Editorial Note on Part 1951
Editorial Notes: 1. Some of the exhibits referenced in this part 1951 are not published in the Code of Federal Regulations. Exhibits are available in any Rural Development office. 2. Nomenclature changes to part 1951 appear at 80 FR 9890-9894, Feb. 24, 2015.

§ 1951.25 Review of limited resource FO, OL, and SW loans. ( a ) *Frequency of reviews.* OL, FO, and SW loans will be reviewed each year at the time the analysis is conducted in accordance with subpart B of part 1924 of this chapter and any time a servicing action such as consolidation, rescheduling, reamortization or deferral is taken. The interest rate may not be changed more often than quarterly.
( b ) *Method of review.* ( 1 ) Each loan will be considered on its own merit.
( 2 ) The County Supervisor should consider: ( i ) The borrower's income and repayment record during the preceding years;
( ii ) The projections shown on the most recent Farm and Home Plan or other similar plan or operation acceptable to RD, in light of the previous year's projected figures and actual figures; (See subpart B of part 1924 of this chapter)
( iii ) Whether improved production practices have been or need to be implemented;
( iv ) The borrower's progress as a farmer; and
( v ) All other factors which the County Supervisor believes should be considered.
( 3 ) The Farm and Home Plan projections for the coming year must show that the “balance available to pay debts” exceeds the amount needed to pay debts by at least 10 percent before an increase in interest rate is put into effect. Borrowers that continually purchase unplanned items without the County Supervisor's approval will have the interest rate on their loans increased to the current rate for that loan type. Borrowers that fail to provide the County Supervisor with the information needed to conduct the analysis required in subpart B of part 1924 of this chapter will have their interest rate on their loan increased to the current rate for the OL, FO, or SW loan as applicable. The rate may increase in increments of whole numbers to the current regular interest rate for borrowers. In the borrower's case file, the County Supervisor must document the unplanned purchases and the failure to provide information in a timely manner. The County Supervisor must write the borrower a letter which sets out the facts documented in the case file and advises the borrower that the interest rate will be increased unless the unplanned purchases cease or unless the borrower provides information in a timely manner. Whenever it appears that the borrower has a substantial increase in income and repayment ability or ceases farming, either the interest rate may be increased to the current rate for FO, OL or SW loans, as applicable, or the borrower will be graduated from the program as provided in subpart F of this part.
( 4 ) The County Office will be responsible for scheduling and completing the reviews.
( 5 ) Borrowers who have received a deferral under Subpart S of this part will not have the interest rate increased on their limited resource loans during the deferral period.
( c ) *Processing.* ( 1 ) If, after the review, the interest rate is to remain the same, no further action needs to be taken.
( 2 ) When the interest rate is increased to the current rate, the loan will be recorded as a regular loan and will no longer be considered a limited resource loan. The borrower must be notified in writing at least 30 days prior to the date of the change. Exhibit B of this subpart may be used as a guide. The effective date of the change in interest rate will be the effective date on Exhibit B. The borrower must be informed of the following for each loan: ( i ) The authorization for the change,
( ii ) Reason for change (repayment ability, etc.),
( iii ) The effective date and rate of the increase in interest,
( iv ) Amount of the new installments and dates due,
( v ) Right to appeal.
( 3 ) It is not necessary to obtain a new promissory note for this change in interest rate.
[50 FR 45764, Nov. 1, 1985, as amended at 53 FR 35717, Sept. 14, 1988; 56 FR 3395, Jan. 30, 1991; 58 FR 15074, Mar. 19, 1993]