§ 5114. Defaults.

(a) A Default of a Farm Borrower Agreement shall be a default of outstanding trust fund account funds under the related Farm Lender Credit Agreement. Farm Lender shall provide the Agency with written notice that a Default has occurred within fourteen (14) days of either failure by the Farm Borrower to make payment at loan maturity or filing for bankruptcy by Farm Borrower.

(b) With respect to a Default on a Guaranteed Farm Borrower Loans, the procedures to be followed by a Farm Lender shall be those specified by USDA. If no such procedures exist, the procedures specified in subsection (c) shall apply.

(c) With respect to a Default on a Nonguaranteed Farm Borrower Loans, the procedures to be followed by a Farm Lender shall be set forth in the Farm Borrower Agreement and the related Farm Lender Credit Agreement, and shall include the following:

(1) A meeting shall be arranged by the Farm Lender with the Farm Borrower upon occurrence of a Default in order to resolve the problem. Actions taken by the Farm Lender may include, the following:

(A) Deferment of principal payments.

(B) An additional temporary loan by the Farm Lender to bring the account current.

(C) Reamortization of or rescheduling the payments on the loan.

(D) Reorganization.

(E) Subsequent loan guarantees.

(F) Changes in the interest rate, upon approval of the Agency.

(2) The Farm Lender shall negotiate in good faith in an attempt to resolve any problem to permit the Farm Borrower to cure a Default; provided that, in the opinion of the Farm Lender, the proposed resolution is economically feasible.

(3) If, within ninety (90) days following receipt by the Agency of the notice provided for in subsection (a), the Farm Lender is unable to resolve to its satisfaction any Default, then Farm Lender shall institute Liquidation proceedings.

HISTORY

1. Repealer and new section filed 2-1-94 as an emergency; operative 2-1-94 (Register 94, No. 5). A Certificate of Compliance must be transmitted to OAL by 8-1-94 pursuant to Corporations Code section 14024 or emergency language will be repealed by operation of law on the following day. For prior history, see Register 89, No. 8.

2. Amendment filed 12-27-2004 as a deemed emergency pursuant to Corporations Code section 14024; operative 12-27-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 6-27-2005 or emergency language will be repealed by operation of law on the following day.

3. Editorial correction of History 2 (Register 2005, No. 27).

4. Certificate of Compliance as to 12-27-2004 order, including amendment of Note, transmitted to OAL 5-25-2005 and filed 7-7-2005 (Register 2005, No. 27).

5. Amendment of subsections (a), (c)-(c)(1) and (c)(3) filed 8-4-2008 as an emergency; operative 8-4-2008 (Register 2008, No. 32). A Certificate of Compliance must be transmitted to OAL by 2-2-2009 or emergency language will be repealed by operation of law on the following day.

6. Certificate of Compliance as to 8-4-2008 order transmitted to OAL 1-26-2009 and filed 2-19-2009 (Register 2009, No. 8).

Note

Note: Authority cited: Section 14024, Corporations Code. Reference: Sections 14067 and 14070, Corporations Code.