(a) Servicing existing Net Recovery Buyout Recapture Agreements. Prior to July 3, 1996, the Agency was authorized to offer borrowers buy out their loans at the net recovery value. A Net Recovery Buyout Agreement was required for borrowers who bought out their loans at the net recovery value. The Agency services existing Net Recovery Buyout Recapture Agreements as described in this section.
(b) Requirements and terms.
(1) The term of a Net Recovery Buyout Recapture Agreement is 10 years. Net Recovery Buyout Recapture Agreements are secured by a lien on the former borrower's real estate.
(2) If the former borrower sells or conveys real estate within the 10-year term, the former borrower must repay the Agency the lesser of:
(i) The market value of the real estate parcel at the time of sale or conveyance, as determined by an Agency appraisal, minus the portion of the recovery value of the real estate paid to the Agency in the buyout;
(ii) The market value of the real estate parcel at the time of the sale or conveyance, as determined by an Agency appraisal, minus:
(A) The unpaid balance of prior liens at the time of the sale or conveyance; and
(B) The net recovery value of the real estate the borrower paid to the Agency in the buyout if this amount has not been accounted for as a prior lien;
(iii) The total amount of the FLP debt the Agency wrote off for loans secured by real estate.
(3) If the former borrower does not pay the amount due, the Agency will liquidate the Net Recovery Buyout account in accordance with subpart H of this part.
(4) If the former borrower does not sell or convey the real estate within the 10-year term, no recapture is due.