RD Instruction 1951-F

PART 1951 - SERVICING AND COLLECTION

Subpart F - Analyzing Credit Needs and Graduation of Borrowers

## [Table of Contents]{.underline}

[Sec]{.underline}. [Page]{.underline}

1951.251 Purpose. 1

1951.252 Definitions. 1

Commercial classified. 1

Farm Credit Programs (FCP) loans. 1

Graduation, FCP. 2

Graduation, other programs. 2

Prospectus, FCP. 2

Reasonable rates and terms. 2

Servicing official. 2

Standard classified. 2

Trial referral. 3

1951.253 Objectives. 3

1951.254 Responsibility. 4

1951.255 Nondiscrimination. 5

1951.256 - 1951.259 \[Reserved\] 5

1951.260 Reaching an understanding with applicants

and borrowers. 5

1951.261 Survey of lender criteria and policies. 6

1951.262 Farm Credit Programs (FCP) - graduation of borrowers. 6

\(a\) Annual notice. 6

\(b\) Create list of prospective lenders. 6

\(c\) Graduation review period. 6

\(d\) Screen out borrowers who obviously cannot

graduate. 7

\(e\) Graduation candidates. 7

\(f\) Sending prospectus information to lenders. 7

(06-21-96) SPECIAL PN

RD Instruction 1951-F

Table of Contents

Page 2

[Sec]{.underline}. [Page]{.underline}

1951.263 Graduation of non-Farm Credit Programs (FCP) borrowers. 9

\(a\) The graduation review period. 9

\(b\) The initial screening. 11

\(c\) The thorough review. 12

\(d\) Trial referral. 14

\(e\) Requesting the borrower to graduate. 15

1951.264 Action when borrower fails to cooperate,

respond and/or graduate. 17

1951.265 Application for subsequent loan,

subordination, or consent to additional

indebtedness from a borrower who has been

requested to graduate. 18

1951.266 Special requirements for MFH borrowers. 19

1951.267 Documents for the Office of the General Counsel

(OGC) review. 19

1951.268 State Supplements and guides. 19

1951.269 - 1951.300 \[Reserved\] 19

Exhibit A - Lender Agricultural Loan Underwriting Standards.

Exhibit B - Suggested Outline for Seeking Information

from Lenders on Credit Criteria for

Graduation of Rural Housing Loans.

Exhibit C - Inclusions/Exclusions from Graduation Review List.

## o0o 

RD Instruction 1951-F

PART 1951 - SERVICING AND COLLECTIONS

Subpart F - Analyzing Credit Needs and Graduation of Borrowers

§1951.251 [Purpose]{.underline}.

This subpart prescribes the policies to be followed when analyzing a
direct borrower\'s needs for continued Agency supervision, further
credit, and graduation. All loan accounts will be reviewed for
graduation in accordance with this subpart, with the exception of
Guaranteed, Rural Development Loan Funds, and Rural Rental Housing loans
made to build or acquire new units pursuant to contracts entered into on
or after December 15, 1989, and Intermediary Relending Program loans.
The term \"Agency\" used in this subpart refers to the Rural Utilities
Service (RUS), Rural Housing Service (RHS), or Rural
Business-Cooperative Service (RBS), depending upon the loan program
discussed herein. This subpart does not apply to Farm Service Agency,
Farm Loan Programs and to RHS direct single family housing (SFH)
customers. In addition, this subpart does not apply to Water and Waste
Programs of the Rural Utilities Service, Watershed loans, or Resource
Conservation and Development loans, which are serviced under part 1782
of this title. (Revised 01-09-08, PN 417.)

§1951.252 [Definitions]{.underline}.

[Commercial classified]{.underline}. These are FSA\'s highest quality
Farm Credit Programs (FCP) accounts. The financial condition of the
borrowers is strong enough to enable them to absorb the normal
adversities of agricultural production and marketing. There is ample
security for all loans, there is sufficient cash flow to meet the
expenses of the agricultural enterprise and the financial needs of the
family, and to service debts. The account is of such quality that
commercial lenders would likely view the loans as a profitable
investment. This is the same definition as found in FSA Transferred
Instruction 2006-W.

[Farm Credit Programs (FCP) loans]{.underline}. FSA Farm Ownership (FO),
Operating (OL), Soil and Water (SW), Recreation (RL), Emergency (EM),
Economic Emergency (EE), Economic Opportunity (EO), Special Livestock
(SL), Softwood Timber (ST) loans, and Rural Housing loans for farm
service buildings (RHF).

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

DISTRIBUTION: WSAL Accounting Servicing

Servicing and Collections

## 1

## (Revision 3)

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§1951.252 (Con.)

[Graduation, FCP]{.underline}. The payment in full of all FCP loans or
all FCP loans of one type ([i.e.,]{.underline} all loans made for
chattel purposes or all loans made for real estate purposes) by
refinancing with other credit sources either with or without an Agency
loan guarantee. A loan made for both chattel and real estate purposes,
for example an EM loan, will be classified according to how the majority
of the loan\'s funds were expended. Borrowers must continue with their
farming operations to be considered as graduated.

[Graduation, other programs]{.underline}. The payment in full of any
direct loan for Community and Business Programs, and all direct loans
for housing programs, before maturity by refinancing with other credit
sources. Graduated housing borrowers must continue to hold title to the
property. Graduation, for other than FCP, does not include credit which
is guaranteed by the United States.

[Prospectus, FCP]{.underline}. Consists of a transmittal letter similar
to FSA Transferred Guide Letter 1951-3 with a current balance sheet and
projected year\'s budget attached. The applicant\'s or borrower\'s name
and address need not be withheld from the lender. The prospectus is used
to determine lender interest in financing or refinancing specific Agency
direct loan applicants and borrowers. The prospectus will provide
information regarding the availability of an Agency loan guarantee and
interest assistance.

[Reasonable rates and terms]{.underline}. Those commercial rates and
terms which borrowers are expected to meet when borrowing for similar
purposes and similar periods of time. The \"similar periods of time\" of
available commercial loans will be measured against, but need not be the
same as, the remaining or original term of the loan. In the case of
Multi-Family Housing (MFH) loans, \"reasonable rates and terms\" would
be considered to mean financing that would allow the units to be offered
to eligible tenants at rates consistent with other MFH.

[Servicing official]{.underline}. The district or county office official
responsible for the immediate servicing functions of the borrower.

[Standard classified]{.underline}. These loan accounts are fully
acceptable by Agency standards. Loan risk and potential loan servicing
costs are higher than would be acceptable to other lenders, but all
loans are adequately secured. Repayment ability is adequate, and there
is a high probability that all loans will be repaid as scheduled and in
full. This is the same definition as found in FSA Transferred
Instruction 2006-W.

## 2

## (Revision 3) 

RD Instruction 1951-F

§1951.252 (Con.)

[Trial referral]{.underline}. A program whereby lenders voluntarily
participate in reviewing selected financial information supplied by
servicing officials on non-FCP borrowers who have been selected for
graduation.

§1951.253 [Objectives]{.underline}.

\(a\) The credit programs will be administered in a manner that will
assure they do not supplant or compete with credit available to rural
families and groups from other reliable credit sources.

\(b\) Borrowers must graduate to other credit at reasonable rates and
terms when they are able to do so.

\(c\) If a borrower refuses to graduate, the account will be liquidated
under the following conditions:

\(1\) The borrower has the legal capacity and financial ability to
obtain other credit.

\(2\) Other credit is available from a commercial lender at reasonable
rates and terms. In the case of Labor Housing (LH), Rural Rental Housing
(RRH), and Rural Cooperative Housing (RCH) Programs, reasonable rates
and terms must also permit the borrowers to continue providing housing
for low and moderate income persons at rental rates tenants can afford
considering the loss of any subsidy which will be cancelled when the
loan is paid in full. The District Director will do a comparative
analysis of rents and incomes of tenants living in the Agency projects
eligible for graduation and conventionally financed projects of the
local area.

\(d\) The Agency will enforce borrower graduation. Most, but not all,
promissory notes, security instruments, and loan agreements contain
clauses requiring a borrower to graduate when other credit can be
obtained. The clause may say \"upon reasonable terms and conditions,\"
\"on terms prevailing in the area for loans for similar periods or time
and purpose,\" or \"at reasonable rates and terms for loans for similar
purposes and periods of time.\" These three provisions are all construed
to mean the borrower agrees to, and the Agency can take, legal action to
enforce graduation when the Agency has evidence that commercial credit
can be obtained at reasonable rates and terms.

## 3

## 

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§1951.254 [Responsibility]{.underline}.

\(a\) State Directors are responsible for:

\(1\) Monitoring the review of the graduation process to ensure this
subpart is complied with in each State under their jurisdiction.

\(2\) Meeting with members of the financial community to discuss
graduation requirements.

\(3\) The Business and Industry (B&I) Chief is responsible for the
graduation review and follow-up on all direct B&I loans.

\(b\) The District Director, except for B&I loans, is responsible for:

\(1\) Monitoring the County Office graduation process for compliance
with this subpart.

\(2\) Meeting with local lenders to discuss borrower graduation,
underwriting criteria, and to assess general interest in refinancing
community program and MFH borrowers.

\(3\) Graduation reviews and follow-up on all community program (except
B&I) and MFH borrowers.

\(4\) Follow-up to ensure that County Supervisors are in compliance with
this subpart. District Directors will report their findings as set forth
in RD Instruction 2006-M.

\(c\) The County Supervisor is responsible for:

\(1\) Performing graduation reviews and following up on all affected FCP
and Rural Housing (RH) accounts.

\(2\) Meeting with the representatives of the financial community such
as insurance and mortgage companies, commercial banks, savings and loan
associations, Farm Credit System institutions, and State lender agencies
to stay informed of current lending activities, practices, and standards
to facilitate borrower graduation.

\(d\) The Agency may use private contractors to assist in graduation
activities. See exhibit D of RD Instruction 2024-A for contracting
program authority guidance.

## 4

##  

RD Instruction 1951-F

§ 1951.255 [Nondiscrimination]{.underline}.

All loan servicing actions described in this subpart will be conducted
without regard to race, color, religion, sex, familial status, national
origin, age, or physical or mental handicap.

§§ 1951.256 - 1951.259 \[Reserved\]

§ 1951.260 [Reaching an understanding with applicants and
borrowers]{.underline}.

\(a\) Prior to loan closing, Agency officials will thoroughly discuss
the graduation requirements, along with those items contained in exhibit
C of subpart A of part 1910, if applicable, with the applicant and
document the discussion in the running case record or other form
provided for this purpose. For Farm Loan Programs (FLP), Agency official
must discuss use of prospectus information to assist in graduation.
During the discussion, the applicant will also be informed that:
(Revised 08-05-98, PN 294.)

\(1\) Agency loans are a temporary source of credit; and that borrowers
are required to refinance their loans when credit is available at
reasonable rates and terms.

\(2\) The Agency expects them to comply with graduation requirements,
evidenced by the legally binding graduation clauses in the promissory
note, security instrument, and loan agreement.

\(3\) Borrower accounts are periodically reviewed for graduation.

\(4\) The borrower will be required to provide financial information
upon request.

\(5\) In certain cases, prepayment restrictions or other limiting
conditions will be considered in the graduation process.

\(6\) Requests for an additional loan, subordination, or consent to
incur additional indebtedness will not normally be approved until an
outstanding graduation request is resolved. (See § 1951.265.)

\(b\) The servicing official will periodically discuss graduation
requirements with borrowers during routine field and office visits, and
document discussion in borrowers' file. (Revised 08-05-98, PN 294.)

## 5

## (Revision 1)

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§ 1951.261 [Survey of lender criteria and policies]{.underline}.

Borrower graduation efforts are more effective if Agency officials
understand the commercial credit environment. During routine lender
contacts and meetings, Agency officials should explain the graduation
requirements and solicit lender underwriting criteria, as well as advice
and assistance as to how Agency borrowers can obtain financing at their
institution. Information gathered from these contacts will be summarized
in narrative form for each Agency program and placed with the graduation
review list in the Servicing Office operational file on other credit.
(The servicing official, in lieu of writing a narrative for all
programs, may use exhibit A of this subpart for FLP loans and exhibit B
of this subpart for RH loans.) For Community Program borrowers, the
State Director will provide Statewide information to the servicing
official pursuant to § 1942.2(a)(2)(i) to supplement that obtained at
the Servicing level. At a minimum, the narrative for each loan program
will contain the following:

\(a\) Lenders\' interest in refinancing Agency borrowers.

\(b\) Lenders\' rates, terms, fees, loan conditions, and policies.

\(c\) The amount of estimated credit available to Agency borrowers.

\(d\) Lenders\' interest in screening borrowers under the trial referral
provisions of § 1951.263(d).

§ 1951.262 [Farm Loan Programs (FLP) - graduation of
borrowers]{.underline}.

\(a\) [Annual notice]{.underline}. All direct FLP borrowers will be sent
FSA Guide Letter 1951-F-8 in October of each year. This letter will
remind borrowers of Agency graduation requirements, and the lifetime
eligibility limitations, and encourage them to graduate as soon as
possible. (Revised 08-05-98, PN 294.)

\(b\) [Create list of prospective lenders]{.underline}. During routine
contacts with local lenders (but at least annually), inquire whether the
institutions would be interested in receiving routine prospectus
information on commercial and standard classified borrowers. A list of
all lenders will be maintained in the Servicing Office operational file
as required under RD Instruction 2033-A.

\(c\) [Graduation review period]{.underline}. The Finance Office will
furnish each Servicing Office, by each January, a loan classification
report identifying all direct FLP borrowers. Graduation reviews should
be completed by July 1 of each year.

## 6

## (Revision 1) 

## RD Instruction 1951-F

§ 1951.262 (Con.)

\(d\) [Screen out borrowers who obviously cannot graduate]{.underline}.
If there is an obvious reason(s) that the borrower will be unable to
graduate, e.g., the borrower is in bankruptcy or has a confirmed
bankruptcy plan, is a limited resource rate borrower or has other
extenuating circumstances, the reasons will be documented in the case
file and a prospectus will not be sent. Borrower classification reports
must be retained as part of the Servicing Office operational file for
graduations.

\(e\) [Graduation candidates]{.underline}. Borrowers who are classified
\"commercial\" or \"standard\" are considered graduation candidates
after screening out the borrowers that obviously cannot graduate. At
least every two years, all borrowers who have a current classification
of commercial or standard must submit a year-end balance sheet, actual
financial performance information for the most recent year, and a
projected budget for the current year to enable the Agency to reclassify
their status and determine their ability to graduate. In intervening
years, when financial performance information is not submitted by the
borrower, the Agency Official will perform a desk review of the
borrower\'s case file. If the borrower is still unable to graduate, the
reasons will be documented in the case file. Graduation will be pursued
for those determined able to graduate to commercial credit, with or
without an Agency loan guarantee.

\(f\) [Sending prospectus information to lenders]{.underline}. (Revised
03-14-97, SPECIAL PN.)

> \(1\) The Agency will distribute a borrower\'s prospectus to local
> lenders for possible refinancing when a borrower\'s financial
> condition and projected repayment capacity indicate that commercial
> credit might be available, with or without guaranteed assistance. The
> borrower's permission is not required; however, the borrower will be
> notified of this action by sending FSA Guide Letter\
> 1951-F-9. (Revised 08-05-98, PN 294.)

\(2\) The borrower\'s prospectus will be sent to prospective lenders on
the list maintained in the Servicing Office. The servicing official will
send the lenders a transmittal letter similar to RD Form Letter
1951-F-3, "to provide a lender with a Farmer Program borrower
prospectus", with the prospectus attached, asking them if they are
interested in refinancing the borrower on a guaranteed or non-guaranteed
basis. The lenders will be notified in the transmittal letter whether an
Agency loan guarantee will be available. If Form RD 440-2, \"County
Committee Certification or Recommendation\" has expired, the servicing
official will

## 7

## (Revision 2)

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§ 1951.262(f)(2) (Con.)

need to reconsider the applicant\'s eligibility and clearly document the
determination in the county case file. A stamped, self-addressed
envelope will be included in the prospectus package for the lenders to
respond.

\(3\) The borrower will be notified in writing, similar to RD Guide
Letter 1951-F-5, "to notify a borrower to refinance the Agency
indebtness", if a lender indicates an interest in refinancing the
borrower's FLP debt. The borrower will be provided 30 days to contact a
lender and refinance the loan. For good cause, the borrower may be
granted a reasonable amount of additional time by the Agency.

\(i\) If more than one lender indicates an interest in providing credit,
the borrower has the right to select a lender, or another lender if
financing can be obtained. Denial from lenders other than those who
indicated an interest in refinancing the borrower's loan will not
satisfy the graduation requirement.

\(ii\) If a lender indicates a willingness to refinance the borrower
without an Agency guarantee, the lender will be provided information
from the Agency case file, upon request, to facilitate the graduation.

\(iii\) If the lender indicates an interest in refinancing with an
Agency guarantee, refer to Market Placement Applications under §
1980.113 of FSA Transferred Instruction 1980-B.

\(iv\) Refer to § 1951.264(b) of this Instruction for handling borrowers
who refuse to cooperate with any graduation requirements following
notice of lender interest in refinancing.

\(4\) If no lender indicates an interest in refinancing the borrower
from the prospectus information or application, the graduation review
will be concluded for that year. Note the lender\'s reasons for
declining to refinance in the margin of the borrower classification
report. This report will be retained in the Servicing Office operational
file for graduations. The borrower\'s case file also will be documented.
The servicing official will attempt to determine the obstacles to
graduation and reevaluate supervision and training strategies as part of
the assessment process under FSA Transferred Instruction 1924-B.

## 8

## (Revision 2) 

RD Instruction 1951-F

§1951.263 [Graduation of non-Farm Loan Programs borrowers]{.underline}.

\(a\) [The graduation review period]{.underline}. Graduation review
lists will be prepared as follows:

\(1\) By October 1 of each year, the Finance Office furnishes the County
Office a list of active program borrowers, excluding FLP borrowers, who
are to be considered for graduation.

\(i\) For Single Family Housing (SFH) borrowers, the list will contain
the names of borrowers who meet the criteria in exhibit C of this
subpart. Length of time of the indebtedness will not be a determining
factor on single family housing borrowers.

\(ii\) The County Supervisor will, upon receipt of the list, divide RH
borrowers identified in paragraph (a)(1)(i) of this section into four
groups in such a manner that approximately one-fourth will be reviewed
each quarter.

\(2\) For Community Programs except for B&I loans which are handled by
the B&I Chief, the District Director, using the Rural Community
Facilities Tracking System (RCFTS) will generate a list by June 1 of
each year, indicating borrowers who have been indebted for at least 5
years.

\(3\) By March 1 of each year the State Office will furnish each
District Office a list of MFH program borrowers and MFH program
transferees who have assumed loans on new terms and who have been
indebted for 15 years in the case of an unsubsidized project and 20
years in the case of a subsidized project. The State Office will compile
the list using the Multi-Family Information Status Tracking and
Retrieval System (MISTR.)

## 9

## (Revision 1)

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§1951.263(a) (Con.)

\(4\) By October 1 of each year, the County Supervisor, using the
Management Records System, will prepare a graduation review list
indicating borrowers who have been indebted for at least 6 years under
the RL Program.

\(i\) Borrowers\' names with all outstanding loans will appear on the
graduation review lists in accordance with the following:

\(A\) SFH borrowers are first selected for review based on the
outstanding loan with the earliest closing date. The graduation review
lists compiled in odd-numbered years will include the names of all
borrowers whose oldest outstanding loan was closed during odd-numbered
calendar years. The same procedure will apply to borrowers whose oldest
outstanding loan closed during even-numbered calendar years. Once a
borrower has appeared on the graduation review list, the borrower will
automatically reappear on the list every 2 years unless screened out by
criteria in exhibit C of this subpart.

\(B\) For Community and Business Programs, graduation review lists will
be compiled on the basis of the year in which the initial loan or
transfer was closed. The graduation review lists compiled in
odd-numbered years will include the names of all borrowers whose loans
were closed during odd-numbered calendar years. The same procedure will
apply to borrowers whose loans were closed during even-numbered calendar
years.

\(C\) If the servicing official has knowledge of any other borrower
whose financial circumstances have changed sufficiently to warrant
consideration, that borrower will also be included in the graduation
review.

\(ii\) The servicing official will manage the graduation of borrowers
throughout the year to accomplish graduation prior to receiving a new
graduation list. The State Director through the issuance of a State
Supplement will establish program timetables. The National Office will
establish reporting requirements to monitor the administration of this
subpart.

## 10

## (Revision 1) 

RD Instruction 1951-F

§ 1951.263 (Con.)

\(b\) [The initial screening]{.underline}. Upon receipt of the
graduation review list, the servicing official will screen the list for
borrowers who are clearly unable to graduate. This initial screening
will focus upon information immediately available in the borrower\'s
case file and in the operational file on other credit.

\(1\) The servicing official will not review borrowers who are clearly
unable to meet minimum lending criteria.

\(2\) It will not be necessary to review borrowers with a specified
interest rate refinancing ceiling clause in their loan instruments, as
long as credit at the specific interest rate is not available from other
sources. It will also not be necessary to review borrowers who have
notes, security instruments, or loan agreements which do not contain a
graduation clause. However, the servicing official will encourage either
type of borrower to graduate voluntarily.

\(3\) A borrower\'s ability to accept other credit may be limited by
factors over which the borrower has little or no control, such as a
referendum required by a public body borrower. However, the existence of
such factors will not preclude the Agency from requesting a borrower to
graduate nor the borrower from making a diligent effort to seek other
credit should such a request be made. The prepayment restrictions
contained in Section 502(c)(1) of Title V of the Housing Act of 1949, as
amended, for RRH, RCH, and LH loans are factors which must be
considered. These prepayment restrictions are found in 7 CFR part 3560,
subpart K. Tenant notification requirements and restrictive use
provisions, as outlined in 7 CFR part 3560, subpart K must also be
addressed. (Revised 02-24-05, SPECIAL PN.)

\(4\) MFH borrowers whose projects have rental assistance (RA) which is
being utilized by eligible tenants will not be required to graduate.

\(5\) The decision reached by the servicing official during the
screening process will be briefly documented next to each borrower\'s
name on the graduation review list. If the borrower is eliminated from
further review due to an inability to meet established minimum lending
criteria and policies (see paragraph (b)(1) of this section), specific
reasons will be included in the borrower\'s case file.

## 11

## (Revision 1)

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§ 1951.263 (Con.)

\(c\) [The thorough review]{.underline}. Borrowers are required to
supply such financial information as the Agency deems necessary to
determine whether they are able to graduate to other credit. At a
minimum, financial statements requested from the borrower must include a
balance sheet and a statement of income and expenses. Ordinarily, the
financial statements will be those normally required at the end of the
particular borrower\'s fiscal year. For borrowers who are not requested
to furnish audited financial statements, the balance sheet and statement
of income and expenses may be of the borrower\'s own format if the
borrower\'s financial situation is accurately reflected. The borrower
has 60 days for group type loans and 30 days for individual type loans
to supply the financial information requested.

\(1\) For borrowers who are not eliminated from the graduation review
list by the initial screening, the servicing official will conduct a
thorough review of financial information already in the borrower\'s case
file and request any additional needed information.

\(2\) For borrowers who are required to submit annual financial
statements, the most recent fiscal year\'s statements will be reviewed.
If copies of the most recent year\'s financial statements are not in the
borrower\'s case file, RD Guide Letter 1951-1, or a letter of similar
format, will be used to request the borrower to provide such
information. For borrower\'s not requested to furnish audited financial
statements, the following forms may be used to show the borrower\'s
financial situation:

\(i\) Form RD 1944-3, \"Budget and/or Financial Statement;\", and Form
RD 431-4, \"Business Analysis - Nonagricultural Enterprise,\" as
appropriate.

\(ii\) Community Programs: Form RD 442-2, \"Statement of Budget, Income
and Equity;\" and Form RD 442-3, \"Balance Sheet.\"

\(iii\) MFH: Form RD 3560-7, \"Multiple Family Housing Project Budget
Utility Allowance,\" and Form RD 3560-10, \"Multiple Family Housing
Borrower Balance Sheet.\" (Revised 02-24-05, SPECIAL PN.)

## 12

## (Revision 1) 

RD Instruction 1951-F

§1951.263(c) (Con.)

\(3\) For loans to individuals, the thorough review is based on the
financial position of only the borrower, meaning the person indebted to
the Agency as evidenced by the signature on the promissory note,
mortgage or other security instrument. The financial position of another
household member, including a spouse, who is not indebted to the Agency
will not be considered in cases of loans to individuals. Financial
statements will be reviewed for:

\(i\) The borrower\'s present and potential income to meet the rates,
terms, loan fees and conditions of other credit ([i.e.,]{.underline}
debt repayment ability.)

\(ii\) The borrower\'s liquid and nonessential assets.

\(iii\) The borrower\'s equity in real property, including consideration
of any subsidy recapture, and personal property.

\(iv\) The borrower\'s repayment history.

\(v\) The impact graduation would have on typical user costs. User
costs, rental rates, lease fees, or other charges when borrowers rely on
collection from these sources for debt repayment, should be reasonable
for the area served.

\(vi\) The Federal, State or local statutory constraints, which may
limit the borrower\'s ability to refinance, such as a referendum
required of a public body.

\(4\) The names of borrowers eliminated from the graduation review list
as unable to graduate will be so noted on the list. Borrower case files
will document the specific reasons for any borrower\'s failure to meet
established minimum lending criteria or policies. The Agency official
will notify borrowers in writing that no further action will be
considered for the year if they were requested to provide financial
information in RD Guide Letter 1951-1 or letter of similar format and
were found upon review unable to graduate. RD Guide Letter 1951-7 may be
used for this purpose.

## 13

## 

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§1951.263(c) (Con.)

\(5\) Following the thorough review, the servicing official will prepare
Form RD 1951-24, \"Results of Borrower Graduation Review,\" listing only
borrowers who will be requested to graduate. Separate Forms RD 1951-24
will be prepared for Community Program and Multiple Family Housing
borrowers. The servicing official will obtain the advice and written
concurrence of the State Director prior to making a request to graduate.

\(d\) [Trial referral]{.underline}. The servicing official, prior to
actually requesting a borrower to graduate may make a trial referral.
This trial referral can be either verbal or written with individual
lenders or by group method and could include all or part of those
borrowers selected for graduation. Prospectus information will be
obtained from the borrower\'s file and will be submitted to the lender
using RD Guide Letter 1951-F-4 for RH borrowers, or a letter of similar
format. Other data may be added if requested by lenders. The non-Farm
Credit Programs\' prospectus will contain the borrower\'s name, address,
original loan amount, date of the loan, the interest rate, and the
unpaid loan balance. For borrowers selected for a trial referral, a
prospectus will be prepared and provided to each lender who chooses to
participate, whose lending area would include the borrower\'s location
and whose criteria the borrower appears to meet. Lenders, following
receipt and review of a prospectus, will be encouraged to indicate their
willingness to contact the borrower and accept an application for
further consideration. If one or more lenders express interest in a
particular borrower, the borrower will be provided the lenders\' names
as possible sources of other credit when the servicing official requests
the borrower to graduate. If the lenders participating in the trial
referral represent the most likely sources of other credit in a given
lending area, and if these lenders fail to show interest in a particular
borrower, this is evidence that there is no credit available for that
particular borrower and no further effort needs to be made to effect
graduation at this time. This information will be noted next to the
borrower\'s name on the graduation review list and the name will be
removed from Form RD 1951-24 by the servicing official. The lender\'s
participation in the trial referral provision of this paragraph will be
optional. Normally, the lender\'s interest will be determined at the
time of the servicing official\'s survey of lender criteria and policies
(see §1951.261). If one or more lenders indicate a willingness to
participate, the servicing official should use the trial referral
provision if one or more of the following factors exists:

## 14

##  

RD Instruction 1951-F

§1951.263(d) (Con.)

\(1\) When the servicing official is not sure that local lenders would
be interested in a particular borrower due to such factors as low unpaid
balance, location of the security within the lending area, or other
factors not made clear at the time of the servicing official\'s contact
with the local lender.

\(2\) When there is a substantial cost imposed by the lender on the
borrower for filing a loan application.

\(3\) When the servicing official has reason to believe borrowers will
not actively seek, on a voluntary basis, refinancing credit from those
lenders believed to be most willing to consider such credit.

\(4\) When failure to employ this system would make it difficult or time
consuming for the servicing official to identify potential willing
lenders in the event the borrower refuses to voluntarily contact
lenders.

\(e\) [Requesting the borrower to graduate]{.underline}.

\(1\) The Agency will send written notice to borrowers found able to
graduate requesting them to graduate. RD Guide Letter 1951-F-5, or a
letter of similar format, will be used for this purpose. The borrower
must seek a loan only in the amount necessary to repay the unpaid
balance.

\(2\) Borrowers must provide evidence of their ability or inability to
graduate within 30 days for RH borrowers, and 90 days for group type
borrowers, after the date of the request. The Agency may allow
additional time for good cause, for example when a borrower expects to
receive income in the near future for the payment of accounts which
would substantially reduce the amount required for refinancing, or when
a borrower is a public body and must issue bonds to accomplish
graduation. The approximate date by which the borrower must provide such
evidence will be shown in the Management Records System for appropriate
follow-up action.

\(3\) If a borrower is unable to graduate the full amount of the loan,
the borrower must furnish evidence to the Agency showing:

\(i\) The names of other lenders contacted;

## 15

## 

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§1951.263(e)(3) (Con.)

\(ii\) The amount of loan requested by the borrower and the amount, if
any, offered by the lenders;

\(iii\) The rates and terms offered by the lenders or the specific
reasons why other credit is not available; and

\(iv\) The purpose of the loan request.

\(4\) The difference in interest rates between the Agency and other
lenders will not be sufficient reason for failure to graduate if the
other credit is available at rates and terms which the borrower can
reasonably be expected to pay. An exception is made where there is an
interest rate ceiling imposed by Federal law or contained in the note or
mortgage.

\(5\) The Agency will notify the borrower in writing if it determines
that the borrower can graduate. RD Guide Letter 1951-6, or letter of
similar format will be used for this purpose. The borrower must take
positive steps to graduate within 15 days for individual loans and 60
days for group loans from such notice to avoid legal action. The
servicing official may grant a longer period where warranted.

\(6\) The District Director with the advice of the State Director, or
the County Supervisor, will consider new information submitted by the
borrower or obtained from other reliable sources following a graduation
request. The servicing official must verify all information submitted or
obtained and reevaluate the borrower\'s financial circumstances. If the
information submitted is not adequate and reliable, the servicing
official will contact other sources of credit in the area and document
the findings in the borrower\'s case file. The servicing official may
offer to meet with the borrower.

\(7\) If additional information confirms that the borrower is unable to
graduate, the servicing official will notify the borrower in writing
that the request to graduate has been withdrawn. The specific reasons
for withdrawing the request will be recorded on Form RD 1951-24, in the
borrower\'s case file, and noted briefly on the graduation review list.

## 16

##  

RD Instruction 1951-F

§1951.264 [Action when borrower fails to cooperate, respond or
graduate]{.underline}.

\(a\) When borrowers with other than FLP loans fail to:

\(1\) Provide information following receipt of both RD Guide\
Letters 1951-1 and 1951-2, or letters of similar format, they are in
default of the terms of their security instruments. The approval
official may, when appropriate, accelerate the account based on the
borrower\'s failure to perform as required by this subpart and the loan
and security instruments.

\(2\) Apply for or accept other credit following receipt of both RD
Guide Letters 1951-F-5 and 1951-6, or letters of similar format, they
are in default under the graduation requirement of their security
instruments. If the Agency determines the borrower is able to graduate,
foreclosure action will be initiated in accordance with
§1955.15(d)(2)(ii). If the borrower\'s account is accelerated, the
borrower may appeal the decision.

\(3\) If the borrower fails to supply graduation information, or to
apply for or accept other available credit, the servicing official will
prepare the required documents recommending legal action and submit them
with the borrower\'s case file and a written report to the official
authorized in §1955.15 to approve foreclosure of the loan type involved.
The report will outline the following: credit sources contacted by the
Agency and the borrower, the reasons given by the borrower for failure
to graduate, action taken by the Agency to verify the availability of
credit, the borrower\'s available financial resources, and any other
pertinent data.

\(4\) The official authorized to approve foreclosure will review those
cases submitted and determine what action must be taken based on the
promissory notes, security instruments, and loan agreements signed by
the borrower, and the facts and recommendations of the servicing
official.

\(5\) If the approval official determines that the borrower is unable to
graduate, the approval official will request the servicing official to
notify the borrower and withdraw the graduation request in accordance
with §1951.263(e).

## 17

## (Revision 1)

(06-21-96) SPECIAL PN

RD Instruction 1951-F

§1951.264(a) (Con.)

\(6\) The Office of the General Counsel (OGC) should be consulted as
needed during the acceleration process. OGC concurrence generally is not
required prior to acceleration for nonmonetary reasons.

\(b\) If an FLP borrower fails to cooperate with the graduation
requirements, the servicing official will notify the borrower in writing
of the Agency's intent to accelerate the account and to foreclose for
failure to cooperate in the graduation process. The letter to the
borrower must describe how the borrower failed to cooperate. Appeal
rights will be provided in the letter in accordance with 7 CFR part 780.
(Revised 03-14-97, SPECIAL PN.)

\(1\) If the borrower does not take positive steps to refinance the FLP
loan(s), or otherwise cooperate with the graduation requirements within
30 days, or appeal, the servicing official will prepare the required
documents recommending legal action and submit them with the case file
and a written report to the District Director, to approve foreclosure of
the account.

\(2\) If the District Director concurs with the servicing official\
to foreclose, the account will be accelerated according RD Instruction
1955-A. OGC should be consulted as needed during the acceleration
process. OGC concurrence generally is not required prior to acceleration
for graduation reasons.

\(3\) If the District Director does not concur with the decision to take
legal action or if the borrower successfully appeals the decision to
accelerate the account, the District Director after consultation with
the servicing official will return the case to the servicing official
with instructions for future loan eligibility and servicing.

§1951.265 [Application for subsequent loan, subordination, or consent to
additional indebtedness from a borrower who has been requested to
graduate]{.underline}.

\(a\) Any borrower who appears to meet the local commercial lending
standards, taking into consideration the Agency\'s loan guarantee
program, will not be considered for a subsequent loan, subordination, or
consent to additional indebtedness until the borrower\'s ability or
inability to graduate has been confirmed. An exception may be made where
the proposed action is needed to alleviate an emergency situation, such
as meeting applicable health or sanitary standards which require
immediate attention.

\(b\) If the borrower has been requested to graduate and has also been
denied a request for a subsequent loan, subordination, or consent to
additional indebtedness, the borrower may appeal both issues.

## 18

## (Revision 1) 

RD Instruction 1951-F

§ 1951.266 [Special requirements for MFH borrowers]{.underline}.

All requirements of 7 CFR part 3560, subpart K must be met prior to
graduation and acceptance of the full payment from an MFH borrower.
(Revised 02-24-05, SPECIAL PN.)

§ 1951.267 [Documents for the Office of the General Counsel (OGC)
review]{.underline}.

If the State Director requests advice from OGC pertaining to a
graduation request, the borrower\'s case file will be sent to the OGC
and will include:

\(a\) Organizational documents;

\(b\) Debt instruments;

\(c\) Security instruments, including loan agreements and/or
resolutions;

\(d\) Recent financial data;

\(e\) The servicing official\'s survey of lender criteria and policies.

\(f\) The servicing official\'s narrative outlining factors considered
and specific reasons for making a graduation request of the borrower.

\(g\) Copies of the letter requesting borrower to graduate and all
subsequent correspondence between servicing official and borrower
relative to the graduation request;

\(h\) Any other pertinent information, including copies of any Federal,
State, or local statutory constraints which may impact on the
borrower\'s ability to refinance.

§ 1951.268 [State Supplements and guides]{.underline}.

State Directors may supplement this subpart to meet State and local
laws, regulations, and practices in accordance with RD Instruction
2006-B.

§§ 1951.269 - 1951.300 \[Reserved\]

Attachments: Exhibits A, B, and C

## oOo

## 19

## (Revision 1)

(06-21-96) SPECIAL PN

RD Instruction 1951-F

Exhibit A

Page 1

## LENDER AGRICULTURAL LOAN UNDERWRITING STANDARDS

## 

## [SHORT-TERM CREDIT]{.underline}

[LENDER]{.underline} [LENDER]{.underline} [LENDER]{.underline}
[LENDER]{.underline} [APPLICANT]{.underline}

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

\|Date \| \| \| \| \| \|

\| [Completed]{.underline} \| \| \| \| \| \|

\|Name \| \| \| \| \| \|

\|\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\|

\|Lending \| \| \| \| \| \|

\| [Limit]{.underline} \|[\$]{.underline} \|[\$]{.underline}
\|[\$]{.underline} \|[\$]{.underline} \| [Not Appl.]{.underline} \|

\|Minimum \| \| \| \| \| \|

\| [Loan Size]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

\|Percent \| \| \| \| \| \|

\| [Equity]{.underline} \| \| \| \| \| \|

\|Percent \| \| \| \| \| \|

\| Repay \| \| \| \| \| \|

\| [Margin]{.underline} \| \| \| \| \| \|

\|Type \| \| \| \| \| \|

\| Security \| \| \| \| \| \|

\| [Required]{.underline} \| \| \| \| \| \|

\|Maximum \| \| \| \| \| \|

\| Loan to \| \| \| \| \| \|

\| Security \| \| \| \| \| \|

\| [Value]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

\|Maximum \| \| \| \| \| \|

\| Term of \| \| \| \| \| \|

\| [Loan]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

Continue with general, or lender specific, criteria on reverse side.

(06-21-96) SPECIAL PN

RD Instruction 1951-F

Exhibit A

Page 2

## [INTERMEDIATE-TERM CREDIT]{.underline}

[LENDER]{.underline} [LENDER]{.underline} [LENDER]{.underline}
[LENDER]{.underline} [APPLICANT]{.underline}

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

\|Lending \| \| \| \| \| \|

\| [Limit]{.underline} \|[\$]{.underline} \|[\$]{.underline}
\|[\$]{.underline} \|[\$]{.underline} \| [Not Appl.]{.underline} \|

\|Minimum \| \| \| \| \| \|

\| [Loan Size]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

\|Percent \| \| \| \| \| \|

\| [Equity]{.underline} \| \| \| \| \| \|

\|Percent \| \| \| \| \| \|

\| Repay \| \| \| \| \| \|

\| [Margin]{.underline} \| \| \| \| \| \|

\|Type \| \| \| \| \| \|

\| Security \| \| \| \| \| \|

\| [Required]{.underline} \| \| \| \| \| \|

\|Maximum \| \| \| \| \| \|

\| Loan to \| \| \| \| \| \|

\| Security \| \| \| \| \| \|

\| [Value]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

\|Maximum \| \| \| \| \| \|

\| Term of \| \| \| \| \| \|

\| [Loan]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

## [LONG-TERM CREDIT]{.underline} 

[LENDER]{.underline} [LENDER]{.underline} [LENDER]{.underline}
[LENDER]{.underline} [APPLICANT]{.underline}

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

\|Lending \| \| \| \| \| \|

\| [Limit]{.underline} \|[\$]{.underline} \|[\$]{.underline}
\|[\$]{.underline} \|[\$]{.underline} \| [Not Appl.]{.underline} \|

\|Minimum \| \| \| \| \| \|

\| [Loan Size]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

\|Percent \| \| \| \| \| \|

\| [Equity]{.underline} \| \| \| \| \| \|

\|Percent \| \| \| \| \| \|

\| Repay \| \| \| \| \| \|

\| [Margin]{.underline} \| \| \| \| \| \|

\|Type \| \| \| \| \| \|

\| Security \| \| \| \| \| \|

\| [Required]{.underline} \| \| \| \| \| \|

\|Maximum \| \| \| \| \| \|

\| Loan to \| \| \| \| \| \|

\| Security \| \| \| \| \| \|

\| [Value]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

\|Maximum \| \| \| \| \| \|

\| Term of \| \| \| \| \| \|

\| [Loan]{.underline} \| \| \| \| \| [Not Appl.]{.underline} \|

RD Instruction 1951-F

Exhibit A

Page 3

## [DEFINITIONS]{.underline}

[Name]{.underline}: The name of the lending institution and applicant.

[Lending Limit]{.underline}: The maximum dollar amount a lender is
willing/able to lend to one borrower.

[Minimum Loan Size]{.underline}: Least amount lender will consider
making a loan for.

[Percent Equity]{.underline}: Net worth divided by total assets.

[Percent Repay Margin]{.underline}: Most lenders use a percent of the
capital debt retirement margin. This is normally the principal portion
of debt due divided by the borrower\'s net income. Operating loan
principal is not considered a capital debt and is not included. However,
since each lender may use different methods to calculate repayment
margins, you should obtain this information from each individual lender.

[Type Security Required]{.underline}: The type of collateral required to
secure loans for short-, intermediate-, and long-term purposes.

[Maximum Loan to Security Value]{.underline}: The loan amount divided by
the appraised value of the loan security. This also may be calculated
using the security\'s net recovery value. You should obtain each
lender\'s method for deriving net recovery value.

[Maximum Term of Loan]{.underline}: The maximum number of years the
lender will allow for repayment for intermediate and long-term purposes.
Short-term credit is assumed due within the 1-year operating cycle.

## o0o

(06-21-96) SPECIAL PN

RD Instruction 1951-F

Exhibit B

Date: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name of Lender: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Title: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Address: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name of County Supervisor:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Service Area: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

## SUGGESTED OUTLINE FOR SEEKING INFORMATION FROM

## LENDERS ON CREDIT CRITERIA FOR GRADUATION

## OF RURAL HOUSING LOANS

1\. Is the lender interested in making loans to refinance rural housing
borrowers? Yes:\_\_\_\_\_ No:\_\_\_\_\_\_\_

If later, when?
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

How much credit does the lender expect to have available in the next
three to four months for making such loans?
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

In the next twelve (12) months?
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

2\. What are the loan
terms?\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_

/\_/ Variable Rate

3\. What is the current interest rate? \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_/
[/ Fixed Rate]{.underline}\_\_\_

If variable, how is it determined?
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

4\. Is a risk differential used in establishing interest rates charged
for new customers? Yes:\_\_\_\_\_ No:\_\_\_\_\_\_ If yes,
explain:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

5\. What can a typical loan applicant be expected to pay for:

a\) filing an application\....\$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_ or
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_%

b\) real estate appraisal\....\$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_ or
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_%

c\) credit report\...\...\...\...\$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_ or
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_%

d\) loan origination fee\.....\$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_ or
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_%

e\) loan closing costs\...\....\$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_ or
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_%

6\. Is mortgage guarantee insurance required? Yes:\_\_\_\_\_\_
No:\_\_\_\_\_\_\_

If yes, how many years?\_\_\_\_\_\_\_\_\_\_\_\_\_
Cost?\_\_\_\_\_\_\_\_\_\_\_\_\_\_

7\. Is there a minimum or maximum loan size policy? Yes:\_\_\_\_\_
No:\_\_\_\_\_\_

If yes,
explain:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

8\. Is there a minimum and maximum home value the lender will loan on?

Yes:\_\_\_\_\_\_ No:\_\_\_\_\_\_\_\_

If yes, minimum: \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ maximum:
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

9\. Does the lender use a loan to market value
ratio?\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(8-29-83) SPECIAL PN

RD Instruction 1951-F

Exhibit B

Page 2

10\. Is there a minimum net and gross income criteria? Yes:\_\_\_\_
No:\_\_\_\_\_

If yes, net: \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ gross:
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

11\. Does the lender use a minimum loan or home value to income ratio?

Yes:\_\_\_\_\_ No:\_\_\_\_\_ If yes, loan to income ratio:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Value to income ratio:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

12\. Is there a percentage of gross income a typical applicant should
have available to pay housing
costs?\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

a\) To pay for principal, interest, taxes and insurance
(PITI)?\_\_\_\_%.

b\) To pay for the total housing costs and other credit obligations?

\_\_\_\_\_\_\_\_\_%.

13\. Are there any age of home, housing type, site size, and/or
geographic restriction policies? Yes:\_\_\_\_\_ No:\_\_\_\_\_

If yes, List:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

14\. Other
Comments:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

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

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

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

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

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

15\. For the purpose of reducing the number of inappropriate referrals,
would the lender like the opportunity to review specific borrower
financial information prior to the borrower being asked to file a formal
application? Yes:\_\_\_ No:\_\_\_ If the answer is yes,
[only]{.underline} those borrowers who are listed on Form RD 1951-24
will be referred to the bank. The lenders should be advised, however,
the information supplied to them will not include the borrower\'s name,
social security number, exact address, or place of employment that could
be used to link a specific borrower to the information being provided by
the Agency.

## oOo 

RD Instruction 1951-F

Exhibit C

## Inclusions/Exclusions From Graduation Review List

\| Single Family \|

\| [Housing (SFH)]{.underline} \|

Nonprogram (NP) Loans \| \|

(but include if borrower \| \|

also has program loan) \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Deferrals \| N/A \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Limited Resource (LR) \| N/A \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Bankruptcy Action Pending (BAP) \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Foreclosure Action Pending (FAP) \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Court Action Pending (CAP) \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Subject to Approved Adjustments (SAA) \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Moratorium \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Collection Only (CO) \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Balance under \$5,000 \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Subsidized \| exclude \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Additional Payment Agreement \| exclude \|

(Delinquency Workout Agreement) \| \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

\| \|

Delinquent Account \| include \|

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\|

## oOo

(06-21-96) SPECIAL PN