5-FLP Definitions

abandoned security property

security property that a borrower is not occupying, is not
in possession of, or has relinquished control of and has not made arrangements for its care or sale.

acceleration

demand by a lender for immediate repayment of the entire balance of a debt if the promissory note or security instruments are breached.

When FSA does this, the entire loan balance is due in 30 calendar days

active borrower

borrower who has an outstanding account in the records of the Finance Office, which may include collection-only or an unsatisfied account balance where a voluntary conveyance was accepted without borrower being released from liability or where liquidation did not satisfy the indebtedness.

accrued deferral interest

unpaid interest from past due installments posted to a borrower's loan account

additional security

property which provides security in excess of the amount of security equal to the loan amount

adjustment

a form of settlement that reduces the financial obligation to the Agency, conditioned upon the completion of payment of a specified amount at a future time

applicant

the individual or entity applying for a loan or loan servicing under either the direct or guaranteed loan program

assistance

financial assistance in the form of a direct or guaranteed loan or interest subsidy or servicing action.

assumption

the act of agreeing to be legally responsible for another party's indebtedness

automatic stay

the prohibition of collection activities against the debtor or efforts to obtain possession of the debtor's property or security interest in the debtor's property during the course of bankruptcy.

basic security

all farm machinery, equipment, vehicles, foundation and breeding livestock herds and flocks, including replacements, and real estate that serves as security for a loan made or guaranteed by the Agency.

borrower

an individual or entity that has an outstanding obligation to the
Agency or to a lender under any direct or guaranteed FLP loan, without regard to whether the loan has been accelerated. The term includes all parties liable for such obligation, including collection-only borrowers, except for debtors whose total loans and accounts have been voluntarily or involuntarily foreclosed, sold, or conveyed, or who have been discharged of all such obligations owed to the Agency or guaranteed lender

cancellation

final discharge of, and release of liability for, a financial obligation to the Agency on which no settlement amount has been paid.

ceases to farm

if the borrower is no longer receiving income produced by the farm, if the borrower is no longer operating the farm, and/or if the borrower has leased the farm for more than 3 years or the lease has an option to purchase.

chapter 7

bankruptcy involves liquidation of the debtor's assets. The proceeds from liquidation are applied to the court-allowed debt

chapter 11

bankruptcy is a business reorganization form of bankruptcy. The debtor has an exclusive right to file a reorganization plan within 120 calendar days after filing for bankruptcy. After the 120-calendar-day period, the debtor loses the exclusive right to file a reorganization plan, and others may file a plan. This chapter is generally discharged at closing. The plan does not have to be concluded within a specific timeframe

chapter 12

provides special debt repayment relief for family farmers and family fishermen. This chapter is targeted to family farmers with 50 percent of gross income from farming. The farmer's debt must not exceed $3.237 million and 80 percent of the farmer's
debts must originate from farming. The debtor must file a plan within 90 calendar days after the First Meeting of Creditors. The court determines the point of discharge (usually at the end of the third or fifth year). The reorganization plans must be paid out in 5 years.

chapter 13

bankruptcy involves reorganization for wage-earners. The debtor must have regular income. A portion of that income will be set aside for distribution to creditors by the Trustee. The plan is generally filed at time of petition and must be paid out in 5 years. The court determines the point of discharge, which is usually at the end of the third or fifth year.

chattel security

property that may consist of, but is not limited to: crops; livestock; aquaculture species; farm equipment; inventory; accounts; contract rights; general intangibles; and supplies that are covered by financing statements and security agreements, chattel mortgages, and other security instruments

civil action

a court proceeding to protect the Agency's financial interests. Does not include bankruptcy and similar proceedings to impound and distribute the bankrupt's assets to creditors, or probate or similar proceedings to settle and distribute estates of incompetents or decedents, and pay claims of creditors.

collateral

property pledged as security for a loan to ensure repayment of an obligation

compromise

the settlement of an FLP debt or claim by a lump-sum payment of less than the total amount owed in satisfaction of the debt or claim

conservation contract

a contract under which a borrower agrees to set aside land for
conservation, recreation or wildlife purposes in exchange for reduction of a portion of an outstanding Agency debt.

conservation contract review team

comprised by the appropriate offices of FSA, the Natural Resources Conservation Service, U.S. Fish and Wildlife Service, State Fish and Wildlife Agencies, Conservation Districts, National Park Service, Forest Service, State Historic Preservation Officer, State Conservation Agencies, State Environmental Protection Agency, State Natural Resource Agencies, adjacent public landowner, and any other entity that may have an interest and qualifies to be a management authority for a proposed conservation contract.

consolidation

process of combining the outstanding principal and interest balance of two or more loans of the same type made for operating purposes

cosigner

a party, other than the applicant, who joins in the execution of a promissory note to assure its repayment and becomes jointly and severally liable to comply with the repayment terms of the note, but is not authorized to severally receive loan servicing

credit sale

a sale of FLP inventory property for which FSA provides financing to the purchase

criminal action

the prosecution by the United States to exact punishment in the form of fines or imprisonment for alleged violation of criminal statutes

current value market buyout

the termination of a borrower's loan obligations to the
Agency in exchange for payment of the current appraised value of the borrower's security property and nonessential assets, less any prior liens

custodial property

property and improvements owned by a borrower that serve as security for an Agency loan that the borrower has abandoned, and that the Agency takes into its control to protect the Government's interest.

debt forgiveness

a reduction or termination of a debt under the act in a manner that results in a loss to the agency

debt settlement

compromise, adjustment or cancellation of an FLP debt

debt service margin

the difference between all of the borrower's expected expenditures in a planning period (including farm operating expenses, capital expenses, essential family living expenses, and debt payments) and the borrower's projected funds available to pay all expenses and payments

debt writedown

the reduction of the borrower's debt to that amount the Agency determines to be collectible based on an analysis of the security value and the borrower's ability to pay

default

the failure of a borrower to observe any agreement with the Agency, or the lender in the case of a guaranteed loan, as contained in promissory notes, security instruments, and similar or related instruments

deferral

postponement of the payment of interest or principal or both

deficiency judgment

a personal judgment against a debtor for the remaining due to FSA after foreclosure or liquidation

delinquent borrower

for loan servicing purposes, is a borrower who has failed to make all scheduled payments by the due date

disaster set-aside

the deferral of payment of an annual loan installment to the Agency to the end of the loan term

due diligence

the process of reasonably evaluating real estate for the presence of contamination from hazardous waste, petroleum products, or other environmental risks, and determining what effect, if any, the contamination has on the regulatory status or security value of the property and any remedial actions needed

easement

an interest in land owned by another that entitles its holder to a specific limited use or enjoyment.

environmental risks

include hazardous waste, petroleum products and underground storage tanks, medical waste, lead-based paint, and asbestos

equity

the money value of a property or of an interest in a property in excess of claims or liens against that property

essential buildings

the borrower's dwelling and any other buildings necessary for the farm operation to assure the repayment of the loan

false information

information provided by an applicant, borrower or other source to the Agency that the applicant or borrower knows to be incorrect

family living expenses

the costs of providing for the needs of family members and
those for whom the borrower has a financial obligation, such as alimony, child support, and care expenses of an elderly parent

farm

a tract or tracts of land, improvements, and other appurtenances that are used or will be used in the production of crops, livestock, or aquaculture products for sale in sufficient quantities so that the property is recognized as a farm rather than a rural residence. It may also include land and
improvements and facilities used in a non-eligible enterprise or the residence which, although physically separate from the farm acreage, is ordinarily treated as part of the farm in the local community

farm income

proceeds from the sale of agricultural commodities that are normally sold annually during the regular course of business, such as crops, feeder livestock, and other farm products

feasible plan

when an applicant or borrower's cash flow budget or farm operating plan indicates that there is sufficient cash inflow to pay all cash outflow

financially distressed

a borrower unable to develop a feasible plan for the current or next production cycle

fixture

an item of personal property attached to real estate in such a way that it cannot be removed without defacing or dismantling the structure, or damaging the item itself

floodplains

are lowland and relatively flat areas adjoining inland and coastal waters, including flood-prone areas of offshore islands, including at a minimum, that area subject to a one percent or greater chance of flooding in any given year

foreclosed

the completed act of selling security either under the power of sale in the security instrument or through judicial proceedings

foreclosure sale

the act of selling security either under the power of sale in the security instrument or through judicial proceedings

former borrower

a borrower who no longer has loans with FSA but may still be obligated to FSA because of a security obligation, such as a Shared Appreciation Agreement, or have continuing rights, such as homestead protection rights

good faith

when an applicant or borrower provides current, complete, and truthful information when applying for assistance and in all past dealings with the Agency, and adheres to all written agreements with the Agency including, but not limited to, loan
agreement, security instruments, farm operating plans, and agreements for use of proceeds

graduation

the payment in full of all direct FLP loans, except for CLs, made for operating, real estate, or both purposes by refinancing with other credit sources either with or without an Agency guarantee

guaranteed loan

a loan made and serviced by a lender for which the Agency has entered into a Lender's Agreement and for which the Agency has issued a Loan Guarantee. This term also includes guaranteed lines of credit except where otherwise indicated

hazardous waste

solid waste or the combination of solid and other waste that, because of its quantity, concentration, or physical, chemical, or infectious characteristics, may cause or significantly contribute to an increase in mortality or serious illness when improperly treated, stored, transported, disposed of, or otherwise managed.

homestead protection

the previous owner's right to lease with an option to purchase the principal residence and up to 10 acres of adjoining land which secured an FLP direct loan

important resources

include wetlands, highly erodible lands, floodplains, historic sites, archaeological sites, paleontological sites, endangered, threatened, or critical habitats, wild and scenic rivers, coastal barriers resource systems, natural landmarks, sole source aquifer recharge areas, and important farmland and rangeland

inaccurate information

incorrect information provided by an applicant, borrower,
lender, or other source without the intent of fraudulently obtaining benefits

ineligible terms

are credit terms offered for the convenience of the Government to facilitate sales. These are more stringent than terms offered under the Agency's loan programs.
These are applicable when the purchaser does not meet program eligibility requirements. Loans made on these are classified as nonprogram assistance and are serviced
accordingly.

inventory property

real estate or chattel property and related rights that formerly
secured an FLP loan and to which the Federal Government has acquired title

joint financing agreement

an arrangement in which two or more lenders make separate loans simultaneously to supply the funds required by one applicant

junior lien

a lien that has been filed behind, or is otherwise subordinate to, another lien on the same item of security

lien

legally enforceable claim against real or chattel property of another obtained as security for the repayment of indebtedness or an encumbrance on property to enforce payment of an obligation

limited resource rate

an interest rate normally below the Agency's regular interest rate, which is available to applicants unable to develop a feasible plan at regular rates and are requesting:
(1) FO or OL loan assistance under part 764 of this title; or
(2) Primary loan servicing on an FO, OL, or SW

liquidated

completed act of selling security pledged as collateral

liquidation

the act of selling security for recovery of amounts owed to the Agency or lender. Begins when no further assistance will be given. includes instituting civil suit against a borrower to recover security or Economic Opportunity property or against third parties to recover security or its value or to recover amounts owed to the Agency; filing claims in bankruptcy or similar proceedings or in probate or administrative proceedings

liquidation expenses

the costs of an appraisal, due diligence evaluation, environmental assessment, outside attorney fees, and other costs incurred as a direct result of liquidating the security for a direct or guaranteed loan. Liquidation expenses do not include internal Agency expenses for a direct loan or in-house expenses for a guaranteed loan.

loan agreement

a contract between the borrower and the lender that contains certain lender and borrower agreements, conditions, limitations, and responsibilities for credit extension and acceptance

loan servicing programs

include any primary loan servicing program, conservation contract, current market buyout, and homestead protection

market value

the amount that an informed and willing buyer would pay an informed and willing, but not forced, seller in a completely voluntary sale

mortgage

a legal instrument giving the lender a security interest or lien on real or personal property of any kind

negligent servicing

servicing that fails to include those actions that are considered
normal industry standards of loan management or comply with the lender's agreement or the guarantee. includes failure to act or failure to act in a timely manner consistent with actions of a reasonable lender in loan making, servicing, and collection.

negotiated sale

a sale in which there is a bargaining of price or terms, or both

net recovery value of agency security

the market value of the security property, assuming that the lender in the case of a guaranteed loan, or the Agency in the case of a direct loan, will acquire the property and sell it for its highest and best use, less the lender's or the Agency's costs of property acquisition, retention, maintenance, and \`liquidation

net recovery value of non-essential assets

the appraised market value of the nonessential assets less any prior liens and any selling costs that may include such items as
taxes due, commissions, and advertising costs. However, no deduction is made for maintenance of the property while in inventory

non-essential assets

assets in which the borrower has an ownership interest that do not contribute to income to pay essential family living expenses or the farming operations and are not exempt from judgment creditors or in a bankruptcy action

non-monetary default

situation where a borrower is not in compliance with the
covenants or requirements of the loan documents, program requirements, or loan

non-program loan

loan on terms more stringent than terms for a program loan that is an extension of credit for the convenience of the Agency, because the applicant does not qualify for program assistance or the property to be financed is not suited for program purposes. Such loans are made or continued only when it is in the best interest of the Agency.

nonrecoverable costs

contractual or noncontractual program loan cost expenses that are incurred by the Agency to maintain property or protect the Agency's interest, but are not chargeable to a borrower or property account. These costs are not added to the outstanding debt owed by the borrower.

normal income security

all security not considered basic security, including crops,
livestock, poultry products, other property covered by Agency liens that is sold in conjunction with the operation of a farm or other business, and FSA Farm Program payments.

note

written evidence of indebtedness

notification meeting of creditors

usually the first notice to a creditor that a bankruptcy has been filed. It allows opportunity for creditors to establish their claims against the debtor and preserve their interest in security, as applicable. It provides the date by which the claim must be filed.

operator

the individual or entity that provides the labor, management, and capital to operate the farm.

participation

a loan arrangement where a primary or lead lender is typically the lender of record but the loan funds may be provided by 1 or more other lenders due to loan size or other factors.

past due

when a payment is not made by the due date

potential liquidation value

the amount of a lender's protective bid at a foreclosure sale. This is determined by an independent appraiser using comparables from other forced liquidation sales.

post-acquisition homestead protection

when a borrower applies for homestead protection after FSA obtains title to the real estate security for the borrower's loan

pre-acquisition homestead protection

when a delinquent borrower applies for homestead protection and it appears that a feasible plan to address the delinquency cannot be developed through primary loan servicing. The Authorized Agency Official begins processing the borrower's request but does not approve homestead protection until FSA obtains title to the property.

present value

current worth of a future stream of payments discounted to the current date

primary loan servicing

include:
(1) Loan consolidation and rescheduling, or reamortization;
(2) Interest rate reduction, including use of the limited resource rate program;
(3) Deferral;
(4) Write-down of the principal or accumulated interest; or
(5) Any combination of the above.

prior lien

a lien that is recorded in front of, or is otherwise superior to, an FSA lien on the same security.

program loans

include CL, FO, OL, and EM. In addition, for loan servicing purposes the term includes existing loans for the following programs no longer funded: SW, RL, EE, ST, and RHF.

protective advance

an advance made by the Agency or a lender to protect or preserve the collateral itself from loss or deterioration.

reamortization

the rewriting of rates or terms, or both, of a loan made for real estate purposes.

recapture

the amount that the Agency or a lender is entitled to recover from a direct or guaranteed loan borrower in consideration for the Agency or the lender writing down a portion of their direct or guaranteed loan debt when that loan was secured by real estate and that real estate increases in value.

reconsideration

a meeting with the Authorized Agency Official that is offered to a borrower who has received an adverse decision. The borrower may present new information at this meeting.