[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR614.4330]



[Page 124]

 

                       TITLE 12--BANKS AND BANKING

 

                 CHAPTER VI--FARM CREDIT ADMINISTRATION

 

PART 614_LOAN POLICIES AND OPERATIONS--Table of Contents

 

                   Subpart H_Loan Purchases and Sales

 

Sec. 614.4330  Loan participations.



    Agreements to purchase or sell a participation interest shall be 

subject to the provisions of Sec. 614.4325 of this subpart, and, in 

addition, shall satisfy the requirements of this section.

    (a) Participation agreements. Agreements to purchase or sell a 

participation interest in a loan shall, in addition to meeting the 

requirements of Sec. 614.4325(d) of this subpart, at a minimum:

    (1) Define the duties and responsibilities of the participating 

institution and the lead lender, and/or the servicing institution, if 

different from the lead lender.

    (2) Provide for loan servicing and monitoring of the servicer;

    (3) Set forth authorization and conditions for action in the event 

of borrower distress or default;

    (4) Provide for sharing of risk;

    (5) Set forth conditions for the offering and acceptance of the loan 

participation and termination of the agreement;

    (6) Provide for sharing of fees, interest charges, and costs between 

participating institutions;

    (7) Provide for a method of resolution of disagreements arising 

under the agreement between two or more institutions;

    (8) Specify whether the contract is assignable by either party; and

    (9) Provide for the issuance of certificates evidencing a 

participation interest in a loan.

    (b) Intrasystem participations. Loans participated between or among 

Farm Credit System institutions shall meet the borrower eligibility, 

membership, loan term, loan amount, loan security, and stock purchase 

requirements of the originating lender.



[57 FR 38247, Aug. 24, 1992, as amended at 67 FR 1285, Jan. 10, 2002]