RD Instruction 2000-KK

PART 2000 - General

Subpart KK - Agreement Between Federal Deposit Insurance Corporation and

Rural Development

§2000.1801 [General]{.underline}.

Rural Development has entered into an agreement with the Federal Deposit
Insurance Corporation (FDIC) which sets forth certain procedures and
responsibilities of the parties with regard to servicing of Rural
Development guaranteed loans in closed FDIC insured banks. The Agreement
is attached as Exhibit A. Rural Development officials should work
closely and cooperate fully with FDIC officials in the implementation of
this agreement.

§2000.1802 [Notification and response dates]{.underline}.

Paragraphs 3 and 4 of the agreement contain specific notification and
response dates of the parties which require diligent adherence.

§2000.1803 [Servicing]{.underline}.

The agreement further provides that FDIC, after a 60-day postponement
concerning some servicing responsibilities, will service all Rural
Development guaranteed loans in accordance with Rural Development
regulations and any applicable loan agreements.

§§2000.1804 - 2000.1850 \[Reserved\]

Attachment: Exhibit A

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DISTRIBUTION W, S, D, C Administration

General

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(4-22-87) PN 49

RD Instruction 2000-KK

AGREEMENT Exhibit A

This agreement is between Rural Development and Federal Deposit
Insurance Corporation (FDIC).

The purpose of this Agreement is to clarify and define certain
responsibilities of Rural Development and FDIC with regard to Rural
Development guaranteed loan obligations and Conditional Commitments for
Guarantee (Form RD 449-14 or Form RD 1980-15) in closed banks insured by
the FDIC. It is not the purpose of this Agreement to abrogate existing
rules and regulations of either the FDIC or Rural Development.

Within twenty-four (24) hours following the closing of a bank, FDIC will
so notify the Rural Development State Director (SD) of the State in
which the bank is located. This notification will provide the SD with
the name of the closed bank, the FDIC official in charge of the closed
bank, the address to which any written correspondence is to be sent, the
telephone number of the FDIC at the closed bank, and a copy of FDIC\'s
public notice regarding the latest date that claims can be filed against
the closed bank\'s estate.

Not later than fifteen (15) business days after receipt of the
above-mentioned notification, the SD will have provided the FDIC
official in charge of the closed bank with a list of all Rural
Development guaranteed loans in the closed bank\'s loan portfolio. For
each loan this list will include the Rural Development case number,
borrower\'s name, date of loan and original principal amount.

FDIC agrees to retain the lender servicing responsibilities for
guaranteed loans (as outlined in the Lender\'s Agreement \[Forms RD
449-35 or 1980-38\], Title 7 CFR, Part 1980, Part 1841, Part 1843, and
Part 1845 of Rural Development regulations, and any loan agreement that
was executed by the defunct lender with the borrower) until such time as
those loans are purchased by an assuming bank or other eligible lender,
or the indebtedness is refinanced and no longer guaranteed by Rural
Development. An eligible lender is defined by Rural Development
regulations. However, for 60 days after bank failure, the FDIC may
postpone servicing requirements promulgated for Rural Development
guaranteed loans with the exception of those requirements pertaining to
payment processing, preparation of loans for secondary market sale,
insurance policy maintenance, tax payments and UCC filings necessary to
perfect and/or protect the security interests of the lender. Thereafter,
FDIC will service all Rural Development guaranteed loans in accordance
with the Lender\'s Agreement and any applicable loan agreements.

When FDIC services the loan, the FDIC is not responsible for any
unilateral actions on the part of Rural Development which cause a loss
on the loan.

When a borrower has both Rural Development guaranteed loans and other
unguaranteed loans in a closed bank, collateral and lien positions as
set forth in the loan documents will govern payment distributions.
Before set-asides, windfalls or any other Rural Development guaranteed
borrower income is applied against any loan balances, FDIC and Rural
Development will agree as to the distribution of these funds.

(4-22-87) PN 49

RD Instruction 2000-KK

Exhibit A

Page 2

The FDIC will not be required to subordinate its lien position without
prior consent. The FDIC, when it acts as lender, may make protective
advances for the protection and preservation of collateral securing
Rural Development guaranteed loans in accordance with the Lender\'s
Agreement and applicable Subparts of Title 7 CFR, Part 1980.

When an Rural Development Conditional Commitment for Guarantee had been
issued to the closed bank, Rural Development will issue its guarantee
(Form RD 449-34 or Form RD 1980-27) provided all loan conditions have
been met and the FDIC has issued the lender\'s certification (as
required by section 1980.60 of 7 CFR, Part 1980, Subpart A), executed
the Lender\'s Agreement, and paid the necessary guarantee fee as
receiver for the closed bank. In addition, the FDIC will provide
certification in a separate document that the entire principal amount of
the loan, as shown on the Loan Note Guarantee, has been or will be
advanced to the borrower. The FDIC will further certify that it will
carry out the responsibilities of the lender as set out in the Loan Note
Guarantee or Contract of Guarantee, the Lender\'s Agreement, the loan or
line of credit agreement, and any other documents signed by the FDIC and
the defunct lender in connection with the Rural Development guaranteed
loan.

FDIC will review each Rural Development guaranteed farm operating or
line of credit farm loan within 60 days of the bank\'s closing and
determine if it is financially feasible to continue advancing loan funds
in order for the borrower to complete the current crop year or the
following crop year. Thereafter, as necessary, reviews will be conducted
by FDIC to determine what future action is to be taken.

Each Rural Development State Director agrees to provide the full and
timely cooperation of that State\'s staff in support of FDIC loan
servicing responsibilities as required in the Lender\'s Agreement.

This agreement may be amended at any time by written agreement of both
parties.

This agreement shall take effect upon the later date shown below.

L. Wm. Leidman Vance L. Clark

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Chairman Administrator

Federal Deposit Insurance Corporation Farmers Home Administration

Date \_\_February 25, 1987 Date \_\_\_February 17, 1987\_\_\_\_