RD Instruction 1925-A

PART 1925 - TAXES

Subpart A - Real Estate Tax Servicing

§ 1925.1 [General]{.underline}.

This Instruction applies to borrowers with a Rural Rental Housing (RRH),
Rural Cooperative Housing (RCH), Labor Housing (LH), and Non-Program
(NP) loans secured by real estate. It also applies to Section 502 and
Section 504 Rural Housing borrowers (Single Family Housing (SFH)) who
also have a Farmer Program loan. [It does not apply to borrowers who
have a SFH loan only]{.underline}; those will be serviced under 7 CFR
part 3550. Borrowers are responsible for paying taxes on the real estate
security to the proper taxing authorities before taxes become
delinquent. This obligation is set forth in the security instrument
securing the loan. This subpart is inapplicable to Farm Service Agency,
Farm Loan Programs. (Revised 01-09-08, PN 417.)

§ 1925.2 [Definition of tax]{.underline}.

For the purpose of this Instruction, the word \"tax\" means all taxes,
assessments, levies, irrigation and water charges or other similar
obligations which are or will, on nonpayment, become a lien upon the
real estate prior to the mortgage securing the Agency loan.

§ 1925.3 [Servicing taxes]{.underline}.

\(a\) The County Supervisor will be responsible for ascertaining that
all mortgaged real estate is listed properly for tax purposes.

\(b\) The County Supervisor is responsible for taking all actions in
connection with taxes as may be necessary to protect the Government\'s
security interests. Any unusual situations that may arise with respect
to tax servicing should be referred to the State Office for
consideration.

\(c\) The County Supervisor will encourage each borrower to pay taxes
promptly in order to avoid any penalties. Normally, this can be
accomplished through routine servicing of loans by emphasizing the
advantages of setting aside sufficient income to meet tax obligations
when they become due. Taxes will be adequately budgeted for those
borrowers with whom Form RD 431-2, \"Farm and Home Plan,\" is developed.
Each borrower will be encouraged to notify the County Supervisor when he
has paid his taxes. After the delinquent date it will be necessary for
the County Supervisor to determine the borrowers whose taxes are
delinquent. The Multi-Family Housing Information System (MFIS) will be
used in posting servicing actions on delinquent taxes.

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DISTRIBUTION: WSAL Real Property

Taxes

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(Revision 1)

(04-20-05) SPECIAL PN

RD Instruction 1925-A

§ 1925.4 [Servicing delinquent taxes]{.underline}.

\(a\) The Local Manager will contact each borrower with a delinquent tax
and make every practical effort to have him pay the tax with his own
funds. He will use the Management System Card for follow-up of
delinquent taxes. If the delinquent tax is not paid and the borrower
comes to the office with proceeds for application on the Agency account
secured by the real estate, the Local Office personnel will endeavor to
get the borrower to use the proceeds to pay the delinquent tax. If the
amount of the delinquent tax is less than the amount of the proposed
payment, the difference will be applied on the Agency account in
accordance with the policy outlined in subpart A of part 1951 of this
chapter.

\(b\) Prior (usually about 90 days) to the time it is legally possible
for action to be taken that will cause the borrower to lose title or
right of possessions of the security property or the use of essential
water, the Local Manager will contact the borrower and definitely
determine if he will pay the delinquent tax immediately. If the borrower
is unable or unwilling to pay the delinquent tax with his own funds
after every appropriate effort has been made to have him to do so, the
Local Manager will refer to RD Instruction 2024-A and enter the action
in the Foundation Financial Information System to pay the amount of the
delinquent taxes plus the amount of any accrued penalty to bring taxes
current.

\(1\) In an exceptional case where reasons for delinquent taxes have
been removed and planned income during the next year covers payment of
current obligations plus delinquent taxes not vouchered, only the
delinquent taxes will be paid that could cause the borrower to lose
title or right of possession of security property.

\(2\) If the Government is holding a mortgage other than a first
mortgage on the property, do not initiate payment request until the
Local Manager has determined that (a) the prior lien holder will not pay
the delinquent tax, (b) the Government\'s security will be jeopardized
if the delinquent tax is not paid, and (c) the value of the security is
sufficient to justify the advance.

§§ 1925.5 - 1925.50 \[Reserved\]

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