[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: 12CFR614.4335]



[Page 124-125]

 

                       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. 614.4335  Borrower stock requirements.



    (a) In general. Except as provided in paragraph (b) of this section, 

a borrower shall meet the minimum borrower stock purchase requirements 

as a condition of obtaining a loan.

    (b) Loans designated for sale into a secondary market. (1) An 

institution's bylaws may provide that the institution's minimum borrower 

stock purchase requirements do not apply if a loan is designated, at the 

time it is made, for sale into a secondary market.

    (2) If a loan designated for sale under paragraph (b)(1) of this 

section is not sold into a secondary market during the 180-day period 

that begins on the date of designation, the institution's minimum 

borrower stock purchase requirements shall apply.

    (c) Retirement of borrower stock--(1) In general. Borrower stock may 

be retired only if the institution meets the minimum permanent capital 

requirements imposed by the FCA pursuant to the



[[Page 125]]



Act or regulations and, except as provided in paragraph (c)(2) of this 

section, in accordance with the following:

    (i) Borrower stock may be retired if the entire loan is sold without 

recourse, provided that when the loan is sold without recourse to 

another Farm Credit System institution, the borrower may elect to hold 

stock in either the selling or purchasing institution.

    (ii) Borrower stock may not be retired when the entire loan is sold 

with recourse.

    (iii) When an interest in a loan is sold without recourse, a 

proportionate amount of borrower stock may be retired, but in no event 

may stock be retired below the institution's minimum stock purchase 

requirements for the interest retained.

    (iv) If an institution repurchases a loan on which the stock has 

been retired, the borrower shall be required to repurchase stock in the 

amount of the minimum stock purchase requirement.

    (2) Loans sold into a secondary market. An institution's bylaws may 

provide that all outstanding voting stock held by a borrower with 

respect to a loan shall be retired when the loan is sold into a 

secondary market.

    (d) Applicability. In the case of a loan sold into a secondary 

market under title VIII of the Act, paragraphs (b)(1) and (c)(2) of this 

section apply regardless of whether the institution retains a 

subordinated participation interest in a loan or pool of loans or 

contributes to a cash reserve.



[62 FR 63646, Dec. 2, 1997]