§ 1948.113 - Security.

(a) Loans to intermediaries. Unless otherwise approved by FmHA or its successor agency under Public Law 103-354, security for the FmHA or its successor agency under Public Law 103-354 loan will be separate and apart from security for other loans for which the intermediary is either maker or payee. Security for all loans to intermediaries must be such that the repayment of the loan is reasonably assured, when considered along with the intermediary's financial condition, work plan, and management ability. It is the responsibility of the intermediary to make loans to ultimate recipients in such a manner that will fully protect the interests of the intermediary and the Government.

(1) Security for such loans may include but is not limited to:

(i) Any realty, personalty, or intangibles capable of being mortgaged, pledged, or otherwise encumbered by the intermediary in favor of FmHA or its successor agency under Public Law 103-354; and

(ii) Any realty, personalty, or intangibles capable of being mortgaged, pledged, or otherwise encumbered by an ultimate recipient in favor of FmHA or its successor agency under Public Law 103-354.

(2) Security will normally consist of a lien on the IRP revolving fund. FmHA or its successor agency under Public Law 103-354 will obtain assignments of security pledged by ultimate recipients including an assignment of the promissory notes given by the ultimate recipients and take possession of the promissory notes. Normally, the assignments will not be filed in the public records. They will be held by FmHA or its successor agency under Public Law 103-354 and may be filed at the sole discretion of FmHA or its successor agency under Public Law 103-354, if FmHA or its successor agency under Public Law 103-354 determines the filing is necessary to protect the Government's interest.

(b) Loans from intermediaries to ultimate recipients. Security requirements for loans from intermediaries to ultimate recipients will be negotiated between the intermediaries and ultimate recipients.

(c) Additional security. The FmHA or its successor agency under Public Law 103-354 may require additional security at any time during the term of a loan to an intermediary if, after review and monitoring, an assessment indicates the need for such security to protect the Government's interest.

(d) Appraisals for security for all loans to intermediaries and for loans to ultimate recipients serving as security for loans to intermediaries. Real property serving as security will be appraised by a qualified appraiser. For all other types of property, a valuation shall be made using any recognized, standard technique for the type of property involved (including standard reference manuals), and this valuation shall be described in the loan file.