[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: 12CFR614.4358]



[Page 128-129]

 

                       TITLE 12--BANKS AND BANKING

 

                 CHAPTER VI--FARM CREDIT ADMINISTRATION

 

PART 614_LOAN POLICIES AND OPERATIONS--Table of Contents

 

                  Subpart J_Lending and Leasing Limits

 

Sec. 614.4358  Computation of obligations.



    (a) Inclusions. The computation of total loans to each borrower for 

the purpose of computing their lending and leasing limit shall include:

    (1) The total unpaid principal of all loans and lease balances 

outstanding and the total amount of undisbursed commitments except as 

excluded by paragraph (b) of this section. This amount shall include 

loans that have been charged off on the books of the institution in 

whole or in part but have not been collected, except to the extent that 

such amounts are not legally collectible;

    (2) Purchased interests in loans, including participation interests, 

to the extent of the amount of the purchased interest, including any 

undisbursed commitment;

    (3) Loans attributed to a borrower in accordance with Sec. 

614.4359.

    (b) Exclusions. The following loans when adequately documented in 

the loan file, may be excluded from loans to a borrower subject to the 

lending and leasing limit:

    (1) Any loan or portion of a loan that carries a full faith and 

credit performance guaranty or surety of any department, agency, bureau, 

board, commission, or establishment of the United States government, 

provided there is no evidence to suggest that the guaranty has become 

unenforceable and the institution can demonstrate that it is in 

compliance with the terms and conditions of the guaranty.

    (2) Any loan or portion of a loan guaranteed by a Farm Credit System 

institution, pursuant to the provisions of Sec. 614.4345 on guaranty 

agreements. This exclusion does not apply to the institution providing 

the guaranty.

    (3) Any loan or portion of a loan that is secured by bonds, notes, 

certificates of indebtedness, or Treasury bills of the United States or 

by other obligations guaranteed as to principal and interest by the 

United States government, provided the loans are fully secured by the 

current market value of such obligations. If the market value of the 

collateral declines to below the balance of the loan, and the entire 

loan, individually, or when combined with other loans and undisbursed 

commitments to or attributed to the borrower, causes the borrower's 

total indebtedness to exceed the institution's lending limit, the 

institution shall have 5 business days to bring the loan into 

conformance before it shall be deemed to be in violation of the lending 

limit.

    (4) Interests in loans sold, including participation interests, when 

the sale agreement meets the following requirements:

    (i) The interest must be sold without recourse; and

    (ii) The agreement under which the interest is sold must provide for 

the sharing of all payments of principal, collection expenses, 

collateral proceeds, and risk of loss on a pro rata basis according to 

the percentage interest in the principal amount of the loan. Agreements 

that provide for the pro rata sharing to commence at the



[[Page 129]]



time of default or similar event, as defined in the agreement under 

which the interest is sold, shall be considered to be pro rata 

agreements, notwithstanding the fact that advances are made and payments 

are distributed on a basis other than pro rata prior to that time.

    (5) Interests in leases sold when the sale agreement provides that:

    (i) The interest sold must be:

    (A) An undivided interest in all the lease payments or the residual 

value of all the leased property; or

    (B) A fractional undivided interest in the total lease transaction;

    (ii) The interest must be sold without recourse; and

    (iii) Sharing of all lease payments must be on a pro rata basis 

according to the percentage interest in the lease payments.

    (6) Loans sold in their entirety to a pooler certified by the 

Federal Agricultural Mortgage Corporation, if an interest in a pool of 

subordinated participation interests is purchased to satisfy the 

requirements of title VIII of the Act.



[58 FR 40321, July 28, 1993. Redesignated and amended at 64 FR 34517, 

June 28, 1999; 67 FR 1285, Jan. 10, 2002]