RD Instruction 444.8

U. S. Department of Agriculture

Rural Development

## RURAL HOUSING SITE LOAN POLICIES, PROCEDURES, AND 

## AUTHORIZATIONS

I [GENERAL]{.underline}: This Instruction sets forth the policies and
procedures and delegates authority for making Rural Housing Site (RHS)
loans under Sections 523 and 524 of the Housing Act of 1949. Any
processing or servicing activity conducted pursuant to this subpart
involving authorized assistance to RD employees, members of their
families, known close relatives, or business or close personal
associates, is subject to the provisions of Subpart D of Part 1900 of
this chapter. Applicants for this assistance are required to identify
any known relationship or association with an RD employee. Section 523
loans are direct loans for the purchase and development of building
sites for housing to be built by the Self-Help method; they have
additional requirements which are contained in paragraph XVIII of this
Instruction.\
(Revised 02-04-93, SPECIAL PN.)

II [OBJECTIVES]{.underline}: The basic objective of RHS loans is to
assist public or private nonprofit organizations interested in providing
sites for housing, to acquire and develop land in rural areas. This land
will be subdivided into adequate building sites and sold on a nonprofit
basis to (a) families eligible for low and moderate income Section 502
Rural Housing (RH) loans, including self-help housing; (b) cooperative
Rural Cooperative Housing (RCH) applicants and broadly based nonprofit
Rural Rental Housing (RRH) applicants; and (c) applicants eligible for
Housing and Urban Development (HUD) Sections 235 and 236 insured
mortgages.

III [DEFINITIONS]{.underline}: As used in this Instruction:

A. A \"private nonprofit organization\" is a corporation which (1) is
owned and controlled by private persons, (2) is organized and operated
for purposes other than making gains or profits for the corporation or
members, and (3) is legally precluded from distributing to its members
any gains or profits.

B. A \"public nonprofit organization\" is a nonprofit corporation other
than a private nonprofit corporation, including a municipal corporation
or other corporate agency of a State or local government.

C. \"Rural area\" is open country or rural places as defined in 7 CFR
part 3550. (Revised 01-23-03, SPECIAL PN.)

D. \"Development cost\" means the cost of purchasing and developing the
sites including engineering and legal fees, streets, roads, utilities,
minimum essential administrative costs, necessary equipment and
estimated interest which the borrower cannot pay from other sources.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DISTRIBUTION: W S A L Program Operations

Loan and Grant Making

Housing

## Sheet 1

## (Revision 6)

(03-25-70) PN 198

RD Instruction 444.8

III D (Con.)

E. \"RHS Section 523 loan\" means a loan to an organization which will
provide sites for housing to be built by the self-help method.

F. \"RHS Section 524 loan\" means a loan to an organization which will
provide sites for housing to be built with no limitation as to the
method of construction that will be used.

G. \"OGC\" means the Regional Attorney in charge serving the State in
which the RHS project is located.

IV [ELIGIBILITY REQUIREMENTS]{.underline}:

A. [Eligibility of Applicant]{.underline}. To be eligible for an RD
loan, the applicant must be a private or public nonprofit organization
as defined in paragraph III A or B which is authorized to provide
housing sites on a nonprofit basis. (Revised 06-17-70, PN 209.)

1\. If it is a private nonprofit organization as defined in paragraph
III A, it should also:

a\. Have a membership as follows: If an established organization, the
membership must include some local community leaders; if a new
organization, it should have at least 10 local community leaders. In
addition to the community leaders, the membership may, in either case,
include persons eligible to buy and interested in buying the developed
sites.\
(Revised 8-12-70 - PN 218.)

b\. Plan to adopt, if it is being newly organized, Articles of
Incorporation and Bylaws that are appropriate to the purposes and powers
of an eligible applicant under this Instruction. The proposed Articles
and Bylaws should be reviewed by the Office of the General Counsel (OGC)
and adapted for use in the respective States. (Revised 02-24-05, SPECIAL
PN.)

B. [Authorized Representative of Applicant]{.underline}. Rural
Development will deal only with the applicant or a bonafide
representative of the applicant or the representative\'s technical
advisors. An authorized representative of the applicant must have no
pecuniary interest in the award of the engineering, architectural or
construction contracts, necessary equipment or the purchase or
development of the land.

V [LOAN PURPOSES]{.underline}: Rural Development loans may be made to
qualified applicants:

A. For the purchase and development of adequate sites, including the
construction of essential access roads, streets, utility lines, and
necessary equipment which will become a permanent part of the
development. If public water and waste disposal facilities are not
available and cannot reasonably be provided on a community basis with
other financing, including Water and Waste Disposal association loans,
funds may be included for this purpose.

RD Instruction 444.8

V (Cont.)

B For the payment of necessary engineering fees, legal fees, and closing
costs.

C For the payment of actual cash cost of incidental administrative
expenses such as postage, telephone, advertising, and temporary
secretarial help, if funds to pay these expenses are not otherwise
available. The estimated cost of these items should be identified and
shown in the budget.

D To provide for needed landscaping, planting, seeding, or sodding, or
other necessary facilities related to buildings such as walks, parking
areas, and driveways.

E When legally required by proper local, county, or State governmental
bodies as a condition for subdivision approval, RHS loan funds may be
used to provide common areas, play grounds, and tot lots, provided such
facilities are dedicated to, and maintained by, a public body. (Added
5-31-78, PN 624.)

VI [LIMITATIONS]{.underline}:

A [Loan Limits]{.underline}. No RHS loan(s) will be made to any
applicant which will result in the applicant\'s owing an unpaid
principal balance of more than \$100,000 on such loan(s) unless prior
authorization for a larger loan is obtained from the National Office. No
such loan will exceed the development cost as defined in paragraph III
D, or the value of the property as improved with the loan unless the
excess amount will be recovered through assured refunds before the
maturity of the loan, from sources such as utility companies for
facilities initially financed with the RHS loan. These limitations also
apply to cases in which the same persons hold a majority of the
membership interests or constitute a majority of the directors of two or
more applicants. (Revised 5-17-71 - PN 258.)

B [Limitations of Use of Loan Funds]{.underline}. Loans will not be made
for:

1 The purchase of land in excess of the immediate and identified needs
in the locality.

2 The purchase of land from a member of an applicant-organization, or
from another organization in which any member of the
applicant-organization has an interest, without prior consent of the
National Office.

3 Refinancing of debts, except in accordance with paragraph VI E of this
Instruction.

4 Payment of any fee, charge, or commission to any broker, negotiator,
or other person for the referral of a prospective applicant or
solicitation of a loan.

5 Payment of any fee, salary, commission, profit, or compensation to an
applicant, or to any officer, director, trustee, stockholder, member or
agent of an applicant, except as provided in paragraph V B. No contract
or agreement for services to be paid for with loan funds should be
executed by the applicant without prior approval of the State Director.

## Sheet 2

## (Revision 3)

(3-25-70) PN 198

RD Instruction 444.8

VI (Cont.)

C [Sale of Developed Sites]{.underline}. The sites developed with a
Section 524 loan must be for housing low- and moderate-income families
and may be sold to families, nonprofit organizations, public agencies,
and cooperatives eligible for assistance under any Section of Title V of
the Housing Act of 1949, or under any other law which provides financial
assistance. For example, this may include: (Revised 2-12-75 - PN 452)

1 Individuals with low and moderate incomes eligible for HUD mortgages.
(Added 2-12-75 - PN 452)

2 Individuals with low and moderate incomes eligible for Veterans
Administration (VA) guaranteed loans. (Added 2-12-75 - PN 452)

3 Individuals with low or moderate incomes eligible for a loan from any
private lender which is authorized by law to provide financial
assistance for housing. (Added 2-12-75 - PN 452)

4 Nonprofit organizations funded by Federal, State or local governments
carrying out programs for low- and moderate-income families to obtain
housing. (Added 2-12-75 - PN 452)

5 State or local public agencies such as a housing authority or a
housing finance development agency carrying out programs for low- and
moderate-income families to obtain housing. (Added 2-12-75 - PN 452)

D [Suitability of Sites]{.underline}. Sites will meet the requirements
of the planned use; for example, individual housing or multiple housing
or any combination thereof. Building sites must be well located and
designed to provide a desirable living environment. Generally a loan
will not be made for the development of less than 10 units, but they
need not be contiguous.

E [Obligations Incurred Before Loan Closing]{.underline}. When an
applicant files an application for a loan, the County Supervisor will
advise the applicant that development work must not be started and
obligations for work, materials, or land purchase must not be incurred
before the loan is closed. If, nevertheless, the applicant incurs
obligations for work, materials, or land purchase before the loan is
closed, the State Director may authorize the use of loan funds to pay
such obligations only when he finds that all the following conditions
exist:

1 The obligations were incurred after the applicant filed a written
application for a loan.

2 The applicant is unable to pay such obligations from its own resources
or to obtain credit from other sources, and failure to authorize the use
of loan funds to pay such debts would impair the applicant\'s financial
position.

3 The obligations were incurred for authorized loan purposes.

4 Contracts, materials, development and any land purchase meet agency
standards and requirements.

5 Payment of the obligations will remove any liens which have attached,
and any basis for liens that may attach, to the property on

account of such obligations or such work, materials, or land purchase.

RD Instruction 444.8

VI E (Cont.)

VII [SPECIAL CONDITIONS]{.underline}:

A [Evidence of Need]{.underline}. Loans will be made on the basis of the
applicant providing firm information as to the number of sites to be
developed and evidence of a need for the proposed building sites in the
locality.

B [Nondiscrimination]{.underline}. Recipients of RHS loans must agree
not to discriminate or to permit discrimination or segregation in the
sale of the developed sites. Borrowers will execute Form RD 400-4,
\"Nondiscrimination Agreement,\" before loan closing. This requirement
should be discussed with the applicant organization as early in the
negotiations as possible. The borrower will be required to agree with
the Equal Employment Opportunity provisions contained in Section 3 of
Exhibit B of this Instruction.

C [Supervisory Assistance]{.underline}. Supervision will be provided
borrowers to the extent necessary to achieve the objectives of the loan
and to protect the interests of the Government. County Supervisors will
counsel with applicants in selecting locations that will provide
essential services and facilities and will result in the development of
desirable residential communities.

D [Loan Resolution]{.underline}. A Loan Resolution will be adopted by
the applicant\'s Board of Directors or similar governing body. Exhibit B
of this Instruction should be used. If any provisions are not
appropriate to a particular case, proposed substitute language should be
submitted to the National Office with the recommendations of the State
Director.

E [Development Policies]{.underline}. Development will be planned and
performed in accordance with Subparts A and C of Part 1924 of this
chapter. (Revised 6-22-87, SPECIAL PN.)

F [Water and Waste Disposal Facilities]{.underline}. If public water and
waste disposal facilities are not available and these facilities will be
provided on a community basis with funds included in the RHS loan or
with other financing, provision should be made to form an organization
with members who will provide continuing maintenance and management of
facilities. The cost of the facilities should be considered as a cost of
developing the sites and included in the price charged for the lots when
they are sold.

G [Compliance with Local Codes and Regulations]{.underline}. Planning
and development of sites will comply with all State, county, and local
planning and zoning requirements, and will be for housing that will
conform with any applicable laws, ordinances, codes, and regulations
governing such matters as construction, heating, plumbing, electrical
installation, fire prevention, health, and sanitation. (Revised 5-31-78,
PN 624.)

H [Optioning of Land]{.underline}. If a loan includes funds to purchase
real estate, the applicable provisions of Subpart A of Part 1943
regarding options will be

## Sheet 3

## (Revision 5)

(3-25-70) PN 198

RD Instruction 444.8

VII H (Cont.)

followed. After the loan is approved, the County Supervisor will have
Form RD 440-35, \"Form Letter - Acceptance of Option,\" or other
appropriate form of acceptance, completed, signed by the applicant, and
mailed to the seller. (Revised 1-2-79, SPECIAL PN.)

I [Use of and Accountability for Loan Funds]{.underline}. Supervised
bank accounts will not be used except when their requirement is made or
authorized by the State Director for cases where adequate bonding is not
available. If a supervised bank account is used, collateral for deposits
of funds will be pledged in accordance with Section 1902.7 of Subpart A
of Part 1902. All loan funds and funds from other sources to be used to
pay the development costs of the site, as well as proceeds from the sale
of any sites, will be deposited in accordance with Subpart A of Part
1902. The County Supervisor will see that funds for land purchase are
paid to the seller simultaneously with loan closing. After the loan is
closed, monthly reports will be provided to the agency of all
disbursements made and income received by the borrower. Reports for each
month will be submitted to the agency County Office during the first 10
days of the next month. No expenditures will be made without prior
agency consent for items which are not included in the agency approved
development cost estimate or for amounts greater than those set forth in
such estimate. (Revised 7-6-81, SPECIAL PN.)

J [Insurance]{.underline}. The State Director will determine the minimum
amounts and types of insurance the applicant will carry.

1 Suitable Workman\'s Compensation Insurance will be carried by the
applicant for all its employees.

2 The applicant will be advised of the possibility of incurring
liability and encouraged, or required when appropriate, to obtain
liability insurance. (Revised 6-10-79 - PN 208.)

K [Bonding]{.underline}.

1 The provisions of Subpart A of Part 1924 pertaining to surety bonds
are applicable to RHS Loans except that approved corporate surety bonds
will be Required in all cases involving a development contract in excess
of \$20,000, unless an exception is made by the National Office.
(Revised 5-28-80, PN 728.)

2 The applicant will provide fidelity bond coverage for its officers and
employees entrusted with the receipt, custody, and disbursement of its
funds and the custody of any other negotiable or readily saleable
personal property. The amount of the bond will be at least equal to the
maximum amount of such funds including funds in bank accounts, and
property that the applicant will have in its possession or control at
any one time. If permitted by State law, the United States will be named
co-obligee in the bond. Form RD 440-24, \"Position Fidelity Schedule
Bond,\" may be used if permitted by State law.

RD Instruction 444.8

VII (Cont.)

L [Conditional commitments for construction of homes on developed
sites]{.underline}. Conditional commitments may be issued on sites
developed with an RHS Section 524 loan to permit homes to be constructed
on sites prior to the sale of the site to an eligible purchaser in
accordance with the following: (Added 10-27-76 - PN 541.)

1 The requirements of 7 CFR 3550.70, must be met and a conditional
commitment issued prior to the start of construction of the home.
(Revised 01-23-03, SPECIAL PN.)

2 The conditional commitment must be issued to (a) an RHS borrower who
can legally provide the proposed housing and has the experience and
training in construction to the extent necessary to assure that the
housing will be built or (b) jointly to the RHS loan borrower and a
builder who has the legal capacity, training and experience necessary to
construct the housing. In all cases the following language will be added
under \"other conditions\" on Form RD 1944-11, \"Conditional
Commitment:\" (Revised 5-12-87, SPECIAL PN.)

\(a\) \"Not withstanding the other provisions of this commitment the
sale of completed homes on sites developed with Section 524 Rural
Housing Site loans will be limited to families eligible for assistance
under any section of Title V of the Housing Act of 1949 or under any
other law which provides financial assistance for housing low- and
moderate-income families. The approval of Rural Development will be
obtained prior to the sale of each home. The request for approval shall
be submitted to the local Rural Development office along with (1) an
application for an RH 502 loan or (2) a financial statement from the
purchaser and verification of the other credit that is available.\"
(Added 10-27-76 - PN 541.)

\(b\) \"The benefits of the nonprofit development of the site(s) must be
passed on to the purchaser. This will result in this site being sold for
\$(price to be determined as provided for in paragraph XV B of this
Instruction.)\" (Added 10-27-76 - PN 541.)

3 In arriving at the commitment price for the site and the completed
home, the value will be based on the present market value of the house
only, plus the nonprofit selling price of the lot.\
(Added 10-27-76 - PN 541.)

4 If in order to obtain interim financing for the construction of the
homes, the RH site borrower requests a subordination by Rural
Development on individual lots, the State Director may approve the
subordination by completing and executing a subordination in the format
of Exhibit C of this Instruction. (Added 10-27-76 - PN 541.)

## Sheet 3A

## (Revision 2)

(03-25-70) PN 198

RD Instruction 444.8

VII (Cont.)

5 Rural Development lien on any lot will be released only at the time of
sale to an eligible purchaser. (Added 10-27-76 - PN 541.)

6 The County Supervisor should provide the necessary supervision to
assure that the RHS borrower takes the necessary action to assure that
all qualified builders in the area are aware of the availability of
Rural Housing sites and are given an equal opportunity to participate in
this conditional commitment program. As a minimum, the borrower will be
required to submit a signed statement indicating the actions taken
including names and dates of contacts with builders. (Added 10-27-76, PN
541.)

RD Instruction 444.8

VIII [RATES, TERMS, AND SOURCE OF FUNDS]{.underline}:

A [Interest Rate]{.underline}. Upon request of the applicant, the
interest rate charged by the agency will be the lower of the interest
rates in effect at the time of loan approval or loan closing. If an
applicant does not indicate a choice, the loan will be closed at the
interest rate in effect at the time of loan approval. Interest rates are
specified in Exhibit B of RD Instruction 440.1 (available in any agency
office) for the type of assistance involved. (Revised 2-25-86, SPECIAL
PN.)

B [Repayment Period]{.underline}. Final payment will be due two years
after the date of the loan. When necessary to carry out the loan
purposes, the National Office may authorize extension of maturity dates.
As lots are sold before the final due date of the note, the proceeds of
the sales will be applied on the account or any prior lien, or, with the
prior approval of the National Office, used in a manner consistent with
the purposes of the loan and the security interest of the Government.

C [Source of Funds]{.underline}. Loans under this Instruction will be
made as insured loans, except that loans under PARAGRAPH XVIII to
develop building sites for sale in connection with self-help projects
will be made as direct loans.

IX [SECURITY]{.underline}. Each loan will be secured by a mortgage on
the property purchased or improved with the loan, and a security
interest in the funds held by the corporation in trust for the
Government, in accordance with the provisions of the required Loan
Resolution.

X [TECHNICAL, LEGAL, AND OTHER SERVICES]{.underline}.

A [Appraisals]{.underline}. The property will be appraised by an agency
employee authorized to make real estate appraisals. The Appraisal will
consist of a narrative statement prepared and signed by the authorized
employee describing in detail the items considered in arriving at the
value of the property. Two values will be established by the appraiser.

1 The fair market value of the total property \"as is.\"

2 The aggregate fair market value of the building sites after
development, based on the appraisal of each developed lot.\
(Revised 8-19-70, PN 218.)

In determining the value of the property, the appraiser will consider
the value and selling prices of similar building sites in the area. The
selling prices of similar sites must be fully documented.

B [Title Clearance and Legal Services]{.underline}. For a loan to a
public nonprofit organization, title clearance and legal services will
be obtained in

## Sheet 4

## (Revision 2)

(3-25-70) PN 198

RD Instruction 444.8

X B (cont.)

accordance with instructions from the OGC, observing the provisions of\
Subpart B of Part 1927 of this chapter, insofar as feasible. For a loan
to a private nonprofit organization, the provisions of Subpart B of Part
1927 of this chapter regarding title clearance and legal services will
apply. The applicant will be encouraged to have the same approved
closing agent, where practicable, perform the title clearance work in
connection with the purchase of land and the sale of the individual
sites.\
(Revised 03-31-92, SPECIAL PN.)

C [Contracts for Legal Services]{.underline}. On projects requiring more
legal services than are customarily required for title clearance alone,
the applicant will be required to have a written contract when loan
funds will be used for legal services. All such contracts will be
subject to review and approval by the State Director and therefore,
should be submitted to the State Director before execution by the
applicant. Contracts will provide for the types of service to be
performed and the amount of fees to be paid, either in lump sum on the
completion of all services or in installments as services are performed.

D [Engineering Services]{.underline}. On projects requiring engineering
services, a written contract will be required between the engineer and
the borrower. All such contracts will be subject to review and approval
by the State Director and therefore should be submitted to the State
Director before execution by the applicant. The form of contract must
conform with standard professional practices and describe the types of
services to be performed and fees to be paid.

XI [PROCESSING APPLICATIONS]{.underline}

A [Application]{.underline}. The application will be in the form of a
letter to the County Supervisor with the following information included
in or attached to the letter:

1 Name and address of applicant.

2 A copy of, or an accurate citation to, the specific provisions of
State law under which the applicant is organized; a copy of the
applicant\'s Articles of Incorporation, Bylaws, and other authorizing
documents, the names and addresses of the applicant\'s members,
directors, and officers; and if another organization is a member of the
applicant organization its name, address, and principal business.

3 A current, dated, and signed financial statement showing assets, and
liabilities, together with information on the repayment schedule and
status of each debt.

4 Evidence of inability to obtain credit from other sources.

5 General description of the project

a Location and size of tract or tracts to be bought and/or developed.

RD Instruction 444.8

XI A 5 (Cont.)

b Number and size of individual sites planned together with a detailed
plot plan.

c Preliminary engineering plans, if available.

6 Estimate cost and amount of loan needed.

7 Explanation of applicant\'s financial contribution to the project.

8 A map showing the location of and other supporting information on
neighborhood and existing facilities such as distance to shopping area,
neighborhood churches, available transportation, drainage, sanitation
facilities, water supply available or planned, and access to essential
services such as doctors, dentists, and hospitals.

9 If facilities such as water and sewage systems, paved streets, and
utilities are not currently available, information on when and how they
will be provided.

10 Evidence of the need for the proposed sites in the locality by low-
and moderate-income families and other qualified applicants that are
likely to be able to obtain financing for a home.

11 Written evidence of any State, county, or local planning, zoning or
other ordinances imposing additional restrictions or requirements upon
the proposed sites. (Added 5-31-78, PN 624.)

B County Supervisor\'s Review and Evaluation of Applications. The County
Supervisor will:

1 Determine that the applicant meets the eligibility requirements of
paragraph IV.

2 Verify that the information provided is accurate and complete.

3 Determine that:

a The sites will be located in a good residential area and that
essential facilities and services will be provided.

b The lots will be reasonable in cost and of a type the agency can
appropriately finance.

c There is an immediate and ready market for the proposed sites in the
planned location.

## Sheet 5

## (Revision 2)

(3-25-70) PN 198

RD Instruction 444.8

XI B 3 (Cont.)

d The total number of sites planned does not exceed the number of loans
the County Supervisor can reasonably expect to include in the rural
housing program or for which other credit is reasonably assured when the
sites are developed.

e Proposed subdivisions will comply with the local codes and ordinances
and also meets the requirements of Subpart C of Part 1924 of this
chapter. (Revised 6-22-87, SPECIAL PN.)

4 Evaluate the manner in which the applicant plane to conduct its
business and financial affairs.

5 Comment on the background of the members, directors, and officials.

6 If he has questions about the proposal, send the incomplete docket to
the State Office for advice.

7 If for any reason the loan cannot be made, inform the applicant.

C Completion of the Docket. If the County Supervisor determines that the
applicant is eligible and the loan will be sound and proper, he should
request the applicant to make any needed revisions. In addition to the
items required in the application the docket must include:

1 A plot plan and detailed preliminary plans and specifications for
development of the building sites.

2 A detailed cost breakdown of the project for such items as land and
rights-of-way, utility installations or connections, on-site
improvements, engineering and legal services, and estimated interest.

3 If water and sanitary facilities are not publicly owned, a complete
statement as to how they will be provided and details about their
ownership and operation.

4 Satisfactory evidence of review and approval of the proposed
development by applicable State and local officials whose approval is
required by State or local laws, ordinances, or regulations.

5 Satisfactory evidence that the appropriate public bodies will accept
and maintain all public facilities, including common areas, playgrounds,
and tot lots dedicated to such bodies.\
(Added 5-31-78, PN 624.)

RD Instruction 444.8

XI (Cont.)

D [Preparation of Docket Forms]{.underline}.

1 REQUEST FOR OBLIGATION OF FUNDS AND FUND ANALYSIS. Form RD 3560-51,
\"Multiple Family Housing Obligation Fund Analysis,\" will be completed
in accordance with the Forms Manual Inserts (FMI).\
(Revised 02-24-05, SPECIAL PN.)

2 COUNTY COMMITTEE CERTIFICATION OF RECOMMENDATION. County Committees
will not be used to review RHS loan applications. (Renumbered 5-1-85,
SPECIAL PN.)

## SHEET 6

## (Revision 8)

(3-25-70) PN 198

RD Instruction 444.8

XI (Cont.)

E Assembly, Review, and Distribution of Complete Loan Docket Items.

When all items required for the complete loan docket have been
furnished, they will be examined thoroughly to make sure they are
properly and accurately prepared and are complete in all respects,
including dates and signatures. The loan docket items will be assembled
in the following order and distributed as follows: (Revised 8-11-89,
SPECIAL PN)

FORM NAME OF FORM TOTAL NO. SIGNED BY NO. FOR COPY FOR

NUMBER\_\_\_\_\_OR DOCUMENT\_\_\_\_\_\_OF COPIES\_\_\_BORROWER\_\_\_LOAN
DOCKET\_\_\_\_BORROWER

Application Letter and 2 1 1-O 1-C

Attachments

RD 1910-11 Applicant, Certification 2 1 1-O 1-C

Federal Collection

Policies for Consumer or

Commercial Debts

Evidence of Legal 2 1 1-O 1-C

Authority (copy or citation

of specific Provisions of

State statutory authority)

Proof of Organization 2 1-O 1-C

(certified copy of Articles

of Incorporation)

Certified copy of Bylaws 2 1 1-O 1-C

List of names and 2 1 1-O 1-C

addresses of officers,

directors and numbers

Narrative plan and other 2 1 1-O 1-C

supporting information

Evidence of Need

Certified Copy of Loan 1 1 1-O -

Resolution

RD 400-4 Assurance Agreement 2 1 1-O 1-C

RD 400-1 Equal Opportunity 2 1 1-O 1-C

Agreement (when applicable)

RD 400-3 Notice to Contractors and3 - 1-C 1-C

Applicants

RD 400-6 Compliance Statement 3 1 1-C 1-C

(when applicable)

XI E (Con.) RD Instruction 444.8

FORM NAME OF FORM TOTAL NO. SIGNED BY NO. FOR COPY FOR

NUMBER OR DOCUMENT OF COPIES BORROWER LOAN DOCKET BORROWER

\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

Survey of land given as 3 1 1-O 1-C

security, plans specifica-

tions, cost estimates,

proposed manner of develop-

ment

Operating budget (if 2 1 1-0 1-C

administrative expenses

are to be included in loan)

Appraisal Report with 1 - 1-0 -

Attachments

Preliminary Title Opinion

and a Final Title Opinion

of a title insurance binder

and a mortgage title

insurance policy

Option or copy of deed,

purchase contract, or other

instrument of ownership

RD 3560-51

Multiple Family Housing 2 2 1 \* 1

Obligation-Fund Analysis (Revised 02-24-05, SPECIAL PN.)

\*Data input to Finance Office through Field Office terminals.

F [Submission of complete Docket]{.underline}. The complete docket will
be sent to the State Office together with the District Director\'s
comments and recommendations. (Revised 1-16-79, SPECIAL PN.)

G [Loan Approval Authority and State Office Action]{.underline}. The
State Director is authorized to approve loans in accordance with this
subpart and Subpart A of Part 1901 of this chapter. As soon as it is
evident that a loan will be approved, the State Director will complete
Exhibit A to Subpart C of Part 2015 of this chapter. (Revised 02-24-05,
SPECIAL PN.)

## Sheet 7

## (Revision 9)

(3-25-70) PN 198

RD Instruction 444.8

XI G (Con.)

> The State Director may redelegate approval authority to qualified
> State Office employees. When a docket or preliminary application is
> received in the State Office, the State Director will:\
> (Revised 7-1-83, SPECIAL PN.)
>
> 1 Utilize the services of technicians on the State staff and from
> other Agencies in evaluating the application.

2 Review the applicant\'s Articles of Incorporation and Bylaws. If they
conform to approved forms for the State as provided in paragraph IV A 1
b, the State Director need not obtain a preliminary opinion from the
OGC. In all other cases the State Director will, and in any case may,
submit the docket with any comments or questions to the OGC for a
preliminary opinion as to whether the applicant and the proposed loan
meet or can meet the requirements of State law and this Instruction.

3 If additional information is needed to adequately evaluate the
application, return the loan docket to the District Director with any
comments or recommendations for further processing.\
(Revised 1-16-70, SPECIAL PN.)

4 If the docket is sufficiently complete to enable the State Director to
determine that the applicant is eligible and the loan would be sound and
proper, issue a proposed memorandum of approval listing any specific
conditions that must be met before loan closing.

5 If the applicant is not eligible or the loan would not be sound and
proper and the deficiencies cannot be corrected, inform the District
Director accordingly.

XII [APPROVAL OR DISAPPROVAL OF A LOAN]{.underline}: The provisions of 7
CFR part 3560, Subpart B, will be followed. (Revised 02-24-05, SPECIAL
PN.)

XIII [ACTIONS SUBSEQUENT TO LOAN APPROVAL]{.underline}. After the loan
is approved, actions to be taken will be in accordance with 7CFR part
3560, Subpart B. (Revised 02-24-05, SPECIAL PN.)

RD Instruction 444.8

XIV [LOAN CLOSING]{.underline}:

A [Applicable instructions]{.underline}. The complete loan docket will
be sent to the OGC for closing instructions. RHS loans will be closed in
accordance with applicable provisions of Subpart B of Part 1927 of this
chapter, and State Instructions which supplement this Instruction, and
closing instructions of the OGC, and with the assistance of the approved
Attorney, representatives of the title insurance company, or local
attorney, whichever is appropriate. (Revised 03-31-92, SPECIAL PN.)

B [Mortgage]{.underline}. Unless the OGC determines the form to be
inappropriate, real estate mortgage Form RD 1927-1 (State), \"Real
Estate Mortgage for \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,\" will be
used for all RHS Section 524 loans modified as prescribed by or with the
advise of the OGC with respect to the name, address, and other
identification of the borrower, the style of execution, and the
acknowledgment. Additional paragraphs will be included in the mortgage
to read as follows:

\"The borrower agrees not to discriminate in the sale of the dwelling
financed under this mortgage due to a prospective purchaser\'s race,
color, national origin, sex, religion, age, marital status, or handicap.
The borrower further agrees to comply with all Federal, State, or local
laws and ordinances prohibiting discrimination in the sale of housing.
The borrower\'s failure or refusal to comply with this agreement will be
a basis for the FmHA to deny future requests for participation in its
rural housing programs and activities.

This instrument also secures the obligations and covenants of borrower
set forth in Borrower\'s Loan Resolution of \_\_\_(Date)\_\_\_, which is
hereby incorporated herein by reference. (Revised 03-31-92, SPECIAL PN.)

C [Promissory Note]{.underline}. Form RD 3560-52, \"Multi-Family Housing
Promissory Note,\" will be used. Instructions for preparation will be in
accordance with the FMI and the following: (Revised 02-24-05, SPECIAL
PN.)

1 The total amount to be shown in the note will be the amount of the
loan shown on Form RD 3560-51. The note will be dated the date of the
loan closing. (Revised 02-24-05, SPECIAL PN.)

## Sheet 8

## (Revision 7)

(03-25-70) PN 198

RD Instruction 444.8

XIV C (Cont.)

2 The note will be signed in accordance with Subpart B of Part 1927 of
this chapter and the FMI for Form RD 3560-52. (Revised 02-24-05, SPECIAL
PN.)

3 Payments shall not be deferred. (Renumbered 5-1-85,\
SPECIAL PN.)

D [Recorded Mortgage]{.underline}. When the real estate mortgage is
returned by the recording official, the County Supervisor will retain
the original in the borrower\'s case folder. If the original is retained
by the recording official for the county records, a conformed copy
including the recording data showing the date and place of recordation
and the book and page number will be prepared and filed in the
borrower\'s case folder. A copy of the mortgage will be delivered to the
borrower but will be conformed only if required by State law or if it is
the custom of other lenders in the area.

E [Date of Loan Closing]{.underline}. An RHS loan is considered closed
when the mortgage is filed for record.

XV [ACTIONS AFTER SITES ARE DEVELOPED]{.underline}: The building sites
will be sold on a nonprofit basis to eligible families or organizations
as described in paragraph VI C.

A An option, Form RD 440-34, \"Option to Purchase Real Property,\" will
be executed. The site will be clearly identified by a land survey.

B The sale price of each individual site will be based on its appraised
value and will not be more than a sufficient amount to pay a
proportionate part of the RHS loan and any other actual costs of buying,
developing, and selling the building site. (Revised 9-2-70, PN 220.)

C The proceeds from sale of the building sites will be applied on the
RHS loan and any prior lien or, with the prior approval of the National
Office, used in a manner consistent with the purpose of the loan and the
security interest of the Government. The sites will be released from the
mortgage in accordance with 7CFR part 3550, subpart D or in accordance
with prior approval of the National Office. (Revised 01-23-03, SPECIAL
PN.)

RD Instruction 444.8

XVI [SUBSEQUENT RHS LOANS]{.underline}: A subsequent RHS loan is an RHS
loan to an applicant indebted for an initial RHS loan. Subsequent RHS
loans will be made on the same basis as initial RHS loans. (Revised
6-10-76, PN 208.)

XVII [COMPLAINTS REGARDING DISCRIMINATION IN OPPORTUNITY TO BUY
DEVELOPED SITES]{.underline}: Any applicant wishing to purchase a site
financed by an RHS loan who believes he has been discriminated against
because of race, color, national origin, religion, sex, handicap, or age
may file a complaint with the County Supervisor or State Director. Any
such complaint will be handled in accordance with 7 CFR 3560.2. (Revised
02-24-05, SPECIAL PN.)

XVIII [SPECIAL REQUIREMENTS FOR RHS SECTION 523 LOANS (LOANS TO
ORGANIZATIONS PROVIDING SITES FOR SELF-HELP HOUSING)]{.underline}: Loans
to organizations which will provide sites for self-help housing (RHS
Sec. 523 Loans) will be made under the provisions of this Instruction
with the following exceptions:

A [Eligibility]{.underline}. The applicant must be a nonprofit
organization engaged in assisting self-help projects.

B [Interest]{.underline}. The interest rate will be 3 percent per annum
on the unpaid principal balance. (Revised 6-10-70, PN 208.)

C [Source of Funds]{.underline}. These will be direct loans made from
the Self-Help Fund.

D [Evidence of Need]{.underline}. Loans to newly formed organizations
will be made on the basis of the applicant\'s providing firm information
as to the number sites to be developed and the names of eligible bona
fide prospective purchasers who are assured of available home financing.
Loans to organizations currently involved in mutual self-help housing
projects may be made without submitting a list of names or prospective
site purchasers. There must, however, be definite evidence that enough
families are available who are eligible and who will buy the sites when
they are developed.

E [Multiple Advances]{.underline}. These loans may be disbursed over a
period not to exceed 18 months from the date of the first advance.\
(Revised 12-19-83, SPECIAL PN.)

F [Note Forms]{.underline}. Form RD 3560-52, \"Multiple Family Housing
Promissory Note,\" will be used. See paragraph XIV C. (Revised 02-24-05,
SPECIAL PN.)

## Sheet 9

## (Revision 7)

(3-25-70) PN 198

RD Instruction 444.8

XVIII (Cont.)

G [Mortgage]{.underline}. Unless the OGC determines the form to be
inappropriate in any case, real estate mortgage Form RD 1927-1 (State),
\"Real Estate \_\_\_\_\_\_\_\_\_\_\_\_\_ for
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Direct Loan),\" will be used,
modified as prescribed by or with the advise of the OGC with respect to
the name, address, and other identification of the borrower, the style
of execution, and the acknowledgment. Additional paragraphs will be
included in the mortgages to read as follows:

\"The borrower agrees not to discriminate in the sale of the dwelling
financed under this mortgage due to a prospective purchaser\'s race,
color, national origin, sex, religion, age, marital status, or handicap.
The borrower further agrees to comply with all Federal, State, or local
laws and ordinances prohibiting discrimination in the sale of housing.
The borrower\'s failure or refusal to comply with this agreement will be
a basis for the agency to deny future requests for participation in its
rural housing programs and activities.

This instrument also secures the obligations and covenants of borrower
set forth in Borrower\'s Loan Resolution of \_(Date)\_\_\_\_, which is
hereby incorporated herein by reference.\" (Revised\
03-31-92, SPECIAL PN)

XIX [Loan Supervision and Servicing]{.underline}: Loan supervision and
loan servicing will be provided according to 7 CFR part 3560. (Revised
02-24-05, SPECIAL PN.)

Attachments: Exhibits B and C

## o0o

##  

RD Instruction 444.8

Exhibit B

(Revision 1)

## ((RURAL HOUSING SITE) LOAN TO NON PROFIT CORPORATION)

LOAN RESOLUTION OF
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, 19\_\_

RESOLUTION OF THE BOARD OF DIRECTORS
OF\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
PROVIDING FOR BORROWING \$ \_\_\_\_\_\_\_\_\_\_\_\_\_

TO FINANCE BUILDING SITES AND RELATED FACILITIES FOR PERSONS AND
FAMILIES OF

LOW OR MODERATE INCOME IN RURAL AREAS, THE COLLECTION, HANDLING, AND
DISPOSITION OF INCOME, THE ISSUANCE OF A PROMISSORY NOTE AND REAL ESTATE
SECURITY INSTRUMENT, AND RELATED MATTERS

Whereas
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(herein referred to as the \"Corporation\") is a nonprofit corporation
duly organized and operating under
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(authorizing State Statute)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

the Board of Directors of the Corporation (herein referred to as the
\"board\") has decided to provide building sites and related facilities
for eligible rural residents; the board has determined that the
Corporation is unable to provide such facilities with its own resources
or to obtain from other sources, for such purpose, sufficient credit
upon terms and conditions which the Corporation could reasonably be
expected to fulfill.

BE IT RESOLVED:

1\. [Application for Loan]{.underline}. The Corporation shall apply for
and obtain a loan (herein called \"the loan\") of \$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ from the United States of America, acting
through the Rural Development or Farm Service Agency, United States
Department of Agriculture, (herein called \"the Government\") pursuant
to section 523 (b) (1) (B) or section 524 of the Housing Act of 1949.
The loan shall be used solely for the specific eligible purposes
specified or approved by the Government in order to provide developed
building sites (herein called \"building sites\") for eligible
purchasers as defined by the Government.

2\. [Execution of Loan Instruments]{.underline}. To evidence the loan
the Corporation shall issue a promissory note (herein referred to as
\"the note\"), signed by its President and attested by its Secretary,
with its corporate seal affixed thereto, for the amount of the loan,
payable two years after date, bearing interest at a rate, and containing
other terms and conditions prescribed by the Government. To secure the
note and any obligations as required by the Government, the President
and the Secretary are hereby authorized to execute a real estate
security instrument giving a lien upon the building sites and such other
security as the Government shall require.

(3-25-70) PN 198

RD Instruction 444.8

Exhibit B

Page 2

(Revision 1)

3\. [Equal Employment Opportunity Under Construction Contracts and Non-
discrimination in the Sale of Sites and In Any Other Benefits of the
Loan]{.underline}. The President and the Secretary are hereby authorized
and directed to execute on behalf of the corporation (a) any
undertakings and agreements required by the Government pursuant to Title
VIII of the Civil Rights Act of 1968 regarding nondiscrimination in the
sale, rental, financing, or advertising of dwelling units or vacant lots
to be used for residential purposes, (b) Form RD 400-1 entitled \"Equal
Opportunity Agreement\" including an \"Equal Opportunity Clause\" to be
incorporated or attached as a rider to each construction contract the
amount of which exceeds \$10,000 and any part of which is paid for with
funds from the loan, and (c) Form RD 400-4 entitled \"Nondiscrimination
Agreement (Under Title VI, Civil Rights Act of 1964)\" a copy of which
is attached hereto and made a part hereof and any other undertakings and
agreements required pursuant to Title VI of such Act. (Revised 3-10-71,
PN 247)

4\. [Site Development Account]{.underline}.

\(a\) The Corporation shall establish on its books a development account
which shall be maintained so long as the loan obligations remain
unsatisfied. All loan funds and any revenue received from the sale of
loan for building sites or other purposes shall be placed in said
account and shall be deposited in accordance with Subpart A of Part
1902. Any such funds shall be held by the corporation in trust for the
Government as security for the loan. Disbursements may be made only for
development costs approved by the Agency and for repayment of the loan.
(Revised 7-6-81, SPECIAL PN.)

\(b\) The Corporation shall provide a fidelity bond, with a surety
company approved by the Government covering the Treasurer and any other
officers or employees who will have custody or control of funds or
readily marketable personal property of the Corporation in an amount not
less than the estimated maximum amount of such funds and property to be
held in the custody or control of the Corporation at any one time, which
amount shall be approved or prescribed by the Government. The United
States of America shall be named as co-obligee and the amount of the
bond shall not be reduced without the prior written consent of the
Government.

\(c\) A complete accounting will be made of all income, contributions,
and loan funds required by this resolution to be deposited in the
account. Each expenditure will be identified as to the source of funds
from which payment is made. All proceeds from sales of the building
sites shall upon receipt be immediately paid on the loan obligations,
unless otherwise specifically authorized by the Government in writing.

RD Instruction 444.8

Exhibit B

Page 3

5\. [Regulatory Covenants]{.underline}. So long as the loan obligations
remain unsatisfied, the Corporation shall \--

\(a\) Maintain complete books and records relating to the Corporation\'s
financial affairs, promptly furnish the Government at the end of each
month a report of all income and expenses, and permit the Government to
inspect such books and records at all reasonable times.

\(b\) Unless the Government gives prior consent - -

\(1\) Not sell sites to other than eligible purchasers.

\(2\) Not enter into any contract or agreement for improvements or
extensions to the property securing the loan obligations.

\(3\) Not cause or permit voluntary dissolution of the Corporation; not
merge or consolidate with any other organization, nor cause or permit
any transfer or encumbrance of title to the building sites or any part
thereof or interest therein by sale, mortgage, lease or other conveyance
or encumbrance, nor engage in any other new business, enterprise, or
venture than, purchase, development and sale of the building sites.

\(4\) Not cause or permit the issuance or transfer of any stock, borrow
any money, nor incur any liability aside from current expenses.

\(c\) Comply with all its agreements and obligations in or under the
note, security instrument, and any related agreement executed by the
Corporation in connection with the loan.

\(d\) Not alter, amend, or repeal without the Government\'s consent this
resolution or the Bylaws or Articles of Incorporation of the
Corporation, which shall constitute parts of the total contract between
the Corporation and the Government relating to the loan obligations.

\(e\) Do other things as may be required by the Government in connection
with the development of the building sites or with any of the
Corporation\'s operations or affairs which may affect the sites, the
loan obligations, or the security.

6\. [General Provisions]{.underline}.

\(a\) It is expressly understood and agreed that any loan made will be
administered subject to the limitations of the authorizing act of
Congress and related regulations and that any rights granted to the
Government herein or elsewhere may be exercised by it in its sole and
exclusive discretion to carry out the purposes of the loan, enforce such
limitations, and protect the Government\'s financial interest in the
loan and security.

(3-25-70) PN 198

RD Instruction 444.8

Exhibit B

Page 4

\(b\) The provisions of this resolution are representations to the
Government to induce the Government to make a loan to the Corporation as
aforesaid. If the Corporation should fail to comply with or perform any
provision of this resolution or any requirement made by the Government
pursuant to this resolution, such failure shall constitute default as
fully as default in payment of amounts due on the loan obligations. In
the event of such failure, the Government at its option may declare the
entire amount of the loan obligations immediately due and payable and,
if such entire amount is not paid forthwith, may take possession of and
operate the project and proceed to foreclosure its security, and may
enforce all other available remedies.

\(c\) Any provisions of this resolution may be waived by the Government
in its sole discretion, or changed by agreement between the Government
and the Corporation after the resolution becomes contractually binding,
to any extent such provisions could legally have been foregone, or
agreed to in amended form, by the Government initially.

\(d\) Any notice, consent, approval, waiver, or agreement must be in
writing.

\(e\) This resolution may be cited in the security instrument and any
other instruments or agreements as the \"Loan Resolution of
\_\_\_\_\_\_\_\_\_, 19\_\_\_\_\_.\"

date of this resolution

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

The undersigned, \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ the
Secretary of the Corporation identified in the foregoing Loan
Resolution, hereby certifies that the foregoing is a true copy of a
resolution of the Board of Directors of the Corporation passed on
\_\_\_\_\_\_\_\_\_\_, 19\_\_\_.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Date) (Secretary)

## o O o 

RD Instruction 444.8

Exhibit C

Page 1

## Subordination By The Government

## For Use With Rural Housing Site Loan

WHEREAS, The United States of America acting through Rural Development
or the Farm Service Agency (hereinafter called the \"Government\") is
the holder of the following-described instrument(s) executed by
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
of\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ County, State
of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
(hereinafter called the \"Borrower\")

Title Date

of of Date Office Book Page

Instrument Instrument Filed Filed \_No.\_ \_No.\_

AND WHEREAS,
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
(hereinafter called the \"Lender\") has agreed to provide a loan to the
borrower or to a builder designated by the borrower to construct a home
on the property described in this instrument.

NOW THEREFORE, in consideration of the Lender\'s agreement to make such
loan to the borrower, the Government hereby (1) consents to the Borrower
obtaining said loan from the lender, and (2) agrees to and hereby
subordinates in favor of the Lender and his successors and assigns its
liens or security interests created or evidenced by the above-described
instrument(s) insomuch as they cover the following described property:
(1)

EXCEPT THAT, the Government shall retain a first lien or security
interest in the above-described property in an amount of \$\_(2)\_. Such
first lien will be released only when satisfactory evidence is provided
indicating that the lot with completed home is being sold to a family
eligible for assistance under any section of Title V of the Housing Act
of 1949 or under any other law which provides financial assistance for
housing low- and moderate-income families and that the benefits of the
nonprofit development of the site are being passed on to the eligible
purchaser and that the amount of that first lien is paid on the
Borrower\'s Rural Housing Site loan debt to the Government.

This subordination is limited to the amount actually loaned by the
Lender to the Borrower for the foregoing purpose, but shall not exceed
\$\_(3)\_.

(10-27-76) PN 541

RD Instruction 444.8

Exhibit C

Page 2

Only the above-described property is affected by this subordination.
This subordination shall not otherwise affect or modify the obligations
secured by the aforesaid lien instrument(s), and the said obligations
shall continue in force and effect until fully paid, satisfied, and
discharged.

No Member of Congress shall be admitted to any share or part of this
agreement or to any benefit that may arise thereupon.

IN WITNESS WHEREOF, The United States of America has caused these
presents to be signed on the \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ day of
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

19\_\_, pursuant to delegated authority published in 7 CFR, Part 1800.

UNITED STATES OF AMERICA

WITNESS: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
BY\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Title\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Rural Development or Farm Service Agency,\
U.S. Department of Agriculture.

RD Instruction 444.8

Exhibit C

Page 3

## Instructions For Completion of Exhibit C

\(1\) Insert complete legal description of specific lot or lots on which
lien is to be subordinated.

\(2\) Insert present market value of lot or prorata amount of RHS loan,
as determined in accordance with Paragraph XV B of RD Instruction 444.8.

\(3\) This amount should be provided by lender, however, approval
official should be assured that amount loaned does not exceed market
value of the house, not including the value of the lot.

(10-27-76) PN 541