For loans secured by real estate, a borrower may request Agency consent to a severance agreement or similar instrument so that future chattel acquired by the borrower will not become part of the real estate securing the FLP debt. The Agency will consent to severance agreements if all of the following conditions are met:
(a) The financing arrangements are in the financial interest of the Agency and the borrower;
(b) The transaction will not adversely affect the Agency's security position;
(c) The borrower is unable to graduate on any program except for CL;
(d) The transaction will not jeopardize the borrower's ability to pay all outstanding debts to the Agency and other creditors; and
(e) The property acquired is consistent with authorized loan purposes.
[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]