1003

Rural Utilities Service, USDA § 1785.67

(4) The Rural Development State Director must send the bond or note evidencing WS advance indebtedness of

the borrower to the Finance Office

along with reports of payments from

advance funds disbursed by NRCS. A

copy of the bond or note and copy of

each report of payment will be sent to

the processing office.

(c) Actions subsequent to closing of

loans or advances. Actions will be taken

in accordance with §1780.44 of this

chapter.

§ 1781.21 Borrower accounting methods, management, reporting, and

audits.

These activities will be handled in

accordance with the provisions of

§1780.47 of this chapter.

§ 1781.22 Subsequent loans.

Subsequent loans will be processed in

accordance with this part.

§ 1781.23 Servicing.

Servicing will be handled in accordance with the provisions of subpart E

of part 1951 of this title.

§ 1781.24 State supplements and availability of bulletins, instructions,

forms, and memorandums.

(a) State supplements will be issued

as needed in accordance with applicable provisions of part 1780 of this chapter.

(b) Bulletins, instructions, forms and

memorandums are available from any

USDA/Rural Development office or the

Rural Utilities Service, United States

Department of Agriculture, Washington, DC. 20250–1500.

§§ 1781.25—1781.100 [Reserved]

PART 1785—LOAN ACCOUNT

COMPUTATIONS, PROCEDURES

AND POLICIES FOR ELECTRIC

AND TELEPHONE BORROWERS

Subpart A [Reserved]

Subpart B—RUS Cushion of Credit Account

Computations and Procedures

Sec.

1785.66 General.

1785.67 Definitions.

1785.68 Establishing an RUS cushion of

credit payment account.

1785.69 Cushion of credit payment account

computations.

1785.70 Application of RETRF cushion of

credit payments.

AUTHORITY: 7 U.S.C. 901 et seq.; Title I, Subtitle D, sec. 1403, Omnibus Budget Reconciliation Act of 1987, Pub. L. 100–203; Pub. L. 103–

354, 108 Stat. 3178 (7 U.S.C. 6941 et seq.).

Subpart A [Reserved]

Subpart B—RUS Cushion of Credit

Account Computations and

Procedures

SOURCE: 54 FR 13669, Apr. 5, 1989, unless

otherwise noted.

§ 1785.66 General.

This subpart B sets forth policies and

procedures on the RUS cushion of

creditpayments program. The cushion

of credit payments program will be

maintained only for insured loans evidenced by obligations of the Fund. A

subaccount within the Fund is hereby

established for purposes of promoting

rural economic development. It shall

be known as the ‘‘Rural Economic Development Subaccount.’’ The assets of

the subaccount shall be obtained from

crediting (on a monthly basis) a sum

determined by multiplying the outstanding cushion of credit payments

made after October 1, 1987, by the difference (converted on a monthly basis)

between the average weighted interest

rate paid on outstanding certificates of

beneficial ownership issued by the

Fund and the 5 percent rate of interest

provided to borrowers on cushion of

credit payments, repayment of loans

made pursuant to Section 313 of the

Act, and other sources as provided by

law. This subaccount shall be used to

provide grants or zero interest loans to

borrowers under the Act for the purpose of promoting rural economic development.

§ 1785.67 Definitions.

Accumulated (deferred) interest means

interest allowed to accumulate up to,

and including, the basis date of RUS

notes covering loans approved before

June 5, 1957. The accumulated interest

1004

§ 1785.68 7 CFR Ch. XVII (1–1–00 Edition)

is payable in equal periodic installments over the remaining life of the

notes.

Act means the Rural Electrification

Act of 1936, as amended (7 U.S.C. 901 et.

seq.).

Advance payment means a voluntary

unscheduled payment on an RUS note,

made prior to October 2, 1987, credited

to the advance payment account of a

borrower.

Cushion of Credit Payment means a

voluntary unscheduled payment on an

RUS note made after October 1, 1987,

credited to the cushion of credit account of a borrower.

Current interest means interest payable periodically as it accrues.

Fund means the Rural Electrification

and Telephone Revolving Fund established pursuant to the Act.

Interest credit means interest earned

on balances in advance payment or

cushion of credit accounts. Since the

periodic installments are established

by the terms of the notes, the interest

credits cannot serve to change the

total amount of each installment;

therefore, an amount equal to the interest credits is added to the principal

installment due. On receipt of the full

installments, amounts equal to the interest credits (the principal offsets) are

added to the respective advance payment accounts.

Prepayment means a voluntary unscheduled payment which the borrower

instructs RUS to apply directly and

immediately to the principal of an RUS

note.

RUS notes means those notes, bonds,

or other obligations evidencing indebtedness created by loans made by RUS

pursuant to titles I, II, or III of the

Act.

Subaccount means the Rural Economic

Development Subaccount established

pursuant to the Act as part of the

Fund.

§ 1785.68 Establishing an RUS cushion

of credit payment account.

A cushion of credit account shall be

automatically established by RUS for

each borrower who makes a payment

after October 1, 1987, in excess of

amounts then due on an RUS note.

Such account will bear interest at a

rate of 5 percent per annum. All payments on RUS notes which are in excess of required payments and not otherwise designated shall be deposited in

the borrowers’ respective cushion of

credit accounts. Payments received in

the month in which an installment is

due will be applied to the installment

due. However, if the regular installment payment is received at a later

date in the month, the first payment

received will be applied retroactively

to a cushion of credit account and the

second will be applied to the installment due.

§ 1785.69 Cushion of credit payment

account computations.

(a) Deposits. Cushion of credit payments are credited to the borrowers’

cushion of credit accounts.

(b) Interest. Interest at the rate of 5

percent per annum shall be credited on

a quarterly basis to cushion of credit

accounts. Interest earned will appear

as a reduction in the interest billed on

the borrower’s RUS notes and will be

separately shown on RUS Form 694,

‘‘Statement of Interest and Principal

Due.’’

§ 1785.70 Application of RETRF cushion of credit payments.

(a) If a maturing installment on an

RUS note or a note which has been

guaranteed by RUS is not received by

its due date, funds will be withdrawn

from the borrower’s cushion of credit

account and applied as of the installment due date beginning with the oldest of such notes as follows: first, to

current interest then due on all notes;

second, to the accumulated interest

due, if any, on all notes; and third, to

the principal then due on all notes. In

those instances where a borrower has

prior to October 2, 1987, maintained an

advance payment account with RUS,

its cushion of credit account will be applied in accordance with the provisions

of this section prior to using any balance remaining in its advance payment

account to pay interest and principal

installments on notes. Computations

required under this section have been

made by RUS as of October 2, 1987;

however, on or before May 25, 1989 any

borrower may make a one time irrevocable election to have all such computations made as of April 5, 1989, by

1005

Rural Utilities Service, USDA Pt. 1786

filing written notice to that effect with

Robert D. Ruddy, Director, Fiscal Accounting Division, Rural Utilities

Service, Washington, DC 20250–1500.

(b) A borrower may reduce the balance of its cushion of credit account

only if the amount obtained from the

reduction is used to make scheduled

payments on loans made or guaranteed

under the Act.

[54 FR 13669, Apr. 5, 1989; 54 FR 17703, Apr. 25,

1989]

PART 1786—PREPAYMENT OF RUS

GUARANTEED AND INSURED

LOANS TO ELECTRIC AND TELEPHONE BORROWERS

Subpart A—General [Reserved]

1786.1—1786.24 [Reserved]

Subpart B—Prepayment of RUS Guaranteed Federal Financing Bank Loans

Pursuant to Section 306(A) of the RE

Act

1786.25 Purpose.

1786.26 Policy.

1786.27 Definitions and rules of construction.

1786.28 Qualifications.

1786.29 Prepayment authority, program allocations, categories of prepayment applications and financially distressed borrowers’ reserve.

1786.30 Processing procedure.

1786.31 Application procedure.

1786.32 Settlement procedure.

1786.33 Forms.

1786.34 Access to records of lenders,

servicers, and trustees.

1786.35 Loss, theft, destruction, mutilation,

or defacement of RUS guarantee.

1786.36 Other prepayments.

1786.37 Application of regulation to previous

prepayments.

1786.38 Judicial review.

1786.39—1786.49 [Reserved]

Subpart C—Special Discounted

Prepayments on RUS Direct/Insured Loans

1786.50 Purpose.

1786.51 Definitions.

1786.52 Prepayment.

1786.53 Discounted present value.

1786.54 Eligibility criteria.

1786.55 Application procedure.

1786.56 Approval of applications.

1786.57 Prepayment agreement.

1786.58 Security.

1786.59 Loan fund audit.

1786.60 Closing.

1786.61 Other prepayments.

1786.62—1786.74 [Reserved]

Subpart D [Reserved]

Subpart E—Discounted Prepayments on

RUS Notes in the Event of a Merger of

Certain RUS Electric Borrowers

1786.95 Purpose.

1786.96 Definitions.

1786.97 Prepayment.

1786.98 Discounted present value.

1786.99 Eligibility criteria.

1786.100 Application procedure.

1786.101 Approval of application.

1786.102 Prepayment agreement.

1786.103 Security.

1786.104 Loan fund audit.

1786.105 Closing.

1786.106 Other prepayments.

APPENDIX A TO SUBPART E TO PART 1786—

LISTING OF ELIGIBLE BORROWERS

APPENDIX B TO SUBPART E TO PART 1786—

FEDERAL RESERVE STATISTICAL RELEASE

Subpart F—Discounted Prepayments on

RUS Electric Loans

1786.150 Purpose.

1786.151 Definitions and rules of construction.

1786.152 Prepayments of RUS loans.

1786.153 Discounted present value.

1786.154 Qualified Notes.

1786.155 Eligible borrower.

1786.156 Application procedure.

1786.157 Approval of applications.

1786.158 Terms and conditions of prepayment agreement.

1786.159 Initial closing.

1786.160 Subsequent closings.

1786.161 Return of Qualified Notes and release of lien.

1786.162 Outstanding loan documents.

1786.163 Existing wholesale power contracts.

1786.164 Loan fund audit.

1786.165 Reporting.

1786.166 Approvals.

1786.167 Restrictions to additional RUS financing.

1786.168 Borrowers who prepaid under this

part prior to October 21, 1992.

1786.169 Liability.

1786.170 Prepayment of loans approved after

December 20, 1993. [Reserved]

1786.171—1786.199 [Reserved]

Subpart G—Refinancing and Prepayment

of RUS Guaranteed FFB Loans Pursuant

to Section 306(C) of the RE Act

1786.200 Purpose.

1786.201 Definitions and rules of construction.

1786.202 Prepayment and refinancing of RUS

guaranteed FFB loans.

1786.203 Special considerations.