2-FLP Terms

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100 Terms

1

adversely affect

a change unrelated to the issue resolved through the appeal will result in the borrower no longer being eligible for the assistance requested

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2

adjustment

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. An adjustment is not a final settlement until all payments have been made under the agreement.

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3

allonge

an attachment or an addendum to a promissory note

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4

applicant

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

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5

assignment of guaranteed portion

process by which the lender transfers the right to receive payments or income on a guaranteed loan to another party, usually in return for payment in the amount of the loan's guaranteed principal. The lender retains the unguaranteed portion in its portfolio and receives a fee from the purchaser or assignee to service the loan and receive and remit payments according to a written assignment agreement. This assignment can be reassigned or sold multiple times.

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6

assignment of indemnity

the transfer of rights to compensation under an insurance

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7

assistance

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

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8

assumption

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

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9

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

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10

borrower

is 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. 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.

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11

cancellation

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

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12

cash flow budget

projection listing of all anticipated cash inflows (including all farm income, nonfarm income and all loan advances) and all cash outflows (including all farm and nonfarm debt service and other expenses) to be incurred during the period of the budget. Advances and principal repayments of lines of credit may be excluded

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13

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

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14

civil action

a court proceeding to protect the Agency's financial interests. A civil action 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

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15

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

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16

conditional commitment

the Agency's commitment to a lender that the material the lender has submitted is approved subject to the completion of all listed conditions and requirements.

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17

conservation contract

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 FLP debt.

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18

Conservation loan

a loan made to eligible applicants to cover the costs to the applicant of carrying out a qualified conservation project

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19

conservation project

conservation measures that address provisions of a conservation plan or Forest Stewardship Management Plan

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20

consolidation

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

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21

construction

work such as erecting, repairing, remodeling, relocating, adding to, or salvaging any building or structure, and the installing, repairing, or adding to heating and electrical systems, water systems, sewage disposal systems, walks, steps, and driveways

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22

controlled

when a director or an employee has more than a 50 percent ownership in an entity or, the director or employee, together with relatives of the director or employee, have more than a 50 percent ownership

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23

cooperative

an entity that has farming as its purpose, whose members have agreed to share the profits of the farming enterprise, and is recognized as a farm cooperative by the laws of the state in which the entity will operate a farm

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24

criminal action

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

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25

debt forgiveness

reduction or termination of a debt under the Act in a manner that results in a loss to the Agency

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26

debt settlement

compromise, adjustment, or cancellation of an Agency debt.

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27

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

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28

default

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

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29

deferral

postponement of the payment of interest or principal, or both

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30

delinquent borrower

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

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31

direct loan

a loan funded and serviced by the Agency as the lender

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32

down payment loan

a type of FO direct loan made to eligible applicants to finance a portion of a real estate purchase

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33

due diligence

the process of evaluating real estate in the context of a real estate transaction to determine the presence of contamination from release of hazardous substances, petroleum products, or other environmental hazards and determining what effect, if any, the contamination has on the security value of the property

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34

economic emergency loan

a loan that was made or guaranteed to an eligible applicant to allow for continuation of the operation during an economic emergency which was caused by a lack of agricultural credit or an unfavorable relationship between production costs and prices received for agricultural commodities. Not currently funded.

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35

emergency loan

a loan made to eligible applicants who have incurred substantial financial losses from a disaster

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36

EZ Guarantee

type of OL or FO of $100,000 or less made using a simplified loan application

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37

false information

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

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38

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

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39

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

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40

farmer

an individual, corporation, partnership, joint operation, cooperative, trust, or limited liability company that is the operator of a farm

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41

farm income

the 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.

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42

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

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43

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

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44

floodplains

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

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45

foreclosure sale

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

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46

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

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47

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

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48

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

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49

guarantor

a party not included in the farming operation who assumes responsibility for repayment in the event of default

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50

hazard insurance

insurance covering fire, windstorm, lightning, hail, explosion, riot, civil commotion, aircraft, vehicles, smoke, builder's risk, public liability, property damage, flood or mudslide, workers compensation, or any similar insurance that is available and needed to protect the Agency security or that is required by law

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51

holder

a person or organization other than the lender that holds all or a part of the guaranteed portion of an Agency guaranteed loan but has no servicing responsibilities

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52

inaccurate information

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

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53

in-house expenses

expenses associated with credit management and loan servicing by the lender and the lender's contractor.

include, but are not limited to, employee salaries, staff lawyers, travel, supplies, and overhead.

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54

interest assistance agreement

the appropriate Agency form executed by the Agency and the lender containing the terms and conditions under which the Agency will make interest assistance payments to the lender on behalf of the guaranteed loan borrower

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55

joint financing arrangement

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

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56

leasehold

a right to use farm property for a specific period of time under conditions provided for in a lease agreement

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57

lender

the organization making and servicing a loan, or advancing and servicing a line of credit that is guaranteed by the Agency. The party requesting a guarantee

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58

lender's agreement

the appropriate Agency form executed by the Agency and the lender setting forth their loan responsibilities when the Loan Guarantee is issued

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59

lien

a 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

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60

line of credit agreement

a contract between the borrower and the lender that contains certain lender and borrower conditions, limitations, and responsibilities for credit extension and acceptance where loan principal balance may fluctuate throughout the term of the contract

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61

liquidation

the act of selling security for recovery of amounts owed to the Agency or lender

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62

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

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63

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

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64

loan transaction

any loan approval or servicing action

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65

loss claim

a request made to the Agency by a lender to receive a reimbursement based on a percentage of the lender's loss on a loan covered by an Agency guarantee.

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66

loss rate

the net amount of loan loss claims paid on FSA guaranteed loans made in the previous 7 years divided by the total loan amount of all such loans guaranteed during the same period

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67

major deficiency

a deficiency that directly effects the soundness of the loan

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68

majority interest

more than a 50 percent interest in an entity held by an individual or group of individuals

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69

minor deficiency

a deficiency that violates agency regulations, but does not affect the soundness of the loan

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70

mortgage

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

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71

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

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72

negotiated sale

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

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73

net recovery value of 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

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74

non-monetary default

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

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75

nontraditional lender

a lender that extends credit but is without federal deposit or share insurance protection. They typically do not hold deposit accounts and are not subject to supervision by the FDIC, Office of Comptroller of the Currency, Office of Thrift Supervision, Federal Reserve Board, Farm Credit Administration, or National Credit Union Administration. They include, but are not limited to, lenders regulated by the U.S. Department of the Treasury's Community Development Financial Institutions Fund

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76

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

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77

potential liquidation value

the amount of a lender's protective bid at a foreclosure sale

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78

present value

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

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79

production cycle

the time it takes to produce an agricultural commodity from the beginning of the production process until it is normally disposed of or sold

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80

prospectus

consists of a transmittal letter, a current balance sheet and projected year's budget which is sent to commercial lenders to determine that lenders interest in financing or refinancing specific Agency direct loan applicants and borrowers

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81

purchase money interest

a component of UCC dealing with security and lien position. A lender providing for a crop or a particular piece of equipment can frequently have first position on that item despite other financing statements in place

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82

protective advance

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

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83

recapture

the amount that a guaranteed lender is entitled to recover from a guaranteed loan borrower in consideration for writing down a portion of their guaranteed loan debt when that loan was secured by real estate and that real estate increases in value. Also, the act of collecting shared appreciation.

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84

reasonable rates and terms

those commercial rates and terms that other farmers are expected to meet when borrowing from a commercial lender or private source for a similar purpose and similar period of time. The "similar period of time" of available commercial loans will be measured against, but need not be the same as, the remaining or original term of the loan.

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85

recoverable cost

a loan cost expense chargeable to either a borrower or property account

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86

recreation loan

a loan that was made to eligible applicants to assist in the conversion of all or a portion of the farm they owned or operated to outdoor income producing recreation enterprises to supplement or supplant farm income. RL's are no longer funded, however, such outstanding loans are serviced by the Agency.

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87

redemption right

a Federal or state right to reclaim property for a period of time established by law, by paying the amount paid at the involuntary sale plus accrued interest and costs

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88

rescheduling

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

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89

restructuring

changing the terms of a debt through rescheduling, reamortization, deferral, writedown, or a combination thereof

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90

security value

market value of real estate or chattel property (less the value of any prior liens) used as security for an Agency or lender's loan

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91

shared appreciation agreement

an agreement between the Agency, or a lender in the case of a guaranteed loan, and a borrower on the appropriate Agency form that requires the borrower who has received a writedown on a direct or guaranteed loan to repay the Agency or the lender some or all of the writedown received, based on a percentage of any increase in the value of the real estate securing an SAA at a future date

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92

soil and water loan

loan that was made to an eligible applicant to encourage and facilitate the improvement, protection, and proper use of farmland by providing financing for soil conservation, water development, conservation, and use; forestation; drainage of farmland; the establishment and improvement of permanent pasture; pollution abatement and control; and other related measures consistent with all Federal, State and local environmental standards. SW loans are no longer funded, however, such outstanding loans are serviced by the Agency

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93

subordination

a creditor's temporary relinquishment of all or a portion of its lien priority in favor of another creditor, providing the other creditor with a priority right to collect a debt of a specific dollar amount from the sale of the same collateral

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94

subsequent loan

any FLP loan processed by the Agency after an initial loan of the same type has been made to the same borrower.

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95

technical appraisal review

a review of an appraisal to determine if such appraisal meets the requirements of USPAP pursuant to standard 3 of USPAP

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96

traditional lender

lender that is subject to examination and supervision by a Federal or State agency, and has Federal deposit or share insurance protection. This includes, but is not limited to, lenders supervised by FDIC, Office of Comptroller of the Currency, Office of Thrift Supervision, Federal Reserve Board, Farm Credit Administration, or National Credit Union Administration

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97

transfer and assumption

the conveyance by a debtor to an assuming party of the assets, collateral, and liabilities of a loan in return for the assuming party's binding promise to pay the debt outstanding or the market value of the collateral

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98

typical plan

a projected income and expense statement listing all anticipated cash flows for a typical 12 month production cycle; including all farm and nonfarm income and all expenses (including debt service) to be incurred by the borrower during such period

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99

unaccounted for security

security for a direct or guaranteed loan that was misplaced, stolen, sold, or otherwise missing, where replacement security was not obtained or the proceeds from its sale have not been applied to the loan

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100

unauthorized assistance

any loan, loan servicing action, lower interest rate, loan guarantee, or subsidy received by a borrower, or lender, for which the borrower or lender was not eligible, which was not made in accordance with all Agency procedures and requirements, or which the Agency obligated from the wrong appropriation or fund

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