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client require the longer terms and the life of the operating goods purchased from proceeds of the loan warrants the longer amortization period.

The interest rate on operating goods loans will be that prescribed in 8 303.25. [Par. 1, A.O. 219, Supp. 1, June 5, 1937, par. 4c, A.O. 219,

* Jan. 23, 1937]

303.94 Repayments. In any case where payments made by the occupants shall be insufficient to cover rental and also the full repay. ment on loans, the payment shall be applied first on the rental and the remainder on the other loans.* [Par. 8a II, A.O. 219, Jan. 23, 1937]

303.95 Security. All loans for operating goods made under the provisions of this subpart, shall be evidenced by a promissory note or notes, payable to the Farm Security Administration either in the full amount of the approved Loan Agreement or in the amount of the advance being made.

A chattel mortgage or similar lien shall be taken on personal property acquired with the proceeds of the loan in the full amount of the purchase price of such property before the first check is delivered. A mortgage shall be taken on all crops growing or to be grown, as security for funds advanced for the purchase of nonrecoverable goods or as security for the payment of rent or funds advanced for payment of rent. The period of time for which any chattel mortgage or similar lien shall be taken will be determined by the limitations of local law applicable to the period of time for which chattel mortgages or similar liens may be taken and the probable period of time for which the chattel to be acquired through the proceeds of the loan will have a useful existence.

Additional security may be taken for such loans in the form of real estate or chattel mortgages or similar liens as first liens on all of the borrower's unencumbered property or as junior liens on all of the borrower's encumbered property.* [Par. 8b, A.O. 219, Jan. 23, 1937]

303.96 Releases. The policy and procedure as set forth in 88 303.155–303.160 will be followed in executing releases of mortgages or similar liens taken in connection with operating goods loans.* [Par. 1, A.O. 219, Supp. 4, Sept. 15, 1937, 2 F.R. 1955]

SUBPART-LOANS TO INDIVIDUALS FOR CONSTRUCTION ON RESET. TLEMENT LANDS OCCUPIED UNDER LEASE AND PURCHASE CONTRACTS

303.116 Families eligible. Types of families prescribed in $302.2 are eligible to enter into lease and purchase contracts and secure loans under this subpart. Loans for construction or repair or improvements will be made to heads of families eligible for resettlement under approved Lease and Purchase Contract.* [Par. 2, A.O. 226, rev. 1, May 18, 1937]

303.117 Terms, conditions and purposes for which construction loans and lease and purchase of land may be made. The price of the land to be stipulated in the Lease and Purchase Contract will be the purchase price paid by the Government (or rehabilitation cor

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*For statutory citation, see note to 8 303.21.

poration) or the current appraisal value as determined by the regional director, whichever is the lower. There should be added in each case the value of any clearing and developmental work performed upon the land by the Government. Where the purchase price is to be used, the price paid for various tracts in the project may be adjusted and equalized so as to spread the benefits of advantageous purchases to all persons entering into such contracts on that project.

Loans for construction and repairs on land owned by the Government, hereafter referred to as construction loans, will be made to accepted families on the basis of Form FSA-RR 14, Farm and Home Management Plan, Form FSA-LE 171, Lease and Purchase Contract, and Form FSA-LE 172, Loan Agreement and Request for Funds, for the following purposes: (a) Minor construction or repair of buildings, fencing, drilling, or repairing of wells, leveling, clearing or dyking of land, or such other improvements as may be necessary to the proper carrying out of the Farm and Home Management Plan prepared for the farm. (b) Major construction of dwelling, barn and other outbuildings, or other improvements and facilities.

Loans for construction, repairs, land improvements, and so forth, shall not exceed a maximum per farmstead or purpose as will be set by the Administrator.

Construction loans shall be made for a period of 40 years and will bear interest at the rate of 3 percent per annum as provided for in the Lease and Purchase Contract.

The borrower shall deposit the proceeds of the loan in a bank or other depository which must be insured under the Federal Deposit Insurance Corporation and be approved by the regional director.

After receiving the written consent of the regional director, the occupant may mortgage or sell livestock, equipment, machinery, tools, crops or other produce to other parties or agencies provided such action will not in any way jeopardize the Government's chances of collecting the money owing it, as required by the Lease and Purchase Contract.* [Pars. 4, 12b I, A.O. 226, rev. 1, May 18, 1937, as amended by par. 1 of Supp. 9, May 26, 1938]

303.118 Security. Regional directors will not require chattel mortgages, crop_liens, or similar forms of security to assure payments under the Lease and Purchase Contract. Provisions have been incorporated in the Lease and Purchase Contract only to permit the Government to assure repayment of money due it if circumstances require such collateral security at some later date.* [Par. 9b, A.O.

* 226, rev. 1, May 18, 1937]

CROSS REFERENCE: For Federal Deposit Insurance Corporation, see 12 CFR Chapter III.

303.119 Application for purchase and loan. The community manager will assist the applicant in accordance with the following procedure: (a) Farm and Home Management Plans will be prepared in triplicate on Form FSA-RR 14. (b) In conformity with the Farm Management Plan, the applicant, with the advice and consent of the community manager, will select a house plan and barn plans, and plans for other structures from those approved by the Coordinator, and will plan other improvements, minor construction,

*For statutory citation, see note to $ 303.21.

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repairs, and so forth. (c) An undated note Form FSA-LE 173 and Form FSA-FI 5, Public Voucher-Farm Security Administration Loan, in quintuple in the full amount of the loan to be made, will be prepared and properly signed by the applicant, in accordance with instructions, together with an unexecuted copy of the note for the United States Treasury Accounts office for the region. (d) Form FSA-LE 171, Lease and Purchase Contract, will be prepared in sextuple and signed by the applicant in triplicate. (e) Form FSA-LE 172, Loan Agreement and Request for Funds, will be prepared in quintuple, and signed by the applicant in duplicate.* [Par. 5, A.O. 226, rev. 1, May 18, 1937]

303.120 Performing construction. All new building construction will be performed by contract, approved by the countersigning officer, between the borrower and a private contractor in accordance with plans and specifications approved by the Coordinator. Any exceptions to the foregoing requirement must be approved by the Coordinator.

Other construction, improvements and repairs may be performed by the client and the proceeds of the loan used by him for the purchase of materials and supplies and equipment and labor or such work may be performed by contract approved by the countersigning officer. Neither the contractor nor the borrower shall have any right to modify any plans or specifications without the approval of the Coordinator.

For minor repairs, the countersigning officer may, if he is assured that the work can be executed more economically by this method, authorize the borrower to purchase material and hire labor. In this case the borrower himself performs labor required for his own repairs, he may withdraw from the account sums not to exceed the equivalent of the prevailing wage for the type and amount of work performed. When an individual client performs work himself or employs other individual workers to perform work for him under the terms of this subpart, he is not required to comply with the labor conditions that are imposed upon contractors by Form FSALE 175, “Construction Contract”. In no case will the value of the repairs performed by this method exceed five hundred dollars ($500) for all the structures of a farmstead unit, except upon specific authorization of the Coordinator or his authorized representative. The use of Form FSA-LE 175, Construction Contract, is required with respect to "other construction improvements and repairs" authorized under the above paragraph where the value of such work exceeds five hundred dollars ($500).* [Par. 10, A.O. 226, rev. 1, May 18, 1937 as amended by par. 2 of Supp. 5, rev. 1, Oct. 29, 1937]

303.121 Supplemental loans. When an original construction loan made to a client under a Lease and Purchase Contract is inadequate to permit completion of the farmstead in accordance with the Farm and Home Management Plan, or where it is desirable to extend the scope of the original Farm and Home Management Plan so as to increase the productivity or usefulness of a farmstead, a supplemental loan may be made for this purpose pro

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*For statutory citation, see note to § 303.21.

ner.

vided prior approval in writing has first been obtained from the Administrator. Under no circumstances may the total of the original and supplemental loans made to a client exceed the maximum per farmstead previously fixed by the Secretary of Agriculture. The same documents will be required for a supplemental loan as for the original loan and they will be processed in the same man

The requirements for construction loans concerning deposit and expenditure of the proceeds of the loans will also apply. All documents incidental to the supplemental loan, that is, Loan Agreement, Note and Supplemental Lease and Purchase Contract must be prepared, executed and processed at the same time. The client will execute Form FSA-LE 171 (Supp. 1), Supplemental Lease and Purchase Contract, in the same number of copies as required for the original Contract. This Form will be a supplement to the orig. inal Lease and Purchase Contract but will combine the amount of the original and supplemental loans, and will further provide for single payments of principal and interest on the consolidated loans.* [A.O. 226, rev. 1, pars. 1, 2, 3 of Supp. 8, Apr. 22, 1938]

SUBPART—COLLECTION OF RURAL REHABILITATION LOANS 3

3

303.136 General policies. If the circumstances are such that the borrower cannot repay in full on the due date, the borrower will provide satisfactory explanation and justification, and the county rural rehabilitation supervisor will transmit a report thereon, using the Forms prescribed in Administration Order 178 (Revision 1), March 18, 1937.

Each case of delinquency will be considered on its individual merits. Except in cases where prompt action is necessary to preserve the security held by, or otherwise to protect the interests of, the Farm Security Administration or state rural rehabilitation corporations, collection work shall follow the procedure prescribed in Administration Order 178 (Revision 1), March 18, 1937.

All ordinary means of collection shall be exhausted before legal proceedings shall be instituted.

No official of the Farm Security Administration shall take possession of or sell mortgaged property in case of default either with or without legal process except in accordance with the procedure formulated by the regional attorney.

No official of the Farm Security Administration shall institute legal proceedings to take possession of, or foreclose on, property mortgaged to the Farm Security Administration or to a State rural rehabilitation corporation which has transferred its assets. All such proceedings will be instituted by the appropriate United States attorney, after submission of the case to him, in the manner prescribed by Administration Order 178 (Revision 1), March 18, 1937.

No official of the Farm Security Administration shall threaten criminal proceedings for the purpose of facilitating the collection of any indebtedness due to the Farm Security Administration or a

8 “Rural rehabilitation loans" include loans to individuals for rural rehabilitation or for emergency rehabilitation needs.

*For statutory citation, see note to § 303.21.

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State rural rehabilitation corporation, notwithstanding the fact that a reasonable basis for criminal action in the particular case may exist. Nothing herein contained shall be understood to prevent the institution of criminal proceedings in accordance with the terms of Administration Order 178 (Revision 1), March 18, 1937, or prevent the compromise or adjustment of a criminal action in a manner permitted or authorized by local law.* [Pars. 2d, 2e, 2f, 2g, 2h, 2i, A.O. 178, rev. 1, Mar. 18, 1937]

303.137 Death of borrower. In the event of the death of the borrower where the surviving spouse or other heir has facilities adequate to continue the Farm and Home Management Plan, consideration will be given to continuing the loan program to such surviving spouse or heir.* [Par. 3c IV G (1), A.O. 178, rev. 1, Mar. 18, 1937]

303.138 Sale of produce or other encumbered property. Clients whose sources of income are mortgaged, may dispose of such produce or property to obtain proceeds to apply on their loans, in accordance with 88 303.155–303.167 through the use of Form FSA-LE 90, Application for Release of Mortgaged Property.* [Par. 3c, IV HR(1), A.O. 178, rev. 1, Mar. 18, 1937, as amended by par. lj of Supp. 1, July 24, 1937]

303.139 Final settlement, cancelation and surrender of rates. When it is determined that a note has been paid in full, including all interest due thereon, plus all charges, such note will be turned over to the regional director, or his delegatee, who will effect the cancelation and surrender of notes and other related documents, in accordance with local law.* [Par. 3c IV K (2), A.O. 178, rev. 1, Mar. 18, 1937, as amended by par. lk of Supp. 1, July 24, 1937]

Ik 1] 303.140 Administrative authorization. In regard to loans made by both the Farm Security Administration and by state rural rehabilitation corporations, whether before or after a transfer of assets, regional directors are authorized to execute all documents necessary or appropriate in collecting such loans, in repossessing, foreclosing and disposing of personal property, including growing crops, on which a chattel mortgage or other lien has been taken, and in providing for the care of such property pending its ultimate disposition by the mortgagee; and they are further authorized to perform all such other acts as are necessary or appropriate in the proper execution of the policies and procedures prescribed in Administration Order 178 (Revision 1), March 18, 1937.* [Par. 7a, A.O. 178, rev. 1, Mar. 18, 1937]

303.141 Delegation of authority. (a) Each Farm Security Administration official hereinafter specified is authorized to receive delegation of the authority, or part thereof, given to regional directors in Administration Order 178 (Revision 1), March 18, 1937, and, if such authority or part thereof, is delegated to him, may in turn delegate it to his immediate subordinate or subordinates; provided, however, that authority to compromise, adjust or settle corporation claims may be delegated only to assistant regional directors in charge of rural rehabilitation, regional collection advisers, regional custodians and regional chiefs of Loan and Collections secPage 38

*For statutory citation, see note to 8 303.21.

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