1. This agreement entered into pursuant to 7 CFR 1951-I, between the United States of America, acting through the Farmers Home Administration (FMHA) (herein called "the Government") pursuant to section 521 of Title V of the Housing Act of 1949 and the borrower(s) whose name(s) and address(es) appears above (herein sometimes referred to as "borrower"), supplements the note(s) from borrower to the Government as described above, and any promissory note(s) for loans made to borrower in the future by the Government. Such future notes, when executed, will be listed below the signature line of this Subsidy Repayment Agreement.

2. I (we) agree to the condition set forth in this agreement for the repayment of the subsidy granted me (us) in the form of interest credits or Homeownership Assistance Program (HOAP) subsidy (hereinafter called "subsidy").

3. I (we) agree that the real property described in the mortgage(s) listed above is pledged as security for repayment of the subsidy received or to be received. I (we) agree that the subsidy is due and payable upon the transfer of title or non-occupancy of the property by me (us). I (we) understand that the real estate securing the loan(s) is the only security for the subsidy received. I (we) further understand that I (we) will not be required to repay any of the subsidy from other than the value (as determined by the Government) of the real estate, mortgaged by myself (ourselves) in order to obtain a Section 502 Rural Housing (RH) loan.

4. I (we) understand that so long as I (we) continue to own the property and occupy the dwelling as my (our) residence, I (we) may repay the principal and interest owed on the loan and defer repaying the subsidy amount until title to the property is conveyed or the dwelling is no longer occupied by me (us). If such a request is made, the amount of subsidy to be repaid will be determined when the principal and interest balance is paid. The mortage securing the FmHA RH loan(s) will not be released of record until the total amount owed the Government has been repaid.

5. I (we) agree that Paragraph 6 of this agreement is null and void should the property described in the mortgage(s) be voluntarily conveyed to the Government or liquidated by foreclosure.

6. When the debt is satisfied by other than voluntary conveyance of the property to the Government or by foreclosure, I (we) agree that sale proceeds will be divided between the Government and me (us) in the following order:

(a) Unpaid balance of loans secured by a prior mortgage as well as real estate taxes and assessments levied against the property which are due will be paid.

(b) Unpaid principal and interest owed on FmHA RH loans for the property and advances made by FmHA which were not subsidy and are still due and payable will be paid to the Government.

(c) I (we) will receive from the sale proceeds actual expenses incurred by me (us) necessary to sell the property. These may include sales commissions or advertising cost, appraisal fees, legal and related costs such as deed preparation and transfer taxes. Expenses incurred by me (us) in preparing the property for sale are not allowed unless authorized by the Government prior to incurring such expenses. Such expenses will be authorized only when FmHA determines such expenses are necessary to sell the property, or will likely result in a return greater than the expense being incurred.

(d) I (we) will receive the amount of principal paid off on the loan calculated at the promissory note interest rate.

(e) Any principal reduction attributed to subsidized interest calculations will be paid to the Government.

(f) I (we) will receive my original equity which is the difference between the market value of the security, as determined by the FmHA appraisal at the time the first loan subject to recapture of subsidy was made, and the amount of the FmHA loan(s) and any prior lien. This amount is and represents percent of the market value of the security. (The percent is determined by dividing my (our) original equity by the market value of the security when the loan was closed.) The dollar amounts

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I (we) will receive the amount of value reciation less the amount paid the Govment as determined in (g) above. I (we) also receive an additional amount in portion to my original equity by reducthe amount of value appreciation due to O Government by the percent of my (our) ginal equity as shown in (f) above.

i) If I (we) am the recipient of HOAP, the ount of value appreciation to be recaped will be calculated as if I (we) had paid percent interest on the loan, unless the erage interest rate paid by me (us) was eater than 1 percent. In such cases it will determined based on the average interest e paid by me (us).

j) If this agreement is for a subsequent n(s) only, the amount of repayment demined in (g) above will be reduced by the lowing percent: This percent

l be determined by dividing the amount the loan(s) subject to recapture by the cal outstanding RH debt. This percentage l be entered at the time I (we) sign this reement.

k) If this agreement is for more than one n that is subject to recapture, the subsirepayment computations will be based on e total subsidy granted on all loans.

. When a FmHA RH loan is repaid by her than foreclosure, voluntary conveyce, or sale of property, the amount of suby to be repaid the Government will be de-mined in the same manner as described paragraph 6 of this Exhibit but based on e appraised value determined by FmHA tead of sales price. In such cases, the suby due to the Government will remain a n on the property until paid. It must be id upon non occupancy, sale, or transfer title to the property.

. I (we) have read and agree to the provins of this agreement.

rrower

-Borrower

EXHIBIT B-SUBSIDY REPAYMENT FACT

SHEET

Subsidy granted by the Farmers Home Administration (FmHA) to section 502 Rural Housing borrowers on loans approved after October 1, 1979, is subject to recapture. This means that when a borrower's home is sold, transferred, or is no longer occupied as the borrower's residence, all or part of the interest credit or home ownership assistance subsidy granted on the loan must be repaid to the Government. The amount to be repaid will be determined on the basis of a formula that permits the borrower to retain a portion of the value appreciation available when the home is sold or the mortgage otherwise paid-off.

The purpose of granting a housing subsidy is to assist a borrower to obtain decent, safe, and sanitary housing. Housing subsidy costs have risen dramatically in recent years. Through the use of a subsidy repayment agreement, the borrower and the Government share this cost. The borrower's contribution to subsidy cost will be from equity acquired through appreciation of the mortgaged property. Therefore, the longer the borrower lives in and maintains the property the greater the portion of the subsidy the borrower may retain.

How will it work?

1. The Mortagages or Deeds of Trust, signed by those receiving interest credit or home ownership assistance subsidy, contain

a provision making the amount of subsidy a lien against the property.

2. When a house is sold, transferred or no longer occupied as the borrower's residence, the amount of subsidy to be repaid will be due and payable.

3. When a borrower pays off the loan, but continues to live in the dwelling, the amount of subsidy to be repaid will be calculated. The borrower may elect to defer the repayment of subsidy, however, until the property is sold or no longer used as the borrower's residence. This protects borrowers from being forced to sell their home because of subsidy recapture.

4. A chart printed on the subsidy repayment agreement which is available from any FmHA county office will be used to calculate borrower and FmHA shares of any value appreciation.

4. Selling Expenses: Authorized expenses incurred by the borrower in order to sell the property. (If none enter "0").

5. Principal paid at the note rate. This is the difference between the initial loan amount and the balance owed on principal as of the selling date, figured with payments applied at the note rate.

6. Principal attributed to subsidy. This is the difference between (3) “unpaid principal balance" and the principal balance figured at the note rate. Enter "0" if there is no difference.

7. Original Borrower Equity, enter amount from 6(f) of the Subsidy Repayment Agreement.

8. Value appreciation. Item 1 less the total of items 2, 3, 4, 5, 6, and 7.

9. Subsidy Recaptured: Enter the amount determined by multiplying value appreciation by the appropriate factor in paragraph 6(g) of the Subsidy Repayment Agreement and subtract from that result any amount provided for in 6(h) of the Subsidy Repayment Agreement or the total amount of subsidy granted whichever is the smaller.

10. Difference: The difference between (8) "value appreciation" and (9) "Subsidy Recaptured."

11. As a check on the calculations total of Government plus Borrower columns will equal total of items 2 through 7 plus items 9 and 10 in the total column. This figure will also be the same as the selling price.

1. Selling Price is the value of the property determined by the sale price or an appraisal.

2. Prior liens refers to the amount of liens owed as of the sale date that are prior to the Government liens and includes, but may not be limited to prior mortgages, real estate taxes and assessments levied against the property.

3. Unpaid balance of FmHA RH loan(s). The amount of the unpaid principal and interest due as of the sale date plus any advances made by the government which were not subsidy.

The following definitions apply to this Part 1955.

(a) Acquired real estate. Real estate and any growing crops, improvements, appurtenances, and rights that pass with the land; inventory acquired as part of a business; and other property that is necessary to the efficient operation of the real estate or business and that is usually sold with the real estate.

(b) Loans to individuals. For purposes of Part 1955, the following loans will be considered loans to individuals: Farm Ownership (FO), Soil and Water (SW), Recreation (RL), Land Conservation and Development (LCD), Economic Opportunity (EO), Operating (OL) whether to groups or individuals, Emergency (EM) whether to groups or individuals, sections 502 and 504 Rural Housing (RH), Rural Rental Housing (RRH) loans without a loan agreement, and Labor Housing (LH) loans without a loan agreement.

(c) Loans to organizations. For purposes of this Part 1955 the following loans will be considered loans to organizations: Community Facility (CF); Water and Waste Disposal; Association Recreation; Watershed (WS); Resource Conservation and Development (RC&D); loans to associations for Shift-in-land-use; loans to associ

ations for Irrigation and Drainage and other Soil and Water Conservation measures; loans to Indian Tribes and Tribal Corporations; Timber Development (TD); RRH except to individuals without a loan agreement; Rural Housing Site (RHS); LH except to individuals without a loan agreement; and Rural Cooperative Housing (RCH): Business and Industrial (B&I) to both individuals and groups. Economic Opportunity Cooperative (EOC) loans are no longer being made, but those already made will be referred to as organization loans.

[41 FR 32698, Aug. 5, 1976, as amended at 42 FR 21268, Apr. 26, 1977]

§ 1955.4 [Reserved]

§ 1955.5 Authorities and responsibilities.

(a) Line authority. This authority is from the Administrator to State Director, District Director, and County Supervisor. Assistance, guidance, and counsel are available from the Property Management Specialist and Program Staff in the State Office and from appropriate program divisions and Property Management staff in the National Office. Full use will be made of these resources.

(b) Redelegation of authority. FmHA will redelegate authorities to the maximum extent possible consistent with program requirements and available resources.

(1) The State Director is authorized to redelegate, in writing, any authority delegated to the State Director in this subpart, except where specifically excluded, to the Chief, Property Management; Chief, Rural Housing; Chief, Farmer Programs; Chief, Community Programs; Chief, Business and Industry; Rural Housing Specialist; Farmer Programs Specialist; Property Management Specialist; Community Programs Specialist; and Business and Industry Specialist.

(2) The County Supervisor is authorized to redelegate, in writing, any authority delegated to the County Supervisor in this subpart to any employee in the County Office determined by him or her to be qualified.