# 7 C.F.R. § 5001.510 (2026): Subordination of lien position

> Federal · Regulations · In force

URL: https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_510

## Section

- **Citation:** 7 C.F.R. § 5001.510 (2026)
- **Heading:** Subordination of lien position
- **Jurisdiction:** Federal
- **Kind:** Regulations
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Title 7 CFR: Agriculture / Chapter L: RURAL BUSINESS-COOPERATIVE SERVICE, RURAL HOUSING SERVICE, AND RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE / Part 5001: GUARANTEED LOANS / Subpart F: Servicing Provisions / § 5001.510: § 5001.510   Subordination of lien position.

## Text

(a)
Request for subordination.
A lender seeking a subordination of its lien position in collateral must submit a written request to the Agency. The lender must include in the request a financial analysis of the servicing action. The financial analysis must be fully supported by current financial statements, less than 90 calendar days old, of the borrower and guarantors. The lender must receive written Agency approval prior to the subordination.
(b)
Agency approval.
Agency approval of the subordination request requires that:
(1) The subordination of the lender's lien position enhances the borrower's business and is in the best financial interest of the Agency;
(2) The lien to which the guaranteed loan is subordinated is for a fixed dollar amount or fixed credit limit and for a fixed term, after which the guaranteed loan lien priority will be restored;
(3) Remaining collateral is sufficient to provide for adequate collateral coverage of the guaranteed loan after taking into account the lender's discount of collateral consistent with the lender's sound loan-to-discounted value practices and satisfactory justification of the discount used. The Agency may require a current independent appraisal in accordance with § 5001.203. However, if the original appraisal is more than one year old, but less than two years old, the lender may provide an appraisal with a new effective date of evaluation in lieu of a completely new appraisal;
(4) Lien priorities remain for the portion of the loan collateral that was not subordinated;
(5) The subordination of collateral to a line of credit does not extend beyond the term of the line of credit and in no event exceeds more than three years.
(6) Subordination to a tax-exempt obligation is strictly prohibited in compliance with OMB Circular A-129, “Policies for Federal Credit Programs and Non-Tax Receivables.”
[85 FR 42518, July 14, 2020, as amended at 89 FR 79727, Sept. 30, 2024]

## Nearby sections

- [7 C.F.R. § 5001.501 (2026) § 5001.501   General.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_501.md)
- [7 C.F.R. § 5001.502 (2026) § 5001.502   Oversight and monitoring.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_502.md)
- [7 C.F.R. § 5001.503 (2026) § 5001.503   REAP RES or EEI project completion requirements.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_503.md)
- [7 C.F.R. § 5001.504 (2026) § 5001.504   Financial reports.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_504.md)
- [7 C.F.R. § 5001.505 (2026) § 5001.505   Collateral inspection and release.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_505.md)
- [7 C.F.R. § 5001.506 (2026) § 5001.506   Loan transfers and assumptions.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_506.md)
- [7 C.F.R. § 5001.507 (2026) § 5001.507   Lender transfer.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_507.md)
- [7 C.F.R. § 5001.508 (2026) § 5001.508   Mergers.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_508.md)
- [7 C.F.R. § 5001.509 (2026) § 5001.509   Servicing fees.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_509.md)
- [7 C.F.R. § 5001.510 (2026) § 5001.510   Subordination of lien position.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_510.md)
- [7 C.F.R. § 5001.511 (2026) § 5001.511   Repurchases from holders.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_511.md)
- [7 C.F.R. § 5001.512 (2026) § 5001.512   Additional expenditures and loans.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_512.md)
- [7 C.F.R. § 5001.513 (2026) § 5001.513   Interest rate changes.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_513.md)
- [7 C.F.R. § 5001.514 (2026) § 5001.514   Lender failure.](https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_514.md)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/CFR_T7_P5001_S5001_510. Check the current official text before relying on it. Not legal advice.