is
not in default on their FSA loan and that FSA has verified that the FLP
loan will remain adequately secured after the subordination.
7. Appraisals for Security Released Without Compensation
When a borrower requests the release of a portion of loan security
``without compensation,'' FSA evaluates whether the loan will remain
adequately secured. The term ``without compensation'' refers to
situations in which FSA releases its claim on a portion of the
collateral without requiring the borrower to make a payment to FSA in
exchange for that release. FSA typically appraises the property that
will remain as security to verify that its market value is sufficient
to secure the remaining balance of the FSA loan.
FSA is removing the requirement to appraise the property being
released because its value is not relevant to decisions on releases
without compensation. The appraisal or evaluation of remaining
collateral will continue, as it provides the basis for determining
whether the loan remains adequately secured. Valuation of the property
being released will still be required when compensation is involved to
ensure that the compensation received by the borrower reflects fair
market value. FSA is removing this non-essential appraisal requirement
for releases without compensation in 7 CFR 765.305 and 765.351 to
reduce administrative burden and appraisal costs.
8. Certified Mailing Requirements
Section 331D of the CONACT (7 U.S.C. 1981d) requires FSA to provide
loan servicing notifications by certified mail to borrowers who are at
least 90 days past due on their installments. However, FSA's
implementing regulations at 7 CFR 766.101 require certified mail for
primary loan servicing notices for all delinquent borrowers, including
those less than 90 days past due.
Because certified mail is more costly and may require additional
processing time compared to other delivery methods that also provide
confirmation of receipt, FSA is revising 7 CFR 766.101 to require
certified mail only when specifically required by statute--that is, for
borrowers 90 days or more past due. This change will improve efficiency
and reduce costs. Borrowers who are less than 90 days past due will
continue to receive timely loan servicing notifications via delivery
methods other than certified mail, and no other loan servicing
notification requirements are being changed.
9. Request To Extend Balloon Installment
In 7 CFR 766.120, FSA provides direct loan borrowers the
opportunity to extend an upcoming balloon installment outside of the
primary loan servicing process when certain requirements are met,
including that the loan be current. FSA has received requests for
balloon installment extensions so close to the due date that the Agency
is unable to process the transaction before the installment becomes
past due. Therefore, to qualify for this quick restructure option, a
borrower must now submit the request no later than 30 days prior to the
balloon installment due date. Borrowers who submit a request less than
30 days before the installment due date may still be eligible to have
the balloon installment restructured; however, they will not be able to
use the quick restructure option and will instead be required to use
the traditional primary loan servicing procedure, which is a lengthier
process.
10. Real Estate Evaluations and Related Definitions
Establishing the value of proposed real estate security is a key
component of the loan approval process. FSA seeks to ensure that the
value of the real estate pledged as collateral is at least equal to the
loan amount to ensure that adequate proceeds will be available to repay
the loan in full if it cannot be repaid through cash flow and the
collateral must be liquidated. In many cases, FSA is also required,
when additional security is available, to obtain security for direct
loans up to 125 percent of the loan amount to account for potential
fluctuations in the value of collateral over time. For clarity,
collateral refers to the physical asset, such as farmland, pledged for
the loan, while security refers to the lender's legal interest or lien
on that asset.
Real estate collateral value is typically established through a
formal appraisal conducted by a State Certified General Appraiser in
accordance with the Uniform Standards of Professional Appraisal
Practice (USPAP). Although FSA employs staff appraisers throughout the
country, demand for appraisals exceeds internal capacity, and most
appraisals are obtained by contracting with private sector appraisers.
The average real estate appraisal contracted by FSA costs between
$2,000 and $3,000 and is completed
[[Page 56745]]
approximately 30 to 45 days after FSA initiates the request. These
costs are paid by FSA and require annual appropriations from Congress.
Producers frequently express concerns about the length of time required
to receive a direct FO loan for the purchase of real estate partially
due to the length of the appraisal process. In some cases, the time
between the submission of a loan application and closing may exceed 90
days.
OMB Circular A-129 (Revised), Policies for Federal Credit Programs
and Non-Tax Receivables (Office of Management and Budget, August 2025),
provides guidance on the valuation of collateral. For many years, this
circular has permitted Federal agencies to use a less formal real
estate evaluation for smaller loans instead of a full appraisal.
Evaluations are conducted by individuals trained to assess real estate
value but who are not licensed appraisers. FSA has used evaluations for
microloans of up to $50,000 to expedite loan closing and has not
experienced increased losses attributable to the use of evaluations
instead of appraisals.
OMB updated circular A-129 in 2025 to increase the dollar
thresholds at which agencies must obtain a formal appraisal: to over
$500,000 for commercial real estate transactions and over $250,000 for
business loans. Previously, the circular established a $250,000
threshold for business loans but did not separately address commercial
real estate transactions. This rule updates 7 CFR 761.7 to align with
the revised OMB guidance, allowing FSA to use real estate evaluations
instead of an appraisal for business loans of $250,000 or less and for
commercial real estate transactions of $500,000 or less. Applicants and
borrowers will retain the right to appeal the Agency's real estate
evaluation if it leads to an adverse decision, consistent with appeals
procedures applicable to formal real estate appraisals. These changes
will allow FSA to reduce the time to loan closing for many direct FO
loans and result in cost savings to taxpayers.
This rule also adds definitions related to real estate evaluations
in 7 CFR 761.2. In developing definitions for ``business loan'' and
``commercial real estate transaction'', FSA reviewed definitions used
by commercial lending regulators, including the Farm Credit
Administration (FCA) and the Federal Deposit Insurance Corporation
(FDIC). Generally, OLs correspond to business loans and FOs correspond
to commercial real estate transactions. The definition of ``commercial
real estate transaction'' clarifies that such transactions include most
real estate-secured loans except those secured by property that is
primarily residential. As a result, this rule will allow FSA to
complete evaluations for new FO loans with a transaction value up to
$500,000 for farm real estate containing a residence, as long as the
property is not primarily residential. EM loans with shorter terms will
generally be processed as business loans, while EM loans with longer
terms secured by real estate will generally be processed as commercial
real estate transactions. EM loans may either be short-term or long-
term depending on the nature of a producer's loss created by a natural
disaster. The expanded use of real estate evaluations will not apply to
primary loan servicing; appraisals for servicing actions will continue
to follow existing policy.
In addition to the definitions discussed above, FSA is also adding
related definitions for ``appraisal'', ``non-residential real
property'', ``real estate evaluation'', and ``real estate-related
financial transaction''. These definitions provide necessary context to
implement the changes described above.
B. Minor Policy Changes Limited to Guaranteed Loans
1. Delegated Authority for Certain Guaranteed Lenders
Federal guaranteed loan programs operate differently from direct
lending. With a guaranteed loan, the process typically begins when a
farmer or rancher applies for credit through a commercial lender. The
lender evaluates the application to determine the borrower's likelihood
of success and whether the level of risk aligns with the lender's
internal lending policies. When the risk exceeds the lender's
acceptable range, but the borrower can demonstrate a feasible operating
plan and provide adequate security, the lender may request an FSA
guarantee to offset a portion of the risk. This approach ensures access
to credit for farmers and ranchers while preventing the Government from
competing with commercial lenders through its direct loan program.
FSA partners with a wide array of lenders--including credit unions,
commercial banks, and Farm Credit organizations--to deliver Guaranteed
Farm Loan Programs. These programs assist applicants who cannot obtain
credit without a Federal guarantee. FSA guaranteed loans are intended
to facilitate the purchase of agricultural real estate, livestock,
equipment, and meet operational needs, among other authorized purposes.
Lenders participating in the Guaranteed Farm Loan Program are
assigned one of three status levels--Standard Eligible Lender (SEL),
Certified Lender Program (CLP) lender, or Preferred Lender Program
(PLP) lender--based on their experience and performance with the
guaranteed lending program. As lender status increases, FSA oversight
decreases, with PLP lenders (the highest lender status) benefitting
from the most streamlined processes that reduce documentation and
expedite loan making. Despite these efficiencies, PLP lenders have
reported inconsistencies and delays in loan processing across FSA
offices in certain cases.
Subsection 339(d)(4)(B) of the CONACT (7 U.S.C.1989(d)(4)(B))
authorizes PLP lenders to make decisions regarding borrower
creditworthiness, repayment ability, adequacy of collateral, and
operational feasibility. FSA first implemented this authority on
February 12, 1999, introducing the PLP status and allowing PLP lenders
to use their organization's internal underwriting policies subject to
FSA concurrence based on a detailed narrative summary, rather than
providing specific financial documentation (64 FR 7358-7403).
To align FSA processes with those used by other Federal agencies,
this rule relies on the statutory authority described in the preceding
paragraph to permit PLP lenders to certify that they have obtained the
specific documentation and performed the necessary analysis to
determine that an applicant meets FSA requirements for
creditworthiness, the test for credit (which examines whether the
applicant is unable to obtain sufficient credit elsewhere without a
guarantee), financial feasibility, and collateral adequacy, as
specified in 7 CFR 762.120(g) and (h), 762.125, and 762.126. FSA will
accept a lender's certification in place of the more detailed narrative
summary that has been required since 1999.
Prior to approval of a loan guarantee, FSA will continue to review
remaining requirements, including, but not limited to, applicant
eligibility (excluding creditworthiness and test for credit),
authorized loan purposes, and environmental compliance documentation.
This streamlined review is intended to reduce processing times. When
environmental requirements have been met, FSA will target approval or
rejection of complete applications submitted under this delegated
authority within 5 calendar days.
Only PLP lenders may receive delegated authority. All PLP lenders
[[Page 56746]]
that currently meet and maintain PLP status will receive delegated
authority for a period not to exceed the expiration date of their PLP
Lender's Agreement. Because PLP status is not automatically renewed,
delegated authority will also require renewal. To maintain PLP status
and delegated authority, lenders must continue to meet all initial
eligibility criteria and any additional criteria established by the
Agency.
FSA may revoke PLP status and delegated authority at any time for
several reasons, including approving loans that do not meet Agency
requirements, failure to maintain eligibility, submission of false
information, or poor portfolio performance. FSA will monitor these
factors through data analytics and a robust oversight and monitoring
process, including reviews of lender loan files. Agency administrative
guidance will establish review frequency and monitoring metrics.
Expanding delegated authority to PLP lenders at the time of loan
origination will further shift feasibility (cash flow) and security
analysis responsibilities to PLP lenders, reducing FSA workload at the
time of loan making and improving administrative efficiency. In order
to maintain program integrity, FSA will continue to thoroughly review
loss claims to ensure that guarantee requirements have been met
throughout the loan lifecycle, prior to any loss payment.
2. Concurrence Requirements for Unguaranteed Loans and Advances
Under current regulations, SEL and CLP lenders are prohibited from
making additional unguaranteed loans or advances to borrowers without
prior written approval from the Agency. PLP lenders may make these
loans or advances without Agency approval, provided the lender's
process for evaluating such requests is sufficiently documented and
incorporated into the lender's Credit Management System (CMS). The CMS
must include written requirements agreed to by FSA and the PLP lender
for originating and servicing FSA loans. If a PLP lender's CMS does not
address this subject, the lender must obtain Agency approval before
making additional unguaranteed loans or advances.
These requirements have been used to ensure that any new
unguaranteed loan or advance does not adversely affect the collateral
position supporting FSA's guaranteed loan or impair the borrower's
ability to repay the FSA guaranteed loan. However, commercial lenders
are already required by their regulators to conduct a comparable
analysis, and FSA rarely disagrees with PLP lender requests for
approval. As a result, portions of this process are duplicative,
provide minimal benefit, and require considerable FSA staff resources.
With this rule, FSA is updating 7 CFR 762.146 to simplify
concurrence requirements for guaranteed lenders when they are making
additional unguaranteed loans or advances. All lenders will continue to
be required to conduct the same analysis they currently perform before
making a subsequent unguaranteed loan or advance. However, lenders will
no longer be required to obtain prior written Agency approval. Instead,
lenders must document in their loan file that the requirements in 7 CFR
762.146 have been met before making the new unguaranteed loan or
advance. FSA will retain its authority to reduce or deny a lender's
loss claim due to negligent servicing. If a lender makes an
unguaranteed loan or advance after originating an FSA-guaranteed loan
and fails to perform the due diligence required by 7 CFR 762.146, FSA
may reduce or deny the lender's loss claim if the lack of due diligence
contributes to a loss on the guaranteed loan.
3. Annual Analyses for Guaranteed Loans
In 7 CFR 762.140, FSA requires all guaranteed lenders to conduct
annual analyses of their guaranteed loan borrowers, and 7 CFR 762.141
specifies the documentation that lenders must submit to FSA. The
specific loans subject to review and the documentation that must be
submitted to FSA as evidence of that analysis vary depending on the
lender's status within the Guaranteed Loan Programs. While these
reviews are important for higher-risk loans or loans that are not
performing as agreed, they provide limited benefit for lower-risk,
well-performing loans. Commercial lenders devote substantial time to
completing each analysis, and FSA staff likewise spend considerable
time reviewing them. FSA is revising these requirements to make more
efficient use of commercial lender and Agency resources while
maintaining appropriate oversight of portfolio performance.
Historically, FSA has required non-PLP lenders to complete an
annual analysis for all term loans with aggregate balances over
$100,000 and for all revolving lines of credit. With this rule, FSA is
increasing the $100,000 threshold to $500,000. As a result, non-PLP
lenders will be required to review only term loans with aggregate
balances over $500,000, all revolving lines of credit, and any loans
that are not performing as agreed.
FSA is also revising which analyses must be submitted to FSA for
further Agency review. Non-PLP lenders will now only be required to
submit analyses for revolving lines of credit and non-performing loans.
Analysis for performing term loans with aggregate balances over
$500,000 must still be completed and retained in the lender's files but
will no longer be submitted to FSA for further review. The analysis
requirements for PLP lenders will continue to be documented in, and
governed by, the lender's CMS.
FSA has historically reviewed every loss claim for compliance with
program requirements and has denied claims when lenders were found to
be out of compliance. Under the updated policy, FSA will continue to
conduct these reviews for loss claims to ensure that guarantee
requirements have been met from loan obligation through servicing
before a loss is paid. This policy change, which simplifies annual
analysis requirements for guaranteed loans in 7 CFR 762.141, does not
increase risk to the Agency. If a lender fails to conduct a required
annual analysis, and the Agency determines that lack of proper borrower
monitoring contributes to a guaranteed loan loss, the result may be a
reduction or denial of the loss claim.
4. Real Estate Evaluations for Guaranteed Loans
In 7 CFR 762.127, FSA currently allows all guaranteed lenders to
complete a real estate evaluation, in accordance with their internal
policies for similar unguaranteed loans, for transactions up to
$250,000 instead of obtaining an appraisal. This $250,000 threshold was
established prior to the 2025 update to OMB Circular A-129, which
permits evaluations for loans up to $500,000, when they are considered
commercial real estate transactions, as discussed earlier in this rule.
FSA is increasing the maximum threshold in 7 CFR 762.127 at which a
guaranteed lender may rely on a real estate evaluation rather than an
appraisal to determine the value of guaranteed loan security.
Commercial lending regulators have well-established policies that
lenders must follow to determine whether a loan is a business loan or a
commercial real estate transaction. Therefore, FSA is not providing
additional guidance to guaranteed lenders on this distinction and will
continue to require lenders to follow the requirements of their
regulator and their own internal policies when completing real estate
[[Page 56747]]
evaluations, subject to the updated maximum limit of $500,000.
C. Minor Policy Changes Affecting Both Direct and Guaranteed Loans
1. Crop Insurance Requirements
Section 371 of the CONACT (7 U.S.C. 2008f) requires recipients of
direct and guaranteed loans to obtain at least catastrophic (CAT) risk
protection insurance coverage for all crops, if available. CAT coverage
represents the lowest level of crop insurance protection. Crop
insurance requirements for guaranteed loan applicants are established
in 7 CFR 762.123, and similar requirements for direct loan applicants
are outlined in 7 CFR 764.108.
In 1996, Section 508(b)(7) of the Federal Crop Insurance Act (7
U.S.C. 1508(b)(7) (1996)) was amended to permit an FLP borrower to
forgo the crop insurance purchase requirement under 7 U.S.C. 2008f by
waiving eligibility for FSA emergency crop loss assistance. In 2014,
however, 7 U.S.C. 1508 was amended to remove the option of executing
such a waiver in lieu of obtaining crop insurance. As a result, FSA is
updating the regulations for guaranteed loans in 7 CFR 762.123 and for
direct loans in 7 CFR 764.108 to remove the option for borrowers to
execute a benefits waiver instead of purchasing crop insurance,
aligning with statutory requirements under Section 371 of the CONACT.
Moving forward, all direct and guaranteed loan borrowers will be
required to obtain crop insurance, if available, as a condition of
receiving an FSA direct or guaranteed loan.
D. Clarifications and Technical Corrections Limited to Direct Loans
1. Farm Assessments
For each direct loan application, FSA staff complete a written
assessment that documents the applicant's financial condition, the
farming operation's organizational structure, management strengths and
weaknesses, and the applicant's plan to eventually progress to
commercial credit. As FSA has implemented new types of direct loans
over the past 10-15 years, the Farm Assessment requirements in 7 CFR
761.103 have become redundant and difficult to navigate. With this
rule, FSA is simplifying the regulatory text without changing the Farm
Assessment requirements.
For example, 7 CFR 761.103 currently includes a separate subsection
addressing microloans; however, the Farm Assessment requirements for
microloans are almost identical to all other direct loans. Therefore,
this rule removes the duplicative language related to microloans and
other repetitive Farm Assessment provisions and updates the section for
clarity and simplicity.
2. Additional Security for Direct FO Loans
In 7 CFR 764.103, FSA specifies that an applicant for a direct FO
loan who is purchasing a farm is not required to provide additional
security if the applicant provides a cash down payment equal to 5
percent or more of the farm's purchase price. Under this provision, the
total amount financed, including any FSA debt, does not exceed 95
percent of the purchase price, thereby resulting in slightly less risk
to FSA than if the entire purchase was financed. For this reason, the
requirement for the applicant to obtain additional security has been
waived for applicants providing a cash down payment equal to 5 percent
or more of the farm's purchase price.
However, in some cases, the purchase price has exceeded the
appraised market value, increasing Agency risk and undermining the
intent of the provision. Therefore, FSA is amending Sec. 764.103 to
clarify that, to qualify for the waiver of additional security, total
financing provided by FSA and all other creditors may not exceed 95
percent of the purchase price or the value of the real estate,
whichever is less.
3. Youth Loan Clarification
YLs are limited to $10,000 and support agricultural projects
conducted through 4-H, Future Farmers of America (FFA), and other
similar organizations. Due to the small loan amounts and limited scope
of eligible projects, FSA has determined that YLs are not eligible for
any balloon installments or flexible repayment terms made for some of
the reasons available under other direct loan programs. Flexible
repayment terms are specifically prohibited for YLs if the intent is to
increase working capital reserves and savings, including reasonable
savings for retirement and education, which do not apply to YL
activities. However, flexible repayment terms are available for YLs if
they are needed to establish a new enterprise, develop a farm, or
recover from a disaster or economic reversal. This rule formalizes that
policy for YLs in 7 CFR 764.304.
4. Direct OL Security
Regulations require that FSA direct OL's be secured by assets with
a value at least equal to the loan amount, and FSA is required to
obtain a lien on additional security, if it is available, to reach a
security margin of 125 percent of the loan amount. A security margin
greater than 125 percent of the loan amount may be taken when assets
cannot be practicably separated or fragmented.
FSA has long determined that individual livestock within a species
cannot be practically distinguished for collateral purposes. Branding
and other identification methods such as ear tags typically establish
ownership but do not reliably differentiate one animal from another.
Consistent with industry practice, FSA therefore takes a lien on the
entire herd of the same species when livestock serves as collateral for
a loan.
Similarly, machinery and equipment used as collateral for direct
OL's are treated as inseparable, and a lien is placed on the borrower's
full line of machinery and equipment, consistent with commercial
lending practices. FSA's existing loan servicing mechanisms--such as
partial lien releases after successful repayment cycles and lien
subordination to facilitate commercial credit--ensure borrowers can
access equity in their equipment while maintaining adequate loan
security. With this rule, FSA provides additional clarity regarding
longstanding practices for non-separable collateral in 7 CFR 764.103
and 764.254. While FSA is not explicitly making this clarification in 7
CFR parts 765 or 766, FSA continues to interpret those regulations that
provide that it may not be practicable to separate the security in
conformity with this clarification of longstanding practices.
5. Application of Loan Payment Proceeds
In 7 CFR 765.153, FSA outlines the standard order for applying
regular loan payments. Agency practice sometimes allows payments to be
applied differently, and this rule clarifies that any alternative
written agreement between FSA and the borrower regarding the
application of proceeds takes precedence over the standard order.
6. Deferred, Non-Capitalized Interest
In 7 CFR 765.154, FSA identifies the types of costs and interest
that must be satisfied before payments are applied to loan principal.
This section currently references ``deferred non-capitalized
interest,'' a category which is no longer relevant because FSA no
longer defers non-capitalized interest when servicing direct loans. No
active FSA loans in the portfolio contain deferred, non-
[[Page 56748]]
capitalized interest; therefore, this rule removes the obsolete
reference.
Similarly, 7 CFR 761.403, which establishes the order of
application for voluntary and involuntary payments when all security
has been liquidated and an adjustment debt settlement is in place, also
references deferred, non-capitalized interest. This rule removes that
obsolete reference as well.
7. Releases Without Compensation
FSA currently allows direct loan security to be released
incrementally without compensation as a loan is paid down, provided the
loan is in good standing and certain conditions are met. This rule
makes two clarifications:
<bullet> Borrowers with a loan in active non-monetary default are
not eligible for a release of security without compensation.
<bullet> Borrowers must have made, in each of the last 3 calendar
years, full installments that include principal reduction no later than
90 days after their due dates. This rule clarifies the timing
requirements in Sec. Sec. 765.305 and 765.351.
8. Updates to Form FSA-2510
FSA is required to publish in regulation the notification sent to
direct loan borrowers who become 90 days past due, which outlines
available loan servicing options and next steps if the borrower chooses
not to apply for loan servicing. This rule makes minor clerical updates
to forms FSA-2510 and FSA-2510IA in Appendices A and B of subpart C of
7 CFR 766. These updates are administrative and do not change any loan
servicing provisions for delinquent borrowers.
9. Removal of Obsolete Net Recovery Buyout Recapture Agreements
Prior to July 3, 1996, the Agency was authorized to offer
delinquent borrowers the option to buy out their loans at the net
recovery value (the estimated amount a lender expects to recover from
the sale of a borrower's collateral after deducting all liquidation-
related costs). In 7 CFR 766.206, FSA outlined the requirements for
servicing the recapture agreements that resulted from these recovery
value buyouts. Because the Agency has not had authority to enter into
such agreements since 1996, these regulatory provisions are, and have
been, obsolete. Therefore, FSA is removing 7 CFR 766.206.
10. Unauthorized Assistance Clarification
If a borrower receives unauthorized assistance (a loan, or a
portion of a loan, provided to a borrower who was not eligible to
receive it) due to submission of inaccurate information or Agency
error, the borrower is generally required to repay the amount of
unauthorized assistance within 90 days of Agency notification. If the
borrower is unable to repay the unauthorized amount and did not provide
false information to the Agency, FSA may convert the loan to non-
program rates and terms to avoid acceleration and foreclosure. This
rule clarifies that when a borrower repays a portion, but not all, of
the unauthorized amount, the remaining unauthorized portion of the loan
may still be converted to non-program rates and terms if all applicable
requirements are met. Accordingly, any portion of unauthorized
assistance that the borrower is unable to repay may be converted to
non-program rates and terms in 7 CFR 766.253.
11. Equitable Relief
Section 366 of the CONACT (7 U.S.C. 2008a) allows FSA to provide
equitable relief to direct loan borrowers who acted in good faith but
became out of compliance with their loan agreements through reliance on
Agency action, inaction, or advice. This rule makes a minor
clarification to 7 CFR 768.1.
12. Removal of Obsolete Provisions
FSA is removing 7 CFR part 773, Special Apple Loan Program, which
was established to assist orchardists who produced apples on not less
than 10 acres for sale in 1999 and 2000. FSA is also removing 7 CFR
part 774, Emergency Loan for Seed Producers Program, which was created
to assist seed producers who had contracts with AgriBiotech in 1999 and
were adversely affected by the company's bankruptcy. These programs are
no longer authorized, and FSA has no remaining outstanding loans under
these parts.
E. Clarifications and Technical Corrections Limited to Guaranteed Loans
1. Definition of Adequate Security
This rule amends the definition of ``adequate security'' in Sec.
761.2 to clarify that the term applies to both direct and guaranteed
loans.
F. Clarifications and Technical Corrections Affecting Both Direct and
Guaranteed Loans
1. Delegation of Authority for FSA Employees
In 7 CFR 761.1, FSA describes how authority for administering the
Farm Loan Programs is delegated from the FSA Administrator to the FSA
Deputy Administrator for Farm Loan Programs and, in turn, how the
Deputy Administrator further delegates authority to employees at the
FSA State and County Offices. In 2024, FSA created a new position at
the State Office level--the Deputy State Executive Director--which was
not included in these existing delegations of authority. Therefore,
this rule amends the regulations to incorporate this new position and
to account for any additional positions the Agency may establish or to
which the FSA Administrator may decide to delegate authority to in the
future. These updates apply to the delegations of authority for FSA
employees in 7 CFR 761.1.
2. Updates to CFR References
FSA's regulations for documenting compliance with the National
Environmental Policy Act (NEPA) were formerly located in 7 CFR 799,
which USDA rescinded in the rule ``National Environmental Policy Act''
(90 FR 29632, July 3, 2025). That rule consolidated all USDA NEPA
regulations in 7 CFR part 1b. This rule removes obsolete references to
7 CFR 799 and replaces them with references to 7 CFR part 1b
accordingly.
3. References to Chattel Property
FSA has historically used the term ``chattel'' to describe non-real
estate assets pledged as security. Because most commercial lenders now
use the term ``personal property,'' this rule replaces all references
to ``chattel'' with ``personal property.''
4. Definitions of Administrative Appraisal Review, Market Value, and
Potential Liquidation Value
This rule makes minor revisions to several definitions in 7 CFR
761.2 related to real estate valuation. Specifically, this rule
clarifies that an ``Administrative appraisal review'' does not assess
compliance with USPAP Standards 3 and 4, updates the definition of
``Market value'' to add context on factors that influence value, and
makes a clerical correction to the definition of ``Potential
liquidation value''.
V. Regulatory Analyses
A. Notice and Comment and Effective Date
The Administrative Procedure Act (APA, 5 U.S.C. 553(a)(2)) provides
that the notice and comment and 30-day delay in the effective date
provisions of that Act do not apply when the rule involves specified
actions, including matters related to loans, grants, benefits, or
contracts. This rule governs a
[[Page 56749]]
program for loans and therefore falls within that exemption.
This rule is exempt from the regulatory analysis requirements of
the Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).
The requirements for the regulatory flexibility analysis in 5 U.S.C.
603 and 604 are specifically tied to the requirement for a proposed
rule by section 553 of the APA or any other law; in addition, the
definition of ``rule'' in 5 U.S.C. 601 is tied to the publication of a
proposed rule. The exemption under section 553 for matters related to
loans extends to the regulatory analysis requirement for this rule.
The Office of Management and Budget (OMB) has determined that this
rule does not meet the criteria in 5 U.S.C. 804(2) of the Congressional
Review Act (CRA). Under 5 U.S.C. 808(2), an agency may make a rule
effective immediately upon publication if it finds good cause. USDA
finds good cause because this rule relates to loans and delaying its
effective date would postpone benefits to American farmers and
ranchers. Therefore, USDA is not required to delay the effective date
for 60 days from the date of publication to allow for Congressional
review. Accordingly, this rule is effective on October 1, 2026.
B. Executive Orders 12866, 13563, and 14192
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Further, Executive Order 13563 emphasized the
importance of quantifying both the costs and benefits of reducing
costs, harmonizing rules, and promoting flexibility. Executive Order
14192, ``Unleashing Prosperity Through Deregulation,'' announced the
Administration policy to significantly reduce the private expenditures
required to comply with Federal regulations to secure America's
economic prosperity and national security and the highest possible
quality of life for each citizen and to alleviate unnecessary
regulatory burdens placed on the American people. In line with these
Executive Order requirements, the Agency has chosen this regulatory
approach to maximize benefits and minimize burdens on American
producers. This rule is not an Executive Order 14192 regulatory action
because it does not impose any more than de minimis regulatory costs.
The Office of Management and Budget (OMB) has designated this rule
as ``not significant'' under Executive Order 12866. Accordingly, OMB
has not reviewed this rule and an analysis of costs and benefits is not
required under either Executive Order 12866 or Executive Order 13563.
C. Environmental Review
The environmental impacts have been considered in a manner
consistent with the provisions of the National Environmental Policy Act
(NEPA, 42 U.S.C. 4321-4347) and the USDA regulation for compliance with
NEPA (7 CFR part 1b).
The actions in this rule fall within the Farm Loan Programs
categorical exclusion at 7 CFR 1b.4(c)(1)(i). No Extraordinary
Circumstances (7 CFR 1b.3(f)) exist because this rule includes only
administrative, procedural, and program-delivery updates. As such,
these regulatory updates do not constitute a major Federal action that
would significantly affect the quality of the human environment,
individually or cumulatively. Therefore, FSA will not prepare an
environmental assessment or environmental impact statement for this
rule and, consistent with 7 CFR 1b.3(g), this document serves as the
programmatic finding of applicability and no extraordinary circumstance
(FANEC). No further environmental compliance documentation is required
for implementation.
D. Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' Executive Order 13175 requires Federal agencies
to consult and coordinate with Tribes on a Government-to-Government
basis on policies that have Tribal implications, including regulations,
legislative comments or proposed legislation, and other policy
statements or actions that have substantial direct effects on one or
more Indian Tribes, on the relationship between the Federal Government
and Indian Tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian Tribes.
FSA has assessed the impact of this rule on Indian Tribes and
determined that this rule does not, to our knowledge, have Tribal
implications that required Tribal consultation at this time. If a Tribe
requests consultation in the future, FSA's Federal Preservation Officer
will work with the Office of Tribal Relations, as needed, to ensure
meaningful consultation is provided.
E. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L.
104-4) requires Federal agencies to assess the effects of their
regulatory actions on State, local, and Tribal governments or the
private sector. Agencies generally must prepare a written statement,
including a cost benefit analysis, for proposed and final rules with
Federal mandates that may result in expenditures of $100 million or
more in any 1 year for State, local, or Tribal governments, in the
aggregate, or to the private sector. UMRA generally requires agencies
to consider alternatives and adopt the more cost effective or least
burdensome alternative that achieves the objectives of the rule. This
rule contains no Federal mandates, as defined in Title II of UMRA, for
State, local, or Tribal governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
UMRA.
F. Paperwork Reduction Act Requirements
In accordance with the provisions of the Paperwork Reduction Act of
1995 (44 U.S.C. 3501-3520), this rule does not change the information
collection approved by OMB under control numbers:
<bullet> 0560-0155, Guaranteed Farm Loan Programs, OMB Expiration
Date of November 2026;
<bullet> 0560-0233, Farm Loan Programs--Direct Loan Servicing, OMB
Expiration Date of November 2027;
<bullet> 0560-0236, Farm Loan Programs--Direct Loan Servicing, OMB
Expiration Date of August 2026 (the 60-day comment period for the
information collection request renewal was published on April 2, 2026
at 91 FR 16628 and is pending OMB approval);
<bullet> 0560-0237, Farm Loan Programs--Direct Loan Making, OMB
Expiration Date of February 2029;
<bullet> 0560-0238, Farm Loan Programs--General Program
Administration, OMB Expiration Date of October 2026; and
<bullet> 0560-0317, Online Loan Application, OMB Expiration Date of
November 2026.
No new information will be collected through this rule.
G. E-Government Act Compliance
FSA is committed to complying with the E-Government Act of 2002, to
promote the use of the internet and other information technologies to
[[Page 56750]]
provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Federal Assistance Programs
The title and number of the Federal assistance programs, as found
in the Assistance Listing, to which this rule applies are:
10.099 Conservation Loans;
10.404 Emergency Loans;
10.406 Farm Operating Loans;
10.407 Farm Ownership Loans; and
10.421 Indian Tribes and Tribal Corporation Loans.
List of Subjects
7 CFR Part 761
Accounting, Administrative practice and procedure, Loan programs--
agriculture, Reporting and recordkeeping requirements, Rural areas.
7 CFR Part 762
Agriculture, Banks, Banking, Credit, Grant programs--agriculture,
Loan programs--agriculture, Reporting and recordkeeping requirements.
7 CFR Part 763
Agriculture, Banks, Banking, Credit, Loan programs--agriculture.
7 CFR Part 764
Agriculture, Credit, Disaster assistance, Livestock, Loan
programs--agriculture, Mortgages.
7 CFR Part 765
Agricultural commodities, Agriculture, Credit, Disaster assistance,
Livestock, Loan programs--agriculture.
7 CFR Part 766
Agricultural commodities, Agriculture, Credit, Livestock, Loan
programs--agriculture.
7 CFR Part 767
Agriculture, Credit, Government contracts, Indians, Loan programs--
agriculture.
7 CFR Part 768
Agriculture, Credit, Loan programs--agriculture.
7 CFR Part 770
Agriculture, Credit, Indians, Loan programs--agriculture, Reporting
and recordkeeping requirements.
7 CFR Part 772
Agriculture, Credit, Loan programs--agriculture, Rural areas.
For the reasons discussed above, FSA amends the regulations in 7
CFR parts 761, 762, 763, 764, 765, 766, 767, 768, 770, 772, 773, and
774 as follows:
PART 761--FARM LOAN PROGRAMS; GENERAL PROGRAM ADMINISTRATION
0
1. The authority citation for part 761 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Subpart A--General Provisions
0
2. Amend Sec. 761.1 by revising paragraph (b)(1) to read as follows:
Sec. 761.1 Introduction.
* * * * *
(b) * * *
(1) Delegates to each State Executive Director within the State
Executive Director's jurisdiction the authority, and in the absence of
the State Executive Director, the person acting in that position, to
act for, on behalf of, and in the name of the United States of America
or the Farm Service Agency to do and perform acts necessary in
connection with making and guaranteeing loans, such as, but not limited
to, making advances, servicing loans and other indebtedness, and
obtaining, servicing, and enforcing or releasing security and other
instruments related to the loan. For actions that do not result in a
loss to the Farm Service Agency, a State Executive Director may
redelegate authorities received under this paragraph to a Deputy State
Executive Director, Farm Loan Chief, Farm Loan Specialist, District
Director, Farm Loan Manager, Senior Farm Loan Officer, Farm Loan
Officer, Loan Analyst, Loan Resolution Specialist, Program Technician,
or other positions as determined by the FSA Administrator.
* * * * *
0
3. Amend Sec. 761.2 as follows:
0
a. In paragraph (a), add the abbreviations for ``AFT'' and ``YL'' in
alphabetical order;
0
b. In paragraph (b):
0
i. In the definition of ``Adequate security'', remove the word
``direct'';
0
ii. In the definition of ``Administrative appraisal review'', remove
the words ``of standard 3'' in paragraph (ii);
0
iii. Add the definitions of ``Application Fast Track'', ``Appraisal'',
and ``Business loan'' in alphabetical order;
0
c. Remove the definitions of ``Chattel or real estate essential to the
operation'' and ``Chattel security'';
0
d. Add the definition of ``Commercial real estate transaction'' in
alphabetical order;
0
e. In the definition of ``Inventory property'', remove the word
``chattel'' and add ``personal'' in its place;
0
f. In the definition of ``Lien'', remove the word ``chattel'' and add
``personal'' in its place;
0
g. Revise the definition of ``Market value'';
0
h. Add the definitions of ``Personal property or real estate essential
to the operation'', and ``Personal property security'' in alphabetical
order;
0
i. In the definition of ``Physical loss'' remove the word ``chattel''
and add ``personal property'' in its place;
0
j. In the definition of ``Potential liquidation value'' remove the
words ``is determined by'' and add ``may be determined by'' in their
place;
0
k. Add definitions for ``Real estate evaluation'' and ``Real estate-
related financial transaction'' in alphabetical order;
0
l. In the definition of ``Security value'' remove the word ``chattel''
and add ``personal'' in its place; and
0
m. Add the definition for ``Valuation'' in alphabetical order.
The revisions and additions read as follows:
Sec. 761.2 Abbreviations and definitions.
* * * * *
(a) * * *
AFT Application Fast Track.
* * * * *
YL Youth loan.
(b) * * *
* * * * *
Application Fast Track is an accelerated underwriting process for
direct loans, which uses financial and repayment data to benchmark and
identify applicants least likely to default. This process serves as
documentation of repayment capacity for qualified applicants.
Appraisal means a written statement independently and impartially
prepared, setting forth an opinion as to the value of an adequately
described property as of a specific date(s), supported by the
presentation and analysis of relevant market information. Real estate
appraisals must comply with the Uniform Standards of Professional
Appraisal Practice (USPAP).
* * * * *
Business loan means a loan or other extension of credit made
primarily for agricultural purposes to any corporation, general or
limited partnership, business trust, joint venture, sole
proprietorship, or other person (including entities and individuals
engaged in farming enterprises).
* * * * *
[[Page 56751]]
Commercial real estate transaction means a real estate-related
financial transaction that is secured by a property whose primary value
is not derived from a single 1-4 family residence.
* * * * *
Market value means the most probable price which a property should
bring in a competitive and open market under all conditions requisite
to a fair sale, the buyer and seller each acting prudently and
knowledgeably, and assuming the price is not affected by undue
stimulus. Implicit in this definition is the consummation of a sale as
of a specified date and the passing of title from seller to buyer under
conditions whereby:
(i) The buyer and seller are typically motivated;
(ii) Both parties are well informed or well advised, and acting in
what they consider to be their own best interests;
(iii) A reasonable time is allowed for exposure in the open market;
(iv) Payment is made in terms of cash in U.S. dollars or in terms
of financial arrangements comparable thereto; and
(v) The price represents the normal consideration for the property
sold unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
* * * * *
Personal property or real estate essential to the operation is
personal property or real estate that would be necessary for the
applicant to continue operating the farm after the disaster in a manner
similar to the manner in which the farm was operated immediately prior
to the disaster, as determined by the Agency.
Personal property security is property that may consist of, but is
not limited to: crops; livestock; aquaculture species; farm equipment;
inventory; accounts; contract rights; general intangibles; and supplies
that are covered by financing statements and security agreements,
personal property mortgages, and other security instruments.
* * * * *
Real estate evaluation is an estimate of value of real estate
provided by an individual who is not required to comply with USPAP,
using market supported information to analyze the subject property.
Real estate-related financial transaction means any transaction
involving:
(i) The sale, lease, purchase, investment in, or exchange of real
property, including interests in property or the financing thereof; or
(ii) The refinancing of real property or interests in real
property.
* * * * *
Valuation is the estimation or determination of value of personal
property or real estate by agency officials, vendors, or third parties,
in each case, authorized or approved by the Agency.
* * * * *
0
4. Revise Sec. 761.7 to read as follows:
Sec. 761.7 Valuations.
(a) General. This section describes Agency requirements for:
(1) Real estate and personal property appraisals made in connection
with the making and servicing of direct FLP and Non-program loans;
(2) Appraisal reviews conducted on appraisals made in connection
with the making and servicing of direct and guaranteed FLP and Non-
program loans;
(3) Real estate evaluations made in connection with the making and
servicing of direct FLP loans and Non-program loans; and
(4) Reviews of real estate evaluations made in connection with the
making and servicing of direct and guaranteed FLP and Non-program
loans.
(b) Valuation standards. (1) Real estate appraisals, technical
appraisal reviews and their respective forms must comply with the
standards contained in USPAP, as well as applicable Agency regulations
and procedures for the specific FLP activity involved. Applicable
appraisal procedures and regulations are available for review in each
Agency State Office.
(2) When a personal property appraisal or real estate evaluation is
required, it must be completed on an applicable Agency form (available
in each Agency State Office) or other format containing the same
information.
(c) Use of an existing real estate appraisal. Except as otherwise
provided in 7 CFR part 766, when a real estate appraisal is required,
the Agency will use the existing real estate appraisal to conduct the
loan transaction under either of the following conditions:
(1) The appraisal was completed within the previous 18 months and
the Agency determines that:
(i) The appraisal meets the provisions of this section and the
applicable Agency loan making or servicing requirements; and
(ii) Market values have remained stable since the appraisal was
completed; or
(2) The appraisal was not completed in the previous 18 months, but
the Agency determines that the appraisal meets the requirements of this
section, and:
(i) The appraisal has been updated by the appraiser or appraisal
firm that completed the appraisal and both the update and the original
appraisal were completed in accordance with USPAP; or
(ii) The appraisal was completed in the previous 36 months and the
Agency has documentation reflecting that:
(A) Market conditions have remained stable or improved based on
sales of similar properties;
(B) The property in question remains in the same or better
condition; and
(C) The value of the property has remained the same or increased.
(d) Valuation reviews. (1) With respect to a real estate appraisal,
the Agency may conduct a technical appraisal review or an
administrative appraisal review, or both.
(2) With respect to a personal property appraisal or real estate
evaluation, the Agency may conduct an administrative review.
(e) Valuation appeals. Challenges to a valuation used by the Agency
are limited as follows:
(1) When an applicant or borrower challenges a real estate
appraisal used by the Agency for any loan making or loan servicing
decision, except primary loan servicing decisions as specified in Sec.
766.115 of this chapter, the issue for review is limited to whether the
appraisal used by the Agency complies with USPAP. The applicant or
borrower must submit a technical appraisal review prepared by a State
Certified General Appraiser that will be used to determine whether the
Agency's appraisal complies with USPAP. The applicant or borrower is
responsible for obtaining and paying for the technical appraisal
review.
(2) When an applicant or borrower challenges a personal property
appraisal used by the Agency for any loan making or loan servicing
decision, except for primary loan servicing decisions as specified in
Sec. 766.115 of this chapter, the issue for review is limited to
whether the appraisal used by the Agency is consistent with present
market values of similar items in the area. The applicant or borrower
must submit an independent appraisal review that will be used to
determine whether the appraisal is consistent with present market
values of similar items in the area. The applicant or borrower is
responsible for obtaining and paying for the independent appraisal
review.
(3) When an applicant or borrower challenges a real estate
evaluation used by the Agency for any loan making or loan servicing
decision, except for primary loan servicing decisions as specified in
Sec. 766.115 of this chapter,
[[Page 56752]]
the issue for review is limited to whether the real estate evaluation
used by the Agency is consistent with present market values of similar
properties in the area. The applicant or borrower must submit an
independent review of the real estate evaluation that will be used to
determine whether the evaluation is consistent with present market
values of similar properties in the area. The applicant or borrower is
responsible for obtaining and paying for the independent real estate
evaluation review.
(f) Real estate evaluations. (1) Real estate related financial
transactions that do not exceed the higher of the current OMB appraisal
threshold or the following limits do not require a real estate
appraisal:
(i) $500,000 for commercial real estate transactions; or
(ii) $250,000 for business loan transactions.
(2) A real estate evaluation may be completed when a real estate
appraisal is not required to determine the security value under this
subpart.
(3) The determination to not obtain a real estate appraisal is
subject to applicable Agency guidance.
(4) Notwithstanding the provisions of this subpart, the Agency
retains the discretion to obtain a real estate appraisal in lieu of
completing a real estate evaluation on a case-by-case basis.
Sec. 761.8 [Amended]
0
5. Amend Sec. 761.8 in paragraph (a) by removing the words ``farm
operating plan must reflect'' and adding ``Agency must document'' in
their place.
Sec. 761.10 [Amended]
0
6. Amend Sec. 761.10 as follows:
0
a. In paragraph (b)(2), add the word ``and'' after the semicolon;
0
b. In paragraph (c)(3), remove the words ``799 of this chapter'' and
add ``1b of this title'' in their place; and
0
c. In paragraph (c)(4), add the word ``and'' after the semicolon.
Subpart C--Progression Lending
0
7. Revise Sec. 761.103 to read as follows:
Sec. 761.103 Farm assessment.
(a) The Agency, in collaboration with the applicant, will assess
the farming operation to:
(1) Determine the applicant's financial condition, organizational
structure, and management strengths and weaknesses;
(2) Identify and prioritize training and progression lending needs;
and
(3) Develop a progression lending plan to assist the borrower in
achieving financial viability and transitioning to private commercial
credit or other sources of credit at reasonable rates and terms, except
for CL.
(b) The initial assessment must evaluate, at a minimum, the:
(1) Farm organization and key personnel qualifications;
(2) Type of farming operation;
(3) The short- and long-term goals of the operation, including a
marketing plan, goals to reasonably increase working capital reserves
and savings, including reasonable savings for retirement and education,
to support operational stability and growth, and goals for progression
towards graduation to commercial credit or eventual self-financing;
(4) Adequacy of resources to conduct the farming operation
including real estate, facilities, and personal property;
(5) Historical performance, except for streamlined CL and loan
transactions processed through AFT;
(6) Farm operating plan, except for loan transactions processed
through AFT;
(7) Progression lending plan including a plan for graduation,
except for streamlined CL; and
(8) Training plan.
(c) An assessment update must be prepared for each subsequent loan.
The update must include a farm operating plan, unless the subsequent
loan was processed through AFT, and any other items discussed in
paragraph (b) of this section that have significantly changed since the
initial assessment.
(d) The Agency reviews the assessment to determine a borrower's
progress at least annually, combining any required classification and
graduation reviews as part of the review. For streamlined CLs, the
borrower must provide a current balance sheet and income tax records.
Any negative trends noted between the previous years' and the current
years' information must be evaluated and addressed in the assessment of
the streamlined CL borrower.
(e) If a CL borrower becomes financially distressed, delinquent, or
receives any servicing options available under part 766 of this
chapter, all elements of the assessment in paragraph (b) of this
section must be addressed.
0
8. Amend Sec. 761.104 by adding paragraph (i) to read as follows:
Sec. 761.104 Developing the farm operating plan.
* * * * *
(i) For loan transactions processed through AFT, the likelihood of
repayment is evaluated by the financial benchmarking process in lieu of
a farm operating plan. Therefore, the aspects of paragraphs (c), (d),
(e), (f), (g), and (h) of this section which require the Agency to
verify income, expense, yield, and price planning to create accurate
and verifiable cash flow budgets and for the applicant to sign the
final farm operating plan do not apply to applications processed
through AFT.
0
9. Amend Sec. 761.105 as follows:
0
a. In paragraph (a)(1), remove the words ``or subordination'';
0
b. In paragraph (a)(4), remove the words ``2 years'' and add ``3
years'' in their place; and
0
c. Revise paragraph (b).
The revision reads as follows:
Sec. 761.105 Analysis.
* * * * *
(b) Except when processing a loan transaction under Sec.
765.105(a)(1) through AFT, the analysis must include a review of the
previous production cycle's actual income, expense, and production
performance, as well as a farm operating plan for the new operating
cycle.
Subpart F--Farm Loan Programs Debt Settlement
Sec. 761.403 [Amended]
0
10. Amend Sec. 761.403 as follows:
0
a. Remove paragraph (e)(3); and
0
b. Redesignate paragraphs (e)(4) and (e)(5) as paragraphs (e)(3) and
(e)(4), respectively.
PART 762--GUARANTEED FARM LOANS
0
11. The authority citation for part 762 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Sec. 762.106 [Amended]
0
12. Amend Sec. 762.106 as follows:
0
a. Amend paragraph (a)(1)(i) by removing the words ``and their branch
offices which they desire to be considered by the Agency for
approval'';
0
b. Remove paragraph (d)(2); and
0
c. Redesignate paragraphs (d)(3) and (d)(4) as paragraphs (d)(2) and
(d)(3), respectively.
0
13. Add Sec. 762.108 to read as follows:
Sec. 762.108 Delegated authority.
(a) Purpose. FSA may delegate authority for certain portions of the
guaranteed loan process to qualified guaranteed lenders. This allows
the lender to certify compliance with those pre-determined aspects of
the guaranteed loan process without the need for a more detailed review
by the Agency.
(b) Scope. Delegated authority is only applicable for those
portions of the
[[Page 56753]]
guaranteed loan process specifically identified within this part.
(c) Eligibility. (1) All lenders that hold PLP status will receive
and exercise delegated authority as outlined in this section.
(2) Delegated authority will be granted to PLP lenders for a period
not to exceed the expiration date of their PLP lender's agreement.
(3) Delegated authority will be conditioned upon the lender
carrying out its authority in accordance with their agreement with the
Agency and credit management system.
(d) Renewal of delegated authority. (1) Delegated authority will
expire on the expiration date of the lender's PLP agreement unless
delegated authority is otherwise revoked according to paragraph (e) of
this section.
(2) Renewal of delegated authority is not automatic and is
conditioned upon the renewal of the lender's PLP status.
(e) Revocation of delegated authority. FSA may revoke a lender's
delegated authority at any time for any of the following reasons:
(1) Approving loans that do not meet the Agency's requirements for
eligibility, financial feasibility, and loan security;
(2) Failure to maintain any of the eligibility requirements in this
section;
(3) Knowingly submitting false or misleading information to the
Agency;
(4) Basing a request on information known to be false;
(5) Failure to maintain PLP lender eligibility requirements in
Sec. 762.106(c);
(6) Unacceptable portfolio performance as evidenced by delinquency,
losses, material deficiencies, or any other performance metric
established by the Agency; or
(7) Revocation of PLP status under Sec. 762.106(g).
(f) Processing timeframes. Complete applications from lenders
exercising delegated authority will be approved or rejected no later
than 5 calendar days after receipt if requisite environmental
requirements have been met.
(g) Oversight. The Agency will monitor lender performance through
the regular use of loan level data and lender monitoring reviews. The
frequency of such reviews will be announced by the Agency in the
Agency's administrative handbooks.
(h) Administration of delegated authority. The Agency may adjust,
modify, or cancel the use of delegated authority programmatically based
on overall considerations such as budget, portfolio performance, and
program integrity.
0
14. Amend Sec. 762.110 as follows:
0
a. Add new paragraph (a)(4); and
0
b. In paragraph (h), add the following sentence at the end of the
paragraph, ``The Agency's request for information may be provided
electronically.''.
The addition reads as follows:
Sec. 762.110 Loan application.
(a) * * *
(4) Lenders may submit applications through any electronic means
designated by the Agency and the Agency may provide all notifications
and requests for information related to the application to the lender
electronically.
* * * * *
0
15. Amend Sec. 762.120 by adding paragraphs (g)(4) and (h)(4) to read
as follows:
Sec. 762.120 Applicant eligibility.
* * * * *
(g) * * *
(4) Delegated Authority. Lenders who have received delegated
authority under Sec. 762.108 of this part must certify that all
requirements of paragraphs (g)(1) through (3) of this section and the
related requirements in the lender's credit management system have been
met for each loan application.
(h) * * *
(4) Delegated Authority. Lenders who have received delegated
authority under Sec. 762.108 of this part must certify that all
requirements of paragraphs (h) and (h)(1) through (3) of this section
and the related requirements in the lender's credit management system
have been met for each loan application.
* * * * *
0
16. Amend Sec. 762.123 by revising paragraph (a)(2) to read as
follows:
Sec. 762.123 Insurance and farm inspection requirements.
(a) * * *
(2) By loan closing, applicants must obtain at least the
catastrophic risk protection (CAT) level of crop insurance coverage, if
available, for each crop of economic significance, as defined by Sec.
400.651 of this title.
* * * * *
0
17. Amend Sec. 762.125 by adding paragraph (e) to read as follows:
Sec. 762.125 Financial feasibility.
* * * * *
(e) Delegated Authority. Lenders who have received delegated
authority under Sec. 762.108 of this part must certify that all
requirements of this section and the related requirements in the
lender's credit management system have been met for each loan
application.
0
18. Amend Sec. 762.126 as follows:
0
a. Amend paragraph (e)(1) by removing the word ``chattel-secured'' and
adding ``personal property-secured'' in its place and by removing the
word ``chattels'' and adding ``personal property'' in its place; and
0
b. Redesignate paragraph (h) as paragraph (i) and add new paragraph
(h).
The revision reads as follows:
Sec. 762.126 Security requirements.
* * * * *
(h) Delegated Authority. Lenders who have received delegated
authority under Sec. 762.108 of this part must certify that all
requirements of this section and the related requirements in the
lender's credit management system have been met for each loan
application.
* * * * *
Sec. 762.127 [Amended]
0
19. Amend Sec. 762.127 as follows:
0
a. In paragraphs (a)(1), (b) introductory text, and (b)(1), remove the
word ``chattel'' wherever it appears and add the words ``personal
property'' in its place;
0
b. In paragraphs (b) introductory text and (b)(4), remove the word
``Chattel'' and add the words ``Personal property'' in its place;
0
c. In paragraphs (b)(2) and (3), remove the words ``chattel property''
and add ``personal property'' in their place;
0
d. In paragraph (c)(1), remove the words ``$250,000 or less'' and add
``less than or equal to $500,000 or the current OMB threshold,
whichever is higher'' in their place; and
0
e. In paragraph (c)(2), remove the number ``250,000'' and add the words
``$500,000 or the current OMB threshold, whichever is higher'' in its
place.
Sec. 762.128 [Amended]
0
20. Amend Sec. 762.128 in paragraphs (a) and (c)(3) by removing the
words ``799 of this chapter'' and adding ``1b of this title'' in their
place.
0
21. Amend Sec. 762.130 as follows:
0
a. In paragraph (e) remove the word ``chattel'' and add ``personal
property'' in its place; and
0
b. Add new paragraph (g).
The addition reads as follows:
Sec. 762.130 Loan approval and issuing the guarantee.
* * * * *
(g) Electronic delivery of notification and documents.
Notifications and documents issued by the Agency or provided by the
lender under this section may be delivered electronically.
0
22. Amend Sec. 762.140 as follows:
0
a. Add paragraphs (a)(3) and (4); and
[[Page 56754]]
0
b. Revise and republish paragraph (b)(5).
The additions and revisions read as follows:
Sec. 762.140 General servicing responsibilities
(a) * * *
(3) Lenders may submit loan servicing documentation through any
electronic means designated by the Agency.
(4) Notifications and documents issued by the Agency related to
loan servicing may be delivered to the lender electronically.
(b) * * *
(5) Performing an annual analysis of the borrower's financial
condition to determine the borrower's progress. PLP lenders will
conduct and document an analysis in accordance with the requirements in
the lender's credit management system (CMS). All other lenders will
perform an annual analysis on term loans when the sum of all balances
on term loans is greater than $500,000, all line of credit loans, and
all loans in monetary or non-monetary default. The annual analysis for
non-PLP lenders will be documented in the lender's file and will
include:
(i) For loans secured by real estate only, an analysis of the
borrower's balance sheet.
(ii) For loans secured by personal property, lenders will also
compare the borrower's actual to planned income and expenses for the
past year.
(iii) An account of the whereabouts or disposition of all
collateral.
* * * * *
0
23. Amend Sec. 762.141 by revising paragraphs (c) and (d) to read as
follows:
Sec. 762.141 Reporting requirements
* * * * *
(c) CLP lenders also must provide the following:
(1) For all lines of credit and term loans that are in monetary or
non-monetary default, a written summary of the lender's annual analysis
of the borrower's operation. This summary should describe the
borrower's progress and prospects for the upcoming operating cycle.
(2) For lines of credit, the written summary will also include a
certification stating that a cash flow projecting at least a feasible
plan has been developed, that the borrower is in compliance with the
provisions of the line of credit agreement, and that the previous year
income and loan funds and security proceeds have been accounted for.
(d) In addition to the requirements of paragraphs (a), (b), and (c)
of this section, the standard eligible lender also will provide the
following for all lines of credit and for all term loans that are in
monetary or non-monetary default:
(1) Borrower's balance sheet, and income and expense statement for
the previous year.
(2) For lines of credit only, the cash flow for the borrower's
operation that projects a feasible plan or better for the upcoming
operating cycle. The standard eligible lender must receive approval
from the Agency before advancing future years' funds on a guaranteed
line of credit.
(3) An annual farm visit report or collateral inspection.
* * * * *
0
24. Amend Sec. 762.146 as follows:
0
a. In paragraph (a)(1), add ``unguaranteed'' after the words ``may make
additional''; and
0
b. Revise paragraph (a)(2).
The revisions read as follows:
Sec. 762.146 Other servicing procedures
(a) * * *
(2) SEL and CLP lenders must not make additional unguaranteed loans
or advances, except as provided in the borrower's loan or line of
credit agreement, without documenting that:
(i) The borrower's account is in good standing;
(ii) The borrower is continuing to operate in accordance with their
latest farm operating plan;
(iii) The borrower's projected cash flow budget continues to
reflect a feasible plan;
(iv) The guaranteed loan security will continue to remain either
separate and identifiable from and will not be intermingled with
security for, or have priority over the security for any subsequent
loan; and
(v) Proceeds from the sale of loan security will be applied in
order of lien priority.
* * * * *
0
25. Amend Sec. 762.149 as follows:
0
a. In paragraph (d)(2)(i), remove the word ``chattel'' and add
``personal property'' in its place;
0
b. Revise paragraph (f);
0
c. In paragraph (i)(6), add ``and negligent origination of the account
for loans originated using delegated authority'' after the words
``negligent servicing of the account''; and
0
d. Add paragraph (i)(6)(iii)
The revision and addition read as follows:
Sec. 762.149 Liquidation
* * * * *
(f) Unauthorized loans or advances. The amount of any payments
received or credited by the lender on loans or advances outside of the
guarantee that do not meet the requirements of Sec. 762.146 will be
deducted from any loss claim submitted by the lender on the guaranteed
loan, if that loan or advance was paid prior to, and to the detriment
of, the guaranteed loan.
* * * * *
(i) * * *
(6) * * *
(iii) Originating loans using delegated authority that do not meet
the Agency's requirements for eligibility, financial feasibility, and
loan security.
* * * * *
PART 763--LAND CONTRACT GUARANTEE PROGRAM
0
26. The authority citation for part 763 is revised to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Sec. 763.7 [Amended]
0
27. Amend Sec. 763.7 in paragraph (b)(12) by removing the words ``799
of this chapter'' and adding ``1b of this title'' in their place.
Sec. 763.16 [Amended]
0
28. Amend Sec. 763.16 in paragraph (a) by removing the words ``799 of
this chapter'' and adding ``1b of this title'' in their place.
PART 764--DIRECT LOAN MAKING
0
29. The authority citation for part 764 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Subpart A--Overview
Sec. 764.1 [Amended]
0
30. Amend Sec. 764.1 in paragraph (b)(1) by removing the word
``Downpayment'' and adding ``Down Payment'' in its place.
Subpart B--Loan Application Process
Sec. 764.51 [Amended]
0
31. Amend Sec. 764.51 in paragraph (b)(7) by removing the words ``799
of this chapter'' and adding ``1b of this title'' in their place.
Subpart C--Requirements for All Direct Program Loans
0
32. Amend Sec. 764.103 as follows:
0
a. Revise paragraph (c);
0
b. In paragraph (e), remove the word ``downpayment'' and add ``down
payment'' in its place.
The revision reads as follows:
Sec. 764.103 General security requirements.
* * * * *
[[Page 56755]]
(c) An additional amount of security will be required, if
available, to reach a 125 percent security margin. Total loan security
in excess of what is needed to achieve a security margin of 125 percent
will only be taken when it is not practicable to separate the security,
including within species of livestock and lines of machinery and
equipment, or if necessary to satisfy the requirements of Sec.
764.254(b)(2)(i). Loans that do not require additional security are
down payment loans, MLs, youth loans, and FOs for the purchase of a
farm where the applicant provides a cash down payment equal to 5
percent or greater of the purchase price and the total financing
provided by the Agency and all other creditors does not exceed 95
percent of the purchase price or the value of the real estate,
whichever is less. Non-real estate assets will not be taken as
additional security for any loan where real estate serves as adequate
security.
* * * * *
Sec. 764.105 [Amended]
0
33. Amend Sec. 764.105 as follows:
0
a. In the section heading, remove the word ``chattel'' and add in its
place ``personal property''; and
0
b. In the introductory text, remove ``chattel'' and add ``personal
property'' in its place.
Sec. 764.106 [Amended]
0
34. Amend Sec. 764.106 in paragraph (b) by removing the words ``799 of
this chapter'' and adding ``1b of this title'' in their place.
0
35. Revise Sec. 764.107 to read as follows:
Sec. 764.107 General appraisal requirements.
(a) Establishing value for real estate. The value of real estate
will be established by a real estate appraisal or real estate
evaluation completed in accordance with Sec. 761.7 of this chapter.
(b) Establishing value for personal property. The value of personal
property will be established as follows:
(1) Annual production. Except for loan transactions approved
through AFT, the security value of annual livestock and crop production
is presumed to be 100 percent of the amount loaned for annual operating
and family living expenses, as outlined in the approved farm operating
plan.
(2) Annual production for AFT. The security value of annual
livestock and crop production for loan transactions approved through
AFT is not presumed to be 100 percent of the amount loaned for annual
operating and family living expenses. The amount of an annual operating
loan approved through AFT will not exceed the lesser of:
(i) 75 percent of the Gross Income reported on Schedule F (or
equivalent descriptions from farm income in entity tax returns) for the
most recent available tax return; or
(ii) The total gross farm income, which for purposes of this
paragraph means all production and income excluding non-farm income in
the cash flow projection, submitted by the applicant with the loan
application.
(3) Livestock and equipment. The value of livestock and equipment
will be established by an appraisal completed in accordance with Sec.
761.7 of this chapter.
Sec. 764.108 [Amended]
0
36. Amend Sec. 764.108 in paragraph (d) by removing the words ``,
unless the applicant executes a written waiver of any emergency crop
loss assistance with respect to such crop''.
Subpart D--Farm Ownership Loan Program
0
37. Amend Sec. 764.154 as follows:
0
a. In paragraph (a)(2) remove the word ``The'' at the beginning of the
sentence and add, in its place, the words ``Except for those applicants
whose loans are approved through AFT, the'';
0
b. In paragraph (b)(1) remove the word ``Repayment'' at the beginning
of the fourth sentence and add, in its place, the words ``Except for
loan transactions approved through AFT, repayment'';
0
c. Remove paragraph (b)(2);
0
d. Redesignate paragraph (b)(3) as (b)(2);
0
e. In the newly redesignated paragraph (b)(2) remove the word ``The''
at the beginning of the first sentence and add, in its place, the words
``Except for loan transactions approved through AFT, the''; and
0
f. Add new paragraph (b)(3).
The addition reads as follows:
Sec. 764.154 Rates and terms.
* * * * *
(b) * * *
(3) Loans approved through AFT must include equal installments,
except that they may include an interest-only installment scheduled up
to 12 months from the date of loan closing.
Subpart E--Down Payment Loan Program
0
38. Revise the heading for Subpart E as set forth above.
Sec. 764.201 [Amended]
0
39. Amend Sec. 764.201 in the introductory text by removing the last
instance of the word ``farmer''.
Subpart F--Conservation Loan Program
Sec. 764.234 [Amended]
0
40. Amend Sec. 764.234 in paragraph (b)(2) by removing the word
``chattels'' and adding ``personal property'' in its place.
Sec. 764.235 [Amended]
0
41. Amend Sec. 764.235 in paragraphs (b), (c)(1), and (d)(2) by
removing all instances of the word ``chattels'' and adding ``personal
property'' in its place.
Subpart G--Operating Loan Program
0
42. Amend Sec. 764.254 as follows:
0
a. In paragraph (a)(2) remove the word ``The'' at the beginning of the
sentence and add, in its place, the words ``Except for those applicants
whose loans are approved through AFT, the'';
0
b. In paragraph (b)(2) remove the word ``Repayment'' at the beginning
of the fourth sentence and add, in its place, the words ``Except for
loan transactions approved through AFT, repayment,'';
0
c. In paragraph (b)(2)(i) add the words ``including within species of
livestock and lines of machinery and equipment'' after ``separate the
security'';
0
d. Remove paragraph (b)(3);
0
e. Redesignate paragraph (b)(4) as (b)(3)
0
f. In newly redesignated paragraph (b)(3) remove the word ``The'' at
the beginning of the first sentence and add, in its place, the words
``Except for loan transactions approved through AFT, the''; and
0
g. Add new paragraph (b)(4).
The addition reads as follows:
Sec. 764.254 Rates and terms.
* * * * *
(b) * * *
(4) Loans approved through AFT must include equal installments,
except they may include an interest-only installment scheduled up to 12
months from the date of loan closing.
Subpart H--Youth Loan Program
0
43. Amend Sec. 764.304 by revising paragraph (b) to read as follows:
Sec. 764.304 Rates and terms
* * * * *
(b) Terms. Youth loan terms are the same as for an OL established
at Sec. 764.254(b) except:
(1) Balloon installments are prohibited for youth loans; and
(2) Unequal installments are prohibited for the purpose of
reasonably increasing cash flow margin to increase working capital
reserves and savings, including reasonable savings for retirement and
education.
[[Page 56756]]
Subpart I--Emergency Loan Program
Sec. 764.351 [Amended]
0
44. Amend Sec. 764.351 in paragraph (a)(2) by removing the word
``Chattel'' and adding ``Personal property'' in its place and by
removing the word ``chattel'' and adding ``personal property'' in its
place.
Sec. 764.352 [Amended]
0
45. Amend Sec. 764.352 in paragraph (i) by removing the word
``chattel'' and adding ``personal property'' in its place.
Sec. 764.353 [Amended]
0
46. Amend Sec. 764.353 as follows:
0
a. In paragraphs (d)(1) and (6), remove all instances of the word
``chattel'' and add ``personal property'' in its place; and
0
b. In paragraph (e)(1), remove the word ``Chattel'' and add
``Personal'' in its place.
Sec. 764.354 [Amended]
0
47. Amend Sec. 764.354 as follows:
0
a. In paragraph (b)(4), remove the word ``chattel'' and add ``personal
property'' in its place;
0
b. Remove paragraph (b)(6); and
0
c. Redesignate paragraph (b)(7) as (b)(6).
Sec. 764.355 [Amended]
0
48. Amend Sec. 764.355 in paragraph (b)(2) by removing the word
``Chattels'' and adding ``Personal property'' in its place.
Subpart J--Loan Decision and Closing
0
49. Amend Sec. 764.401 as follows:
0
a. Revise paragraph (a)(1)(i);
0
b. Add paragraph (a)(3); and
0
c. Revise paragraph (b)(1).
The revisions read as follows:
Sec. 764.401 Loan decision
(a) * * *
(1) * * *
(i) The applicant can demonstrate a reasonable likelihood of
repayment for the proposed loan and all other credit needs through
either the AFT evaluation model or a feasible farm operating plan;
* * * * *
(3) All loan transactions other than EM, YL, and loans made in
conjunction with other servicing actions are eligible for approval
through AFT.
(b) * * *
(1) The applicant's farm operating plan does not reflect a feasible
plan (because the Agency does not review a farm operating plan for an
applicant evaluated through AFT, an AFT evaluation alone is not a basis
for denial);
* * * * *
Sec. 764.402 [Amended]
0
50. Amend Sec. 764.402 as follows:
0
a. In paragraph (a)(2), remove the words ``For entity applicants,'' at
the beginning of the sentence and add, in their place, the words ``For
all entity applicants including entity applicants approved through
AFT,'';
0
b. In paragraph (a)(4), remove the word ``A'' at the beginning of the
first sentence and add, in its place, the words ``Except for a loan
transaction approved through AFT, a'';
0
c. In paragraph (c), remove the word ``Chattel'' and add ``Personal
property'' in its place, and remove the word ``chattel'' and add
``personal property'' in its place;
0
d. In paragraph (c)(1), remove the word ``chattel'' and add ``personal
property'' in its place; and
0
e. In paragraphs (c)(2) and (e)(3), remove the word ``chattel'' and add
``personal'' in its place.
Subpart K--Borrower Training and Training Vendor Requirements
0
51. Revise Sec. 764.453 to read as follows:
Sec. 764.453 Agency waiver of training requirements
(a) The Agency will grant a waiver for training in financial
management, without further action by the applicant, under the
following conditions:
(1) The applicant agrees to complete or submits evidence of
successful completion of a course similar to a course approved under
section Sec. 764.457 and the Agency determines that additional
training is not needed;
(2) The applicant submits evidence which demonstrates to the
Agency's satisfaction the applicant possesses experience and training
necessary for a successful and efficient operation; or
(3) The applicant's loan was approved through AFT.
(b) If the financial functions of the operation are shared among
individual entity members, the Agency will consider the collective
knowledge and skills of those individuals when determining whether to
waive training requirements.
(c) When considering subsequent loan actions, previous training
requirements that have not yet been satisfied may be waived by the
Agency should the borrower submit satisfactory evidence in accordance
with paragraph (a) of this section.
Sec. 764.454 [Amended]
0
52. Amend Sec. 764.454 as follows:
0
a. In paragraph (a), remove the words ``at loan closing'' and add
``prior to loan closing'' in their place;
0
b. In paragraph (a)(4), add the words ``unless the Agency subsequently
grants a waiver as provided in Sec. 764.453'' after ``training is
completed'';
0
c. In paragraph (c)(1), add the word ``any'' after the words ``must
include''; and
0
d. In paragraph (d), remove the words ``the required training'' and add
``training provided by a vendor'' in their place.
Sec. 764.459 [Amended]
0
53. Amend Sec. 764.459, in paragraph (b), in the table, in the third
column and second row, remove the word ``couse'' and add in its place
``course''.
PART 765--DIRECT LOAN SERVICING--REGULAR
0
54. The authority citation for part 765 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Subpart B--Borrowers With Limited Resource Interest Rate Loans
Sec. 765.51 [Amended]
0
55. Amend Sec. 765.51 in paragraph (a) by removing the words ``2
years'' and adding ``3 years'' in their place.
Subpart C--Borrower Graduation
Sec. 765.101 [Amended]
0
56. Amend Sec. 765.101 in paragraphs (b)(1) and (3) by removing all
instances of the word ``chattel'' and adding ``personal property'' in
their place.
0
57. Amend Sec. 765.102 by adding paragraphs (b)(4)(iii) and (b)(4)(iv)
as follows:
Sec. 765.102 Borrower non-compliance with graduation requirements.
* * * * *
(b) * * *
(4) * * *
(iii) For EMs secured by real estate, the Agency will schedule
repayment in equal installments over the lesser of the remaining number
of years on the loan, the useful life of security, or 25 years.
(iv) For EMs secured only by personal property, the Agency will
reschedule repayment in equal installments over the lesser of the
remaining number of years on the loan, the useful life of security, or
5 years.
Subpart D--Borrower Payments
Sec. 765.152 [Amended]
0
58. Amend Sec. 765.152 in paragraph (b)(1) by removing the word
``chattel'' and adding ``personal property'' in its place.
0
59. Amend Sec. 765.153 by revising paragraph (a) as follows:
[[Page 56757]]
Sec. 765.153 Application of payments.
(a) Regular payments. A regular payment is credited to a scheduled
installment on program and non-program loans. Regular payments are
applied to loans in the following order unless a different order is
agreed to in writing by the borrower and Agency:
* * * * *
Sec. 765.154 [Amended]
0
60. Amend Sec. 765.154 as follows:
0
a. Remove paragraph (b); and
0
b. Redesignate paragraphs (c), (d), and (e) as (b), (c), and (d),
respectively.
Subpart E--Protecting the Agency's Security Interest
Sec. 765.204 [Amended]
0
61. Amend Sec. 765.204 in paragraphs (a) and (b) by removing all
instances of the word ``chattel'' and ``chattels'' and adding
``personal property'' in their place.
Sec. 765.205 [Amended]
0
62. Amend Sec. 765.205 as follows:
0
a. In paragraph (a)(3), remove the words ``799 of this chapter;'' and
add ``1b of this title; and'' in their place;
0
b. Remove paragraphs (a)(4) and (a)(5);
0
c. Redesignate paragraph (a)(6) as (a)(4);
0
d. Remove paragraph (c)(3)(ix);
0
e. Redesignate paragraphs (c)(3)(x), (xi), (xii), (xiii), (xiv), (xv),
and (xvi) as (c)(3)(ix), (x), (xi), (xii), (xiii), (xiv), and (xv),
respectively:
0
f. In the newly redesignated paragraph (c)(3)(xii) remove the words
``799 of this chapter'' and add ``1b of this title'' in their place;
0
g. In paragraph (c)(4), remove the words ``paragraphs (b)(3)(viii)
through (xvi)'' and add ``paragraphs (c)(3)(viii) through (xv)'' in
their place;
0
h. In paragraph (d), remove the word ``Chattel'' and add ``Personal
property'' in its place, and remove the word ``chattel'' and add
``personal property'' in its place;
0
i. In paragraph (d)(1), remove the word ``chattel'' and add ``personal
property'' in its place, and remove the words ``paragraphs (b)(3)(i)
through (xiii)'' and add ``paragraphs (c)(3)(i) through (xii) and
(xv)'' in their place; and
0
j. In paragraph (d)(2)(iii), remove the words ``paragraphs (b)(1)
through (12)'' and add ``paragraphs (c)(3)(i) through (xii) and (xv)''
in their place.
Sec. 765.207 [Amended]
0
63. Amend Sec. 765.207 in the introductory text by removing the word
``chattel'' and adding ``personal property'' in its place.
Subpart F--Required Use and Operation of Agency Security
Sec. 765.252 [Amended]
0
64. Amend Sec. 765.252 as follows:
0
a. In paragraph (b)(3)(ii), remove the words ``799 of this chapter''
and add ``1b of this title'' in their place; and
0
b. In paragraph (c), remove all instances of the word ``chattel'' and
add ``personal property'' in their place.
Subpart G--[Amended]
0
65. Amend the title of Subpart G by removing the word ``Chattel'' and
adding ``Personal Property'' in its place.
Sec. 765.301 [Amended]
0
66. Amend Sec. 765.301 in paragraphs (a), (b), and (c) by removing all
instances of the word ``chattel'' and adding ``personal property'' in
their place.
Sec. 765.303 [Amended]
0
67. Amend Sec. 765.303 as follows:
0
a. In the section heading, remove the word ``chattel'' and add in its
place ``personal property''; and
0
b. In paragraphs (c)(2) and (3), remove all instances of the word
``chattel'' and add ``personal'' in their place.
Sec. 765.304 [Amended]
0
68. Amend Sec. 765.304 in paragraph (a) by removing the word
``chattel'' and adding ``personal property'' in its place.
0
69. Amend Sec. 765.305 as follows:
0
a. In paragraph (c), remove the word ``chattel'' and add ``personal
property'' in its place;
0
b. In paragraph (c)(2), add the words ``not later than 90 days after
the scheduled installment due date'' after the word ``reduction'';
0
c. In paragraph (c)(3), remove the words ``and released'';
0
d. In paragraph (c)(4), remove the word ``and'' at the end of the
paragraph;
0
e. In paragraph (c)(5), remove the period at the end of the paragraph
and add ``;and'' in its place; and
0
f. Add new paragraph (c)(6).
The addition reads as follows:
Sec. 765.305 Release of security interest.
* * * * *
(c) * * *
(6) The borrower is not in non-monetary default.
Subpart H--Partial Release of Real Estate Security
0
70. Amend Sec. 765.351 as follows:
0
a. In paragraph (a)(6), remove the words ``799 of this chapter'' and
add ``1b of this title'' in their place;
0
b. In paragraph (f)(2), add the words ``not later than 90 days after
the scheduled installment due date'' after the word ``reduction'';
0
c. In paragraph (f)(6), remove the words ``and released'', and remove
the word ``appraisals'' each time it appears and add, in its place,
``valuations'';
0
d. In paragraph (f)(7), remove the word ``and'' at the end of the
paragraph;
0
e. In paragraph (f)(8), remove the period at the end of the paragraph
and add ``; and'' in its place; and
0
f. Add new paragraph (f)(9).
The addition reads as follows:
Sec. 765.351 Requirements to obtain Agency consent.
* * * * *
(f) * * *
(9) The borrower is not in non-monetary default.
0
71. Amend Sec. 765.353 as follows:
0
a. Revise paragraph (a)(1);
0
b. In paragraph (a)(2), add the words ``real estate'' after ``waive
the'', and remove the number ``$50,000'' and add ``the higher of the
current OMB appraisal threshold or $500,000'' in its place;
0
c. In paragraph (b), remove the words ``an appraisal'' and add ``a real
estate appraisal or real estate evaluation'' in their place; and
0
d. In paragraph (c), remove the word ``Appraisal'' and add
``Valuation'' in its place, and remove the word ``Appraisals'' and add
``Valuations'' in its place.
The revision reads as follows:
Sec. 765.353 Determining market value.
(a) * * *
(1) Except when releasing real estate security without compensation
under Sec. 765.351(f), the Agency will obtain a valuation of the
security proposed for disposition.
* * * * *
Subpart I--Transfer of Security and Assumption of Debt
Sec. 765.401 [Amended]
0
72. Amend Sec. 765.401 in the section heading by removing the word
``chattel'' and adding ``personal property'' in its place.
Sec. 765.403 [Amended]
0
73. Amend Sec. 765.403 in paragraph (a) by removing the word
``chattel'' and adding ``personal property'' in its place.
Sec. 765.404 [Amended]
0
74. Amend Sec. 765.404 as follows:
0
a. In paragraph (a)(1), remove the words ``chattel security property''
and add ``personal property security'' in its place; and
[[Page 56758]]
0
b. In paragraph (f)(2), remove the word ``chattel'' and add
``personal'' in its place.
PART 766--DIRECT LOAN SERVICING--SPECIAL
0
75. The authority citation for part 766 continues to read as follows:
Authority: 5 U.S.C. 301, 7 U.S.C. 1989, and 7 U.S.C. 1981d(c).
Subpart C--Loan Servicing Programs
Sec. 766.101 [Amended]
0
76. Amend Sec. 766.101 as follows:
0
a. In paragraph (c), remove the words ``delinquent borrowers'' and add
``borrowers with a payment at least 90 days past due'' in their place,
and remove the words ``first class'' and ``regular'' wherever they
appear, and add ``first-class'' in their place; and
0
b. In paragraph (d)(2), add the words ``FSA-2510'' before ``or FSA-
2510-IA''.
Sec. 766.102 [Amended]
0
77. Amend Sec. 766.102 in paragraph (a)(4) by removing the words ``799
of this chapter'' and adding ``1b of this title'' in their place.
Sec. 766.107 [Amended]
0
78. Amend Sec. 766.107 in paragraph (b) by removing the word
``chattel'' and adding ``personal property'' in its place.
Sec. 766.108 [Amended]
0
79. Amend Sec. 766.108 in paragraph (b)(2)(ii) by removing the word
``chattels'' and adding ``personal property'' in its place.
Sec. 766.111 [Amended]
0
80. Amend Sec. 766.111 in paragraph (b)(1) by removing the word
``ombination'' and adding ``combination'' in its place.
Sec. 766.112 [Amended]
0
81. Amend Sec. 766.112 in paragraph (b)(2) by removing the words ``799
of this chapter'' and adding ``1b of this title'' in their place.
Sec. 766.115 [Amended]
0
82. Amend Sec. 766.115 in paragraph (a)(2) by removing the word
``Sec. 761.7'' and adding the words ``paragraph (e)(1) or (e)(2) of
Sec. 761.7 for real estate or personal property, respectively,'' in
its place.
0
83. Amend Sec. 766.120 as follows:
0
a. In paragraph (a)(12), remove the word ``and'';
0
b. In paragraph (a)(13), remove the period at the end of the paragraph
and add ``;and'' in its place; and
0
c. Add paragraph (a)(14).
The addition reads as follows:
Sec. 766.120 Extending maturity date and installment schedule for
direct loans with a balloon payment.
(a) * * *
(14) The written request for an extension is received at least 30
days prior to the balloon payment due date.
* * * * *
Subpart D--Homestead Protection Program
Sec. 766.152 [Amended]
0
84. Amend Sec. 766.152 in paragraph (a)(1) by removing the word
``chattels'' and adding ``personal property'' in its place.
Subpart E--Servicing Shared Appreciation Agreements and Net
Recovery Buyout Agreements
Sec. 766.202 [Amended]
0
85. Amend Sec. 766.202 in paragraph (a) by removing the word ``Sec.
761.7'' and adding ``Sec. 761.7(b)'' in its place.
Sec. 766.206 [Removed and Reserved]
0
86. Remove and reserve Sec. 766.206.
Subpart F--Unauthorized Assistance
0
87. Amend Sec. 766.253 as follows:
0
a. Revise paragraph (a)(3); and
0
b. In paragraph (a)(3)(v)(C), remove the word ``chattel'' and add
``personal property'' in its place.
The revision reads as follows:
Sec. 766.253 Unauthorized assistance resulting from submission of
inaccurate information by borrower or Agency error.
(a) * * *
(3) If the borrower is unable to repay the entire unauthorized
amount, the remaining unauthorized portion of the loan will be
converted to a Non-program loan under the following conditions:
* * * * *
Subpart H--Loan Liquidation
Sec. 766.352 [Amended]
0
88. Amend Sec. 766.352 as follows:
0
a. In the section heading, remove the word ``chattel'' and add in its
place ``personal property''; and
0
b. In paragraphs (a), (a)(1), and (b), remove all instances of the word
``chattel'' and add ``personal property'' in its place.
Sec. 766.354 [Amended]
0
89. Amend Sec. 766.354 as follows:
0
a. In the section heading, remove the word ``chattel'' and add in its
place ``personal property''; and
0
b. In paragraphs (a), (b), (b)(2) and (4), and (c)(2), remove all
instances of the word ``chattel'' and add ``personal property'' in its
place.
Sec. 766.357 [Amended]
0
90. Amend Sec. 766.357 as follows:
0
a. In the section heading, remove the word ``chattel'' and add in its
place ``personal property''; and
0
b. In paragraph (c), remove the word ``chattel'' and add ``personal
property'' in its place.
0
91. Revise appendix A to subpart C as follows:
Appendix A to Subpart C of Part 766--FSA-2510, Notice of Availability
of Loan Servicing to Borrowers Who Are 90 Days Past Due
This appendix A contains the notification (form letter) that the
Farm Service Agency will send to borrowers who are at least 90 days
past due on their loan payments. It provides information about the loan
servicing that is available to the borrower. As stated below on the
notification, the borrower is to respond within 60 days from receiving
the notification (see Sec. 766.101(b)(2) and (d)(2) for the
requirements). The notification is provided here as required by 7
U.S.C. 1981d.
BILLING CODE 3411-E2-P
[[Page 56759]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.003
[[Page 56760]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.004
[[Page 56761]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.005
[[Page 56762]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.006
[[Page 56763]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.007
[[Page 56764]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.008
[[Page 56765]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.009
[[Page 56766]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.010
BILLING CODE 3411-E2-C
0
92. Revise appendix B to subpart C to read as follows:
Appendix B to Subpart C of Part 766--FSA-2510-IA, Notice of
Availability of Loan Servicing to Borrowers Who Are 90 Days Past Due
(for Use in Iowa Only)
This appendix contains the notification (form letter) that the Farm
Service Agency will send to borrowers with loans in Iowa who are at
least 90 days past due on their loan payments. It provides information
about the loan servicing that is available to the borrower. As stated
below on the notification, the borrower is to respond within 60 days
from receiving the notification (see Sec. 766.101(b)(2) and (d)(2) for
the requirements). The notification is provided here as required by 7
U.S.C. 1981d.
[[Page 56767]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.011
[[Page 56768]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.012
[[Page 56769]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.013
[[Page 56770]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.014
[[Page 56771]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.015
[[Page 56772]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.016
[[Page 56773]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.017
[[Page 56774]]
[GRAPHIC] [TIFF OMITTED] TR04SE26.018
[[Page 56775]]
PART 767--INVENTORY PROPERTY MANAGEMENT
0
93. The authority citation for part 767 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Subpart A--Overview
Sec. 767.1 [Amended]
0
94. Amend Sec. 767.1 in paragraph (a)(4) by removing the word
``chattel'' and adding ``personal'' in its place.
Subpart D--Disposal of Inventory Property
Sec. 767.155 [Amended]
0
95. Amend Sec. 767.155 as follows:
0
a. In the section heading, remove the word ``chattel'' and add in its
place ``personal''; and
0
b. In paragraphs (a)(1) and (2), and (b), remove all instances of the
word ``chattel'' and add ``personal property'' in their place.
Subpart E--Real Estate Property With Important Resources or Located
in Special Hazard Areas
Sec. 767.201 [Amended]
0
96. Amend Sec. 767.201 in the introductory paragraph by removing the
words ``799 of this chapter'' and adding ``1b of this title'' in their
place.
PART 768--EQUITABLE RELIEF
0
97. The authority citation for part 768 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
Sec. 768.1 [Amended]
0
98. Amend Sec. 768.1 in paragraph (a)(3)(i), by removing the words
``noncompliant; or'' and adding ``non-compliant.'' in their place.
PART 770--INDIAN TRIBAL LANDS ACQUISITION LOANS
0
99. The authority citation for part 770 continues to read as follows:
Authority: 5 U.S.C. 301 and 25 U.S.C. 5136.
Sec. 770.5 [Amended]
0
100. Amend Sec. 770.5 in paragraph (a) by removing the words ``799 of
this chapter'' and adding ``1b of this title'' in their place.
PART 772--SERVICING MINOR LOAN PROGRAMS
0
101. The authority citation for part 772 continues to read as follows:
Authority: 5 U.S.C. 301, 7 U.S.C. 1989, and 25 U.S.C. 490.
Sec. 772.4 [Amended]
0
102. Amend Sec. 772.4 in the introductory text by removing the number
``799'' and adding ``1b'' in its place.
Sec. 772.5 [Amended]
0
103. Amend Sec. 772.5 in paragraphs (b) and (c)(1) by removing all
instances of the word ``chattel'' and adding ``personal property'' in
their place.
Sec. 772.6 [Amended]
0
104. Amend Sec. 772.6 in paragraph (a)(6) by removing the words ``799
of this chapter'' and adding ``1b of this title'' in their place.
Sec. 772.8 [Amended]
0
105. Amend Sec. 772.8 in paragraph (b) by removing the word
``chattel'' and adding ``personal property'' in its place.
PART 773--[Removed and Reserved]
0
106. Remove and reserve part 773.
PART 774--[Removed and Reserved]
0
107. Remove and reserve part 774.
William Beam,
Administrator, Farm Service Agency.
[FR Doc. 2026-18164 Filed 9-3-26; 8:45 am]
BILLING CODE 3411-E2-P
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