Pennsylvania Code
Title 7 - AGRICULTURE
Part V-C - Farmland and Forest Land
Chapter 138a - FAMILY FARM DEVELOPMENT PROGRAM
Section 138a.6 - Condition of loan guarantees
Current through Register Vol. 54, No. 12, March 23, 2024
(a) Upon default of a loan guaranteed under this program, the Commonwealth will pay the lender the lesser of:
(b) The lender is responsible for all aspects of loan administration. The lender is required to disburse and service the loan, and enforce remedies under the financing documents, including liquidation of collateral-tangible, intangible and proceeds-and enforcement of security interests upon default.
(c) The lender is required to fully secure the loan with no less than a second lien position on assets and collateral. When necessary and approved by the Secretary, subordinated positions may be taken.
(d) In case of default by the borrower, if either the lender or the Department concludes that liquidation is necessary, the lender, unless the Department decides to carry out liquidation, will be required to liquidate assets used as collateral and apply the entire proceeds against the outstanding principal balance owed by the borrower. The Commonwealth will pay an estimated loss settlement to the lender prior to completion of liquidation.
(e) A loan guarantee will not be permitted as part of a general refinancing of a current loan from the lender to the borrower unless the current loan was made for a permissible use as set forth in § 138a.4 (relating to permissible uses of loan proceeds and maximum terms of loans), and one of the following occurs:
This section cited in 7 Pa. Code § 138a.7 (relating to conditions on interest deferrals).