ral is received by the County Superor no collection or servicing action 11 be taken except upon specific structions from the State Director OGC. However, when a borrower luntarily proposes to make a payent on an account, the County Suervisor will accept the collection nless notice has been received that he case has been referred to the U.S. ttorney. The County Supervisor will mmediately notify OGC directly by hemorandum, with a copy sent to the State Director, of any such collections received. The County Supervisor also will notify the State Director and OGC of any developments which may affect any case which has been referred to OGC.

(e) Actions on cases referred to the U.S. Attorney and on judgment cases (including third-party judgments). OGC will notify the State Director, the Finance Office, and the County Supervisor when a case is referred to the U.S. Attorney or is otherwise disposed of. When a case is referred to the U.S. Attorney, the Finance Office will discontinue mailing Forms FmHA 450-1, "Statement of Account," to such borrowers. OGC will also notify the State Director when a judgment (including third-party) is obtained.

(1) When the County Supervisor receives notice from OGC that a judgment (including third-party) has been obtained, the County Supervisor will notify the Finance Office to establish a judgment account by submitting Form FmHA 455-20, "Notice of Judgment."

(2) After notice has been received that a case has been referred to the U.S. Attorney or a judgment has been obtained and has not been returned to FmHA by the U.S. Attorney, no action will be taken by the County Supervisor except upon specific instructions from the State Director, OGC, or the U.S. Attorney. However, the County Supervisor will keep the State Director informed of any developments which may affect the FmHA security interest or and pending court action to enforce collection. If information is obtained indicating that such debtors have assets or income not previously reported by the County Supervisor to the State Director from which collec

tion of such judgment accounts can be obtained, the facts will be reported to the State Director. The State Director immediately will notify OGC of any developments which might have a bearing on cases referred to the U.S. Attorney, including such judgment

cases.

(i) If the debtor proposes to make a payment, FmHA employees will not accept such payment but will offer to assist in preparing a letter for the debtor's signature to be used in transmitting the payment to the U.S. Attorney. In such case, the debtor will be advised to make payment by check or money order payable to the Treasurer of the United States.

(ii) Collection items received through the mail from the debtor or from other sources by the County Office to be applied to such accounts will be forwarded by the County Supervisor through OGC to the appropriate U.S. Attorney. Likewise, collections received by the District Director or the State Office will be forwarded through OGC to the appropriate U.S. Attorney. Such items will be forwarded in the form received except that cash will be converted into money orders made payable to the Treasurer of the United States. The money order receipts will remain attached to the money orders. Form FmHA 451-1 will not be issued in any such case. The debtor will be informed in writing by the County Supervisor of the disposition of the amount received.

(3) When the U.S. Attorney has returned a judgment case to FmHA, the County Supervisor is responsible for servicing it as follows:

(i) When the judgment debtor has the ability to make periodic payments, action will be taken by the County Supervisor to make arrangements for the judgment debtor to do so.

(ii) Any payments received from such debtor by FmHA will be handled by issuing Form FmHA 451-1 and converting and transmitting such payments as provided in Part 1951, Subpart B. The U.S. Attorney will be informed through OGC of payments received only when the debtor pays a judgment in full.

(iii) At the time of the annual review of collection-only or delinquent and

roblem cases, the County Supervisor ill determine whether such judgment ebtors, whose judgments have not een charged off and who are not aking regular and satisfactory payients, have assets or income from hich the judgment can be collected. f such debtors have either assets or ncome from which collection can be hade and they decline to make satisactory arrangements for payment, he facts will be reported by the County Supervisor to the State Direcor. The State Director will notify OGC of developments when it appears hat collections can be enforced out of ncome or assets.

(iv) Such judgments will not be renewed or revived unless there is a reason to believe that substantial assets have or may become subject thereto.

(v) Such judgments may be released only by the U.S. Attorney when they are paid in full or compromised.

(4) In all judgment cases, any proposed compromise or adjustment will be handled in accordance with § 1864.12 of Part 1864 of this chapter (FmHA Instruction 456.1, paragraph XII).

(5) If the debtor requests information as to the amount of outstanding indebtedness, such information, including court costs, should be obtained from the Finance Office if the County Supervisor does not have that information. If questions arise as to the payment of court costs, information as to such costs will be obtained through the State Office from OGC.

(7 U.S.C. 1989; 42 U.S.C. 1480; 42 U.S.C. 2942; 5 U.S.C. 301; Sec. 10, Pub. L. 93-357, 88 Stat 392; delegation of authority by the Sec. of Agri., 7 CFR 2.23; delegation of authority by the Asst. Sec. for Rural Development, 7 CFR 2.70; delegations of authority by Dir., OEO 29 FR 14764, 33 FR 9850)

after referred to as "FHA") and the Commodity Credit Corporation (hereinafter referred to as "CCC") that the following procedure will be observed in those cases where producers sell to CCC or pledge to CCC as loan collateral under the Price Support Program, agricultural commodities such as, but not limited to, cotton, tobacco, peanuts, rice, soybeans, grains, on which FHA holds a prior lien and the proceeds from such sales or loans are not remitted to FHA for application against the loan(s) secured by such lien:

1. When an FHA County Supervisor learns that an FHA borrower has obtained a loan from CCC on a commodity or sold a commodity to CCC under such circumstances, he shall immediately notify his State Director. The State Director, immediately upon receipt of the notice, shall furnish CCC (see Appendix 1) with the name and address of such borrower, the county of his location at the time the commodity was placed under loan or sold, and the amount of the FHA loan secured by the lien.

2. When CCC receives such a notice from FHA, CCC shall take steps to prevent the making of any further loans on or purchases of the commodity of the borrower. If the CCC loan is still outstanding and CCC calls the loan, CCC shall notify the FHA State director of the demand.

3. If the CCC loan is repaid, whether prior to or after the receipt by CCC of the notice from FHA, the FHA State Director shall be notified immediately, at which time CCC will have discharged its responsibility under this agreement.

4. FHA shall, in each case in which the CCC loan is not repaid or the commodity has been sold to CCC, endeavor to collect from the borrower the amount due on the FHA loan. Such collection efforts shall include the making of demand on the borrower and the following of FHA's normal administrative policies with respect to the collection of debts, but shall not include the making of demand for payment upon the area peanut producer cooperative marketing associations through which CCC makes price support available to producers. If collection efforts are not successful, the FHA County Supervisor shall make a complete report on the matter to his State Director. If the State Director determines that the amount due on the FHA lien is not collectable by administrative action, he shall refer the matter to the appropriate local office of the General Counsel, with a full statement of the facts, for a determination of the validity of the FHA lien. If it is determined by the General Counsel's Office that FHA holds a valid prior lien on the commodity, the State Director shall furnish CCC with a copy of such determination, together with all other pertinent information, and shall

[44 FR 4437, Jan. 22, 1979, as amended at 44 FR 10980, Feb. 26, 1979; 44 FR 64796, Nov. 8, 1979; 46 FR 39123, July 31, 1981]

EXHIBIT A-MEMORANDUM OF UNDERSTANDING BETWEEN COMMODITY CREDIT CORPORATION AND FARMERS HOME ADMINISTRATION

IT IS HEREBY AGREED by and between the Farmers Home Administration (herein

uest payment to FHA of the lesser of (1) amount due on its loan, or (2) the value the commodity at the time the CCC loan purchase was made (based on the market ue of the commodity on the local market arest to the place where the commodity s stored). The information to be furshed CCC shall include (a) the principal lance plus interest due FHA on the date the request, (b) the amount due on the HA loan at the time the CCC loan or purhase was made, and (c) the amount of the CC loan or purchase proceeds, if any, aplied by the producer against the FHA loan. HA shall continue to make collection efbrts and shall notify CCC of any amount ollected from the producer or any other party.

5. Upon receipt of evidence, including a copy of the determination of the Office of the General Counsel, from the State Director of FHA that the proceeds from the CCC loan or purchase have not been received by FHA from the borrower, and that collection cannot be made by FHA, CCC will if the CCC loan has not been repaid or if CCC has purchased the commodity, pay FHA the amount specified in paragraph 4 above or deliver the commodity (or warehouse receipts representing the commodity) to FHA: Provided, That if CCC has any information indicating that collection may be made by FHA from the borrower or any other party, it may notify FHA and delay payment pending additional collection efforts by FHA.

6. It is the desire of both FHA and CCC that claims to be processed under this agreement receive prompt attention by both parties and be disposed of as soon as possible. Instructions for the implementation of these procedures at the field office level will be developed and issued by the Washington offices of FHA and CCC.

7. Any question with regard to the handling of any claim hereunder shall be reported by the applicable ASCS office to ASCS in Washington and by the FHA State Director to the National Office of FHA.

This Memorandum of Understanding supersedes the agreement entered into between FmHA and CCC on November 5, 1951. Entered into as of this 29th day of May, 1973.

FARMERS HOME ADMINISTRATION,

FRANK B. ELLIOTT,
Acting Administrator.

COMMODITY CREDIT CORPORATION,

KENNETH E. FRICK, Executive-Vice President.

EXHIBIT B-MEMORANDUM OF UNDERSTANDING AND BLANKET-COMMODITY LIEN WAIVER

The Farmers Home Administration (FHA) sometimes makes loans to farmers on the security of agricultural commodities that are eligible for price support under loan and purchase programs conducted by the Commodity Credit Corporation (CCC). FHA and CCC desire that price support be made available to farmers without unnecessarily impairing or undermining the respective security interests of FHA and CCC in and without undue inconvenience to producers and FHA and CCC in securing lien waivers on such commodities.

Now, therefore, it is agreed as follows:

(1) Upon request of an official of an ASCS State Office, the FHA State Director in such State shall furnish designated ASCS County Offices with the names of producers in the trade area from whom FHA holds currently effective liens on commodities with respect to which CCC conducts price support programs. FHA will try to furnish a complete and current list of the names of such producers; however, FHA's liens with respect to any commodity will not be affected by an error in or omission from such lists.

(2) For a loan disbursed by an ASCS County Office, CCC will issue a draft in the amount (less fees and charges due under CCC program regulations) of the loan on, or purchase price of, the commodity payable jointly to FHA and the producer if (a) his name is on the list furnished by FHA, or (b) he names FHA as lienholder. The draft will indicate the commodity covered by the loan or purchase.

(3) On issuance of the draft, the security interest of FHA shall be subordinated to the rights of CCC in the commodity with respect to which the loan or purchase is made. The word "subordinated" means that, in the case of a loan, CCC's security interest in the commodity shall be superior and prior in right to that of FHA and that, on purchase of a commodity by CCC or its acquisition by CCC in satisfaction of a loan, the security

Rotation of Grain Crops

Under the Commodity Credit Corporation (CCC) Farmer-Owned Grain Reserve Program, a producer may request to rotate or exchange new crop grain for the original -crop grain that is in the Farmer-Owned Grain Reserve Program and already encumbered by CCC. The Farmers Home Administration (FmHA) may have subordinated their first lien position to CCC on the original grain placed in reserve and/or may have a first lien on the new crop. FmHA and CCC desire to devise a mechanism whereby the CCC can relinquish its first lien position on the original grain reserve crop to FmHA and in turn the FmHA can relinquish its first lien position to CCC on the replacement grain reserve crop.

Now, therefore, it is agreed as follows: (1) Upon receipt of a memorandum from an Agricultural Stabilization and Conservation Service (ASCS) County Executive Director or other designated county office official requesting the rotation of a grain reserve crop for a producer borrower(s), the FmHA County Supervisor and the ASCS county office official will jointly indicate approval or rejection of the request on the bottom of the original and a copy of the memorandum (Approval Memorandum) as follows:

"We hereby agree to and authorize the rotation of the subject producer's grain crops in accordance with the provisions of the Memorandum of Understanding between Farmers Home Administration and Commodity Credit Corporation datedFmHA ASCS

number of bushels being rotated, the type of crop, years' crop being rotated and the location of the original grain reserve crop (approximate land and facility description).

(2) Upon execution of the Approval Memorandum by both ASCS and FmHA, the security interest of FmHA in the new crop grain shall be subordinated to the security interest of CCC in such grain and the security interest of CCC in the original crop grain shall be subordinated to the security interest of FmHA in such grain. At that point in time it will be the responsibility of each agency and the borrower to account for their respective interests in the grain crops and/or proceeds from the sale of the grain. The crop rotation and subordination of liens will only involve the amount of grain that has been specifically provided for in the memorandum from ASCS.

(3) If there is an intervening third party lien and it is impossible for FmHA or CCC to have a first lien on their respective grain crops, the request of the producer to rotate crops will not be granted.

(4) Nothing contained in this Memorandum of Understanding shall be construed to affect the rights and obligations of the parties except as specifically provided herein.

(5) This agreement may be terminated by either party on 30 days written notice to the other party.

PART 1965-REAL PROPERTY

Subpart A-[Reserved]

Subpart B-Security Servicing for Multiple Housing Loans

Sec.

1965.51 General.

1965.52 Definitions.

1965.53-1965.54 [Reserved]

1965.55 Authority of State Director. 1965.56-1965.57 [Reserved]

1965.58 Responsibilities.

1965.59-1965.60 [Reserved]

1965.61 General loan servicing requirements.

1965.62 [Reserved]

1965.63 Issuance or transfer of stock, or change in membership or membership interest in organizations indebted to FmHA.

1965.64 [Reserved]

1965.65 Transfer of real estate security and assumption of loans.

1965.66-1965.67 [Reserved]

1965.68 Consolidation.

1965.69

1965.70

[Reserved]

Reamortization.

[Reserved]

1965.72

Deceased borrower.

This subpart prescribes the policies, rocedures, and authorizations for rvicing and liquidating all Farmers ome Administration (FmHA) multie housing type loans and labor housg grants. These loans include Rural ental Housing (RRH), Rural Cooperive Housing (RCH), Rural Housing te (RHS), and Farm Labor Housing H). The servicing functions deribed in this subpart are for the purose of assisting the borrower in meetg the objectives of the loan, repayg loans on schedule, complying with mHA agreements and regulations, otecting the interest of FmHA, and aintaining the security property. orrowers will be required to pay their ebts to the FmHA and other crediaccording to their agreements.

Borrowers shall be required to operate their facilities according to FmHA regulations and applicable State and local laws and regulations. State Directors with the assistance of OGC should issue necessary State Supplements to assure compliance with State laws. After careful analysis, any borrower in default who does not evidence prospects of attaining successful operations within a reasonable time will have its loan liquidated according to authorizations contained in this subpart and Subpart A of Part 1955.

§ 1965.52 Definitions.

(a) FmHA. "FmHA" means the United States of America acting through the Farmers Home Administration; it also includes FmHA's predecessor agencies.

(b) OGC. "OGC" means the Regional Attorney or the Attorney in charge in the field office of the Office of the General Counsel of the United States Department of Agriculture.

(c) Servicing. "Servicing" includes the broad scope of activities undertaken by FmHA to see that the objectives of the loan are carried out; to assure compliance with the respective policies, procedures and authorizations set forth for each respective loan program; or to bring to a successful conclusion each loan or grant made by FmHA through transfer, sale, reamortization, payment or liquidation.

(d) Borrowers. "Borrowers" means all individuals, partnerships, cooperatives, trusts, public agencies, private or public corporations and other organizations which have received a loan or grant from FmHA for LH, RRH, RCH, or RHS purposes.

(e) Governing body. "Governing body" means those elected or appointed officials of an organization or public agency type borrower responsible for the operations of the project.

(f) District Director. For the purpose of this subpart, the term also includes the Assistant District Director, and other qualified District Staff who may be delegated responsibilities under this subpart according to the provisions of Subpart F of Part 2006 (available in any FmHA office). In the case of LH loans still being serviced in the