§ 3555.204 Security requirements.
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Title 7 CFR: Agriculture › Chapter XXXV: RURAL HOUSING SERVICE, DEPARTMENT OF AGRICULTURE › Part 3555: GUARANTEED RURAL HOUSING PROGRAM › Subpart E: Underwriting the Property › § 3555.204: § 3555.204 Security requirements.
Text
Rural Development will only guarantee loans that are adequately secured. A loan will be considered adequately secured only when all of the following requirements are met:
(a)
Recorded security document.
The lender obtains at closing, a mortgage on all required ownership and leasehold interests in the security property and ensures that the loan is properly closed.
(b)
Prior liens.
No liens prior to the guaranteed mortgage exist except in conjunction with a supplemental loan for transfer and assumption. The guaranteed loan must have first lien position at closing. Junior liens by other parties are permitted as long as the junior liens do not adversely affect repayment ability or the security for the guaranteed loan.
(c)
Adequate security.
Existing and proposed property improvements are completely on the site and do not encroach on adjoining property.
(d)
Collateral.
All collateral secures the entire loan.
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