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RULES AND REGULATIONS

9074
accomplished by exchanging a nonin sured note for the insured promissory note and, when applicable, by exchang ing a noninsured mortgage for the in sured mortgage. Since no funds are in- _
volved in making the final payment to the holder, only any amount owed the loan insurance account and the annual charge, if any, will be transmitted to the Finance Office.
a Collection of loan insurance ac count and annual charge. When fia l payment of the account of the insured borrower is to be accomplished by either of the above methods, the County Su pervisor, upon receipt of Form FHA-835
from the Finance Office, will collect from the borrower any amount owed the loan insurance account and the annual charge, if any. I f Form FHA-835 shows an unpaid balance of any amount ad vanced from the insurance fund, the County Supervisor will compute the in terest on such amount to the date he receives payment. Also, if the loan is evidenced by Form FHA-251, the County Supervisor will compute the annual charge to the date he receives payment.
He will remit the funds collected to the Finance Office with Form FHA-37.
b Preparation of Form FHA-993.
The County Supervisor will complete the information in Section I of Form FH A 993 with respect to the borrower, the amount of loan, and the date of note or bond. The original and two copies of the partially completed Form FH A 993 will be delivered to the nolder. The County Supervisor will inform the holder o f the outstanding balance of principal and interest due him on the insured note account as of the date of Form FHA-835 and the daily rate of accrual of such interest. The County Supervi sor will request that, if such amount is in agreement with the holders records, the holder should insert the date the final payment is received date insured loan is refinanced, execute the original and one copy of Form FHA-993, and re turn to the County Supervisor the ex ecuted original and copy of Form F H A 993, together with the canceled promis sory note. I f the lender holds the mort gage, the County Supervisor also will request the holder to return the satisfied mortgage. I f requested by the holder, the County Supervisor will file for rec ordation any instrument of satisfaction or release of the mortgage furnished by the holder.
c Finance Office action. Upon re ceipt of Form FHA-993 from the County Supervisor, the Finance Office will deter mine if the full amount owed the loan insurance account and the annual charge for notes on Form FHA-251 have been paid. I f paid, the Director, Finance Office, will sign Section I I of Form FH A 993. The original of Form FHA-993
will be retained in the Finance Office.
Finance Office records will be satisfied as a paid-in-full account.
d County Office action 1 Insured mortgage held by the lender. For an insured loan for which the lender holds the mortgage, the County Supervisor will, upon receipt of the completed copy of Form FH-993 from the Finance O f-

fice, sign and acknowledge Form F H A 366. Form FHA-366 will be delivered to the lender or to the recorder of deeds and mortgages, as the case may require.
The canceled promissory note, the satis fied real estate mortgage, and any ab stracts of title held by the FHA which are. the property of the borrower will be delivered to the borrower. The com pleted copy of Form FHA-993 will be placed in the borrowers case folder.
Property insurance will be canceled in accordance with Part 306 of this chapter.
The County Office records will be ad justed to show a paid-in-full account.
2 Insured note or insured mortgage held by the Government under a trust assignment or declaration of trust. For an insured Farm Ownership loan for which the Government is named as mort gagee in the mortgage or holds the mort gage under a trust assignment or dec laration of trust, the instrument of satisfaction or release furnished by the County Supervisor in accordance with 366.41f will, upon receipt of the completed copy o f Form FHA-993 from the Finance Office, be delivered to the lender or the recorder o f deeds and mort gages, as the case may require. The canceled promissory note, the satisfied real estate mortgage, and any abstracts o f title held by the Farmers Home Ad ministration which are the property of the borrower will be delivered to the bor rower. The completed copy of Form FHA-993 will be placed in the borrowers case folder. Property insurance will be canceled in accordance with Part 306
o f this chapter. The County Office rec ords will be adjusted to show a paid-infull account.
Dated: November 2, 1959.
K . H . H ansen,
Administrator, Farmers Home Administration.
F .R .

Doc.

5 9-94 4 8; F ile d , 8 :4 7 a.m .J

Nov.

6,
1959;

F H A I n s t r u c t i o n 451.4

PART 366 PAYMENT IN FULL
Subpart A Direct Farm Ownership, Other Real Estate and Farm Hous ing Accounts; and Insured Farm Ownership Accounts Held by the Insurance Fund The title of Subpart A, Part 366, Title 6, Code of Federal Regulations 20 F.R.
4175, 21 F.R. 170, 21 F.R. 7142 is revised to read as set forth above and Subpart A
is revised to read as follows:
Sec.
366.1
366.2
366.3
366.4
366.5

G e n e r a l.
A u t h o r i z a t io n .
D e t e r m in i n g b a la n c e t o b e c o lle c t e d .
D e liv e r y o f s a t is fa c t io n s , n o t e s a n d o th e r do cu m e n ts.
P ro p e rty in s u ra n c e .

A u t h o r it y : 3 66 .1 t o 366.5 is s u e d u n d e r secs. 3, 41, 50 S ta t . 523, a s a m e n d e d , 528, a s a m e n d e d , sec. 12, 60 S t a t . 1076, a s a m e n d e d , se c . 510, 63 S t a t . 437, sec. 18, 72 S t a t . 840; 7
U .S .C . 1003, 1015, 1005b, 42 U .S .C . 1480, 7
U .S .C . 1006e; O r d e r o f A c t in g S ec . o f A g r i., 19 F .R . 74, 22 F .R . 8188.

366.1

General.

Sections 366.1 to 366.5 set forth the au thorizations, policies, and procedures for processing final payments on direct Farm Ownership accounts, Other Real Estate accounts, and Farm Housing ac counts which are paid in full at any time after loan closing. Final payment on an insured Farm Ownership account which is held by the insurance fund will be processed generally in the same manner as a direct Farm Ownership account, except that the borrower will be re quired to pay any loan insurance charges, any other amounts owed the loan insurance account, and any annual charge; as shown on the statement of ac count prepared in accordance with the applicable provisions of Subpart C of this part. In every case where a loan has been closed, including those where the entire principal o f the loan is refunded before any of it has been previously dis bursed from the supervised bank ac count, the borrower will be required to pay interest from the date o f the note to the date final payment is received by the County Supervisor.
366.2

Authorization.

a The County Supervisor is author ized to accept final payment on a direct Farm Ownership account, insured Farm Ownership account held by the insurance fund, Other Real Estate account, or Farm Hotising account except a Farm Ownership account repaid in less than five years by sale of the farm when profit making seems to be the only significant motive for the sale and to execute the necessary releases and satisfactions in connection with the indebtedness.
When a borrower who has not had his loan five years proposes to sell his farm and pay the Farm Ownership loan in full, and profit making seems to be the only significant motive for the sale, the County Supervisor will advise the State Director of the circumstances.
The State Director is authorized to ap?
prove or disapprove the transaction and will inform the County Supervisorof the action to be taken.
b The State Director will issue a State Instruction which will instruct County i Supervisors regarding the re lease or satisfaction of Farm Ownership, Other Real Estate, and Farm Housing mortgages when the loan is paid in full.
A form of release or satisfaction pre pared or approved by the Attorney in Charge will be used.
c Escrow arrangements may be used provided the escrow agent is prop erly bonded. Noescrow arrangements will be initiated by the Farmers Home Administration and no part of the ex pense for an escrow arrangement will be paid by the Government.
366.3 Determining balance to be col lected.

a When a borrower has indicated his desire to pay his account in full, the County Supervisor will prepare and for ward to the Finance Office Form FHA995, Request for Certified Statement of Account, in order to obtain the unpaid balance, of principal and interest on the