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FEDERAL REGISTER

T u e s d a y , A u g u s t 9, 1949

CODIFICATION GUIDÉ Con.
Title 42
Chapter I:
Part 34_____ -------------

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Title 44
Chapter II:
Part 202_____________________

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b Certification by County Commit tee. Before a loan may be made the County Committee must certify on Form FHA 202 that to the best of its knowledge and belief:
1 The applicant has suffered damage as a result of a disaster.
2 The applicant is unable to obtain the loan applied for from commercial banks, cooperative lending agencies, or other responsible sources, and 3 The applicant honestly will en deavor to carry out the undertakings and obligations required of him under the loan.
381.5 Loan purposes. Disaster loans may be made for the following agricul tural purposes :
a The purchase of feed, seed, fer tilizer, materials forpest control, and for essential farm and home operating expenses.
b The purchase of livestock.
c The purchase of orchard and cit rus nursery stock.
d The purchase of farm and home equipment, or the repair thereof.
e The refinancing of indebtedness secured by liens on property other than real estate where the property involved is essential to the applicants farming operations and the present creditor will not continue to carry the indebtedness.
The refinancing of unsecured debts ne gotiated during or after the disaster, when the need for the credit obtained was related to the disaster, and satisfac tory arrangements cannot be worked out with the creditor for the applicant to repay the indebtedness out of future income. Disaster loans may not be made to refinance any other debts.
f The replacement or repair of buildings, fences, drainage and irrigation systems on individual farms.
g The leveling of land and the clear ing of debris therefrom necessary as a direct result of the disaster.
h Other agricultural purposes not inconsistent with the limitations set forth in connection with any of the above purposes.
i Expenses incident to the making of such loans.
381.6 Rates and terms. Disaster loans will bear interest from the date of the advance at the rate of 3 percent per annum on the unpaid principal. Except as provided in this section, such loans will be scheduled for repayment in at least annual installments over the mini mum period of time consistent with the anticipated ability of the borrower to re pay subject to the following:
a The repayment schedule may not extend beyond the estimated useful life of the principal items offered as security.
b In no case may loans secured by liens on chattel property be scheduled
for repayment over a period extending beyond 1 years from the date of the advance.
c Loans secured by liens on real es tate in accordance with the policy con tained in 381.7 may be scheduled for repayment over a period not to exceed 20 years from the date of the advance.
d In cases in which adequate income cannot be anticipated diuring the first year after the loan is made, the first in stallment may be scheduled for repay ment at the end of the second crop year following the date of the loan. Upon the prior approval of the Administrator, based upon unusual conditions in an in dividual case, a longer period of defer ment may be authorized.
381.7 Security requirements. Ex cept as provided in this section disaster loans will be secured for the full amount of the loan by 1 a first lien on all live stock, farm machinery, and farm equip ment purchased or refinanced with pro ceeds of the loan, 2 the best lien ob tainable on crops growing or to be grown, and 3 the best lien obtainable on as much of the livestock, farm machinery, and farm equipment of security value owned by the applicant at the time the loan is made as the loan approving offi cial determines necessary to secure rea sonably the disaster loan. Assignments of proceeds from crop insurance policies or from the sale of agricultural products may be taken as additional security for any disaster loan when necessary to pro tect the interest of the Government.
a Disaster loans made primarily for real estate repairs and improvements, including improvements to orchards and groves, which require longer periods for repayment than would be prudent to en cumber livestock and equipment,, should be secured only by real estate liens.
However, applicants must have sufficient equity in the real estate to secure ade quately the disaster loans.
b Loan approving officials shall re quire in individual cases that liens on real estate be taken as additional security in situations not covered by paragraph a o f this section when it is determined that the amount of the loan, the financial condition of the applicant, or other pe culiar circumstances make such action advisable in order to secure adequately the loan to be made.
c When disaster loans are to be se cured by liens on real estate, the appli cant will be required to provide, at his expense, mortgagees title insurance or an abstract of title.
381.8 Advances resulting in perma nent real estate improvements. Loans made primarily for the purpose of mak ing permanent improvements to real es tate will be made generally to the owner of the real estate. However, a loan for this purpose may be made to a tenant when adequate chattel security can be obtained, but in such cases the landlord will be required to compensate the tenant for the improvements to the real estate.
381.9 Loan forms and routines a Applications. Applications for dis aster loans will be made to the County Office of the Farmers Home Adminis-

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tration on Form FHA 202, Application and Certifications for Disaster Loan .
b Promissory note. The applicant will be required to execute Form FHA
203, Promissory Note , for the full amount of each advance.
c Loan voucher. The applicant will be required to execute Form FHA 5, Loan Voucher , for the total amount of each advance as indicated in Form FHA 203.
d Security instruments. 1 When chattels are to be taken as security for a loan, the applicant will execute Form FHA 30_____ Crop and Chattel Mort gage .
2 When real estate is to be taken as security for a loan the applicant will execute Form FH A 76_____ Real Estate Mortgage .
3 Assignments of proceeds from the sale of farm, dairy, or other agricultural products, when required as additional security, will be executed by the applicaht on Form FHA 80, Assignment of the Proceeds from the Sale of Agricul tural Products , or other form approved by the representative of the Office of the Solicitor.
e Lien searches. Applicants are re quired to obtain and pay the cost of lien searches. The cost of lien searches may be paid from the proceeds of loan checks when necessary.
381.10 Loan approval authority.
Subject to the policies and procedures contained in 381.2 to 381.9, State Di rectors are authorized to approve dis aster loans in amounts which will not cause the outstanding principal balance on such loans to exceed $12,000 for any one borrower. State Directors may re delegate to State Field Representatives and County Supervisors authority to ap prove disaster loans subject to the fol lowing limitations:
a State Field Representatives may be authorized to approve disaster loans in amounts which will not cause the out standing principal balance on such loans to exceed $5,000 for any one borrower.
b County Supervisors may be au thorized to approve disaster loans in amounts which will not cause the out standing principal balance on such loans to exceed $2,500 for any one borrower.
381.11 Servicing disaster loans.
Farmers Home Administration Instruc tions except those relating to compro mise, adjustment and cancellation of debts containing the policies and pro cedures for the servicing of other operat ing loans under the Production and Sub sistence Loan Program will be followed in the servicing of disaster loans. Offi cials of the Farmers Home Administra tion who have been vested with authority and assigned responsibility under the Production and Subsistence Loan Pro gram are vested with the same authority and assigned the same responsibility with respect to disaster loans.
STJBPART B LOANS UNDER ITEM LOANS TO
FARMERS, PROPERTY DAMAGE , PUBLIC LAW
71, 81ST CONGRESS
A u t h o r i t y : 381.21 to 381.23 issued un d er 62 Stat. 1038, 63 Stat. 81.
D e r i v a t i o n : 381.21 to 381.23 contained in A dm in istration Letter 83, dated June 20, 1949.