Minnesota Administrative Rules
Agency 109 - Rural Finance Authority
Chapter 1654 - ETHANOL PRODUCTION FACILITY LOAN PROGRAM
Part 1654.0070 - AUTHORITY PARTICIPATION
Universal Citation: MN Rules 1654.0070
Current through Register Vol. 48, No. 39, March 25, 2024
Subpart 1. Procedure.
If the financial assistance is in the form of participation with a lender, the procedures in this section must be followed.
Subp. 2. Lender eligibility.
A. Any bank, credit union,
or savings association chartered by the state or federal government, a
subdivision of the farm credit system (Agri Bank), the Federal Deposit
Insurance Corporation, or any insurance company, fund, or other financial
institution doing business as an agricultural lender within the state may apply
to the authority for certification as an approved lender.
B. Upon a lender's demonstration of its
ability to originate and service commercial real estate and equipment loans,
the authority shall designate them as an approved lender for purposes of the
ethanol production facility loan program.
C. Before offering loans to the authority for
participation, each approved lender must enter into a master participation
agreement. The agreement shall specify the contractual relationship between the
parties and terms and conditions of loans to be made by the lender under the
ethanol production facility loan program and offered to the authority for
participation.
Subp. 3. Loan closing, purchase of participation, and loan management.
A. Upon receiving notification of approval by
the authority of a loan participation, the lender shall proceed to close the
loan. The lender must record and cross-reference all documents relating to the
loan including the authority note and loan agreement. The lender must notify
the authority that the loan is closed and recorded and submit copies of the
recorded documents to the authority.
B. Within ten business days of receipt of
written notice under item A, that the loan is closed and recorded, the
authority shall pay the lender the authority's participation interest in the
loan.
C. Within five working days
after the receipt of finally collected funds, the lender shall complete and
return a participation certificate as prescribed by the authority evidencing
the authority's undivided pro rata interest in the ethanol production facility
loan.
D. The lender shall manage
the loan, including the authority participation interest, with the degree of
care and diligence usually maintained by commercial real estate lenders. The
lender shall have custody and control of all loan documents, except the
original application, which shall be retained by the authority. The lender
shall manage, administer, and enforce the loan documents in its own name and
also on behalf of itself and the authority, including, without limitation, the
right to foreclose or otherwise enforce remedies against the
borrower.
E. The lender shall
promptly notify the authority of occurrences that substantially affect the
security, collection, or enforcement of any loan.
F. The lender shall obtain the prior written
consent of the borrower and the authority before:
(1) making or consenting to a release,
substitution, or exchange of collateral that reduces the aggregate value of the
collateral;
(2) waiving a claim
against the borrower or a guarantor, surety, or obligor in connection with the
indebtedness; or
(3) modifying or
waiving a term of the note or related instruments evidencing or securing the
loan.
Subp. 4. Participation repurchase.
An originating lender is under no obligation to repurchase any authority participation interest in an ethanol production facility loan except as provided in this section.
A. A
lender may, at its option and upon written approval by the authority,
repurchase the authority's participation interest at any time.
B. A lender must repurchase the authority's
participation interest whenever the loan is refinanced.
C. A lender must repurchase the authority's
participation interest if the lender has made misrepresentations or fails to
perform its obligations under the participation agreement, has received written
notice from the authority, and has not corrected the representation of
performance under the notice.
D.
Any repurchase shall be for the principal balance of the authority's
participation plus accrued interest and any penalties or costs incurred by the
authority to secure repurchase.
Subp. 5. Review of loan and collateral.
A. At any time during the term of an ethanol
production facilities loan, the authority or the state legislative auditor may
inspect the books, records, documents, and accounting practices of the lender
relative to the loan to determine compliance with the terms and conditions of
the loan and participation agreement. Any inspections shall be during the
lenders normal business hours. The lender must allow the authority to copy any
documents relating to the loan and the authority's participation.
B. The lender and the authority may
physically inspect the collateral securing the loan upon notice to the
borrower. Any inspections must be conducted at a reasonable time.
Statutory Authority: MS s 41B.07
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