StacksVerified U.S. regulatory reference

7 CFR §4287.345

Verified against eCFR.gov as of June 20, 2026View official text on eCFR.gov ↗
The Lender's primary responsibilities in Default are to act reasonably and expeditiously, to work with the Borrower to bring the account current or cure the Default through restructuring if a realistic plan can be developed, or to accelerate the account and conduct a liquidation in a manner that will minimize any potential loss. The Lender may initiate liquidation in accordance with § 4287.357.
  1. (a)The Lender must notify the Agency in writing when a Borrower is more than 30 days past due on a payment and the Delinquency cannot be cured within 30 days or when a Borrower is otherwise in Default of covenants in the Loan Agreement by submitting Form RD 1980-44, “Guaranteed Loan Borrower Default Status,” or processing the Default Status report in LINC. The Lender must provide this notification to the Agency within 15 calendar days of when a Borrower is 30 days past due on a payment or is otherwise in Default of the Loan Agreement. The Lender must update the loan's status each month using either Form RD 1980-44 or the LINC Default Status report until such time as the loan is no longer in Default. If a monetary Default exceeds 60 days, the Lender must meet with the Agency and, if practical, the Borrower to discuss the situation.
  2. (b)In considering options, the prospects for providing a permanent cure without adversely affecting the risk to the Agency and the Lender are the paramount objective.
    1. (1)Curative actions (subject to the rights of any Holder) include, but are not limited to:
      1. (i)Deferment of principal or Interest payments;
      2. (ii)An additional unguaranteed temporary loan by the Lender to bring the account current;
      3. (iii)Reamortization of or rescheduling the payments on the loan (subject to the rights of any Holder) excluding capitalization of accrued Interest;
      4. (iv)Transfer and Assumption of the loan in accordance with § 4287.334;
      5. (v)Reorganization;
      6. (vi)Liquidation; and
      7. (vii)Changes in Interest rates with the Agency's, the Lender's, and Holder's approval. Any Interest rate changes must be adjusted proportionately between the guaranteed and unguaranteed portion of the loan.
    2. (2)The term of any deferment, rescheduling, reamortization, or moratorium will be limited to the lesser of the remaining life of the Collateral or remaining limits as set forth in § 4279.234 of this chapter (excluding paragraph (d)). Balloon payments are permitted as a loan servicing option as long as there is a reasonable prospect for success and the remaining life of the Collateral supports the action.
    3. (3)In the event of a loss or a repurchase, the Lender cannot claim Default or penalty Interest, late payment fees, or Interest on Interest.
  3. (c)Debt write-downs by the lender are prohibited when the Lender will continue with the Project loan, except as directed or ordered by a final court order.
  4. (d)In the event of a loss, the guarantee will not cover Interest to the Lender accruing after the Interest Termination Date.
  5. (e)For repurchases of guaranteed loans, refer to § 4279.225 of this chapter.