(a) Borrower eligibility. The Agency will only consider a writedown if the borrower:
(1) Meets the eligibility criteria in § 766.104;
(2) Is delinquent;
(3) Has not previously received debt forgiveness on any FLP direct loan; and
(4) Complies with the Highly Erodible Land and Wetland Conservation requirements of 7 CFR part 12.
(b) Conditions. The conditions required for approval of writedown are:
(1) Rescheduling, consolidation, reamortization, deferral or some combination of these options on all of the borrower's loans would not result in a feasible plan with a 110 percent debt service margin. If a feasible plan is achieved with a debt service margin of 101 percent or more, the Agency will permit a borrower to accept a non-writedown servicing offer and waive the right to a writedown offer when the writedown offer will require additional time and appraisals to fully develop. If after obtaining an appraisal a feasible plan is achieved with and without a writedown and the borrower meets all the eligibility requirements, both options will be offered and the borrower may choose one option.
(2) The present value of the restructured loan must be greater than or equal to the net recovery value of Agency security and any non-essential assets.
(3) The writedown amount, excluding debt reduction received through Conservation Contract, does not exceed $300,000.
(4) A borrower who owns real estate must execute an SAA in accordance with § 766.201.
(c) Associated loan servicing. Loans written down will also be serviced in accordance with §§ 766.107 and 766.108, as appropriate.
[72 FR 63316, Nov. 8, 2007, as amended at 86 FR 43392, Aug. 9, 2021]