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Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Rules and Regulations remaining eligible applications will be funded based on the date received.

Transfer and Assumption of HPRP
Loans
HPRP Loan Agreement An HPRP loan agreement must be executed by the intermediary and FSA
at loan closing for each loan. The HPRP
loan agreement will specify the terms of each loan such as the loan amount, interest rate, term and repayment schedule, disbursement procedure, provisions for late charges, provisions regarding default, and insurance requirements. As a condition of receiving HPRP funds, the intermediary agrees to seek prior written approval from FSA before making changes to its articles of incorporation, charter, by laws, draft loan documents, security policy, or relending policies when any of these are related to HPRP loans. In addition, 7 CFR 769.165 states that the intermediary must agree to maintain a separate ledger and segregated account for the HPRP revolving loan fund;
comply with FSAs annual monitoring reporting requirements on HPRP
activities; and pledge the HPRP
revolving loan fund and any other form of security that FSA may require.

As specified in 7 CFR 769.166, FSA
will allow for transfer and assumptions of the HPRP loans if an intermediary must discontinue participation in HPRP.

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HPRP Revolving Loan Fund Primary security for HPRP will be in the form of a first lien on the intermediarys HPRP revolving loan fund. Additional security will be required if needed to fully secure the loan.
The intermediary will be required to establish a revolving loan fund that must be maintained for as long as an HPRP loan to an intermediary remains unpaid. All HPRP loan funds received by an intermediary must be deposited into an HPRP revolving loan fund account to be used by the intermediary to provide direct loans to eligible ultimate recipients. Such accounts must be fully covered by Federal deposit insurance or fully collateralized with other securities in accordance with normal banking practices and all applicable State laws. Maintenance requirements of the revolving loan fund are specified in 7 CFR 769.164.
Post Award Requirements FSA determined that annual monitoring reports would be both necessary for the success of HPRP and to ensure intermediaries compliance with HPRP rules; therefore, FSA will require the intermediary to provide reports that include a description of the use of loan funds, information regarding the acreage, the number of heirs both before and after loan was made, audit findings, disbursement transactions, and any other information required by FSA.

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Background of Improving Farm Loan Program Delivery and Streamlining Oversight Activities The Consolidated Farm and Rural Development Act CONACT 7 U.S.C.
19212009cc18 authorizes FSAs Direct and Guaranteed Farm Loan Programs. FSA makes and services a variety of direct and guaranteed loans to farmers who are unable to obtain private commercial credit with reasonable rates and terms. FSA also provides direct loan borrowers with credit counseling and oversight. FSA loan applicants are often Beginning Farmers BF and Socially Disadvantaged SDA farmers who do not qualify for conventional loans because of insufficient net worth, or established farmers who have suffered financial setbacks due to natural disasters or economic downturns.
This rule streamlines and consolidates to improve program delivery, to improve the oversight of direct loan servicing activities, and to eliminate requirements that are costly, repetitive, or do not further the programs goals. These changes will reduce burden on farmers, ranchers, and FSA staff.
The loan making and servicing revisions included in this rule are intended to improve delivery of farm loans. More specifically, as explained in further detail below, this rule:
Corrects the spelling of down payment throughout the regulations;
Revises the family farm definition to ensure applicants are the operator of a farm;
Adds a definition of non-monetary default.
Authorizes the use of appraisals completed within the previous 18
months for loan making and servicing actions;
Provides additional guidance on the use of supervised bank accounts;
Modifies operating plan development rules to authorize realistic county or state average yields to be used in place of actual producer yields during disaster years;
Modifies the requirement to verify applicant debts for loan program participants;
Clarifies that entity members holding at least 50 percent interest in the entity must be the owners and operators of the farm;

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Clarifies that costs associated with compliance of the Occupational Safety and Health Act of 1970 are an eligible use of guaranteed Operating Loan OL
funds;
Corrects an existing cross reference to crop insurance regulations;
Revises direct loan application review and response timeframes;
Exempts non-essential assets valued up to $15,000 from being pledged as security for direct loan applicants;
Authorizes fixtures as an authorized use of funds for direct operating loans;
Authorizes an annual OL and Emergency Loan EM to carry a repayment term of 24 months;
Authorizes a waiver of previously required borrower training requirements;
Eliminates obsolete supervisory language and replaces it with language to better reflect FSAs current resources and mission;
Ties the assessment to the frequency of required classification or graduation reviews;
Eliminates year end analysis requirement for borrowers who received a direct loan, chattel subordination, or primary loan servicing action during the previous year;
Changes the limited resource review requirement from annually to every 2 years;
Adds sole member LLCs to the protections for borrowers entering the armed forces;
Prohibits large-scale surface leases for non-agricultural purposes;
Eliminates appraisal requirement on release of property without monetary consideration where FSA is well secured;
Raises the estimated value for the appraisal requirement from $25,000 to $50,000;
Increases the processing time for Primary Loan Servicing applications from 60 days to 90 days when a real estate appraisal is required; and Allows a borrower to accept a nonwritedown offer and waive the need for a writedown offer when an appraisal would be required for the writedown offer.
Spelling of Down Payment Currently, the regulations use the term downpayment as one word in twelve locations. As downpayment is a misspelling, this rule corrects the term to down payment as two separate words.
Family Farm Definition Eligibility criteria for most direct and guaranteed farm loans requires an applicant to operate a family farm.

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