Minn. R. (Rural Finance Authority) | Minnesota Rules — Rural Finance Authority

Chapter 1650 BEGINNING FARMER AND AGRICULTURAL IMPROVEMENT LOANS

Minn. R. 1650.0010 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0011 Applicability and Purpose

Subpart 1. Applicability.

Parts 1650.0011 to 1650.0071 establish the criteria and procedures to be used by the RFA in administering the basic beginning farmer loan participation program authorized by Minnesota Statutes, chapter 41B.

Subp. 2. Purpose.

The purpose of the RFA basic beginning farmer loan participation program and for the issuance of bonds to finance or provide security for the program is to preserve and develop the state's agricultural resources. This is accomplished by extending credit on real estate security through the purchase of participation interests in first priority mortgage farm real estate loans. Loans to persons entering or currently farming and meeting the eligibility criteria in part 1650.0031 are eligible for participation.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2251(NO. 42)

Minn. R. 1650.0020 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0021 Definitions

Subpart 1. Scope.

The definitions in this part apply to parts 1650.0011 to 1650.0071.

Subp. 2. Agricultural purposes or farming.

"Agricultural purposes" or "farming" means the cultivation or use of land or land improvements and personal property for the production of agricultural crops, vegetables, fruit, or other horticultural crops, forest products, bees and apiary products, livestock, dairy animals, dairy products, poultry or poultry products, fur-bearing animals, aquaculture, hydroponics, exotic species of plants or animals, or other agriculturally related products. "Agricultural purposes" and "farming" include:

A. the use of wetlands, pasture, forest land, wildlife, and homestead and other real property associated with the agricultural use of land; and

B. the practices and facilities needed to conserve soil and water, protect human and animal health, have a safe and efficient operation, and meet local, state, and federal laws and regulations relating to the operation of a farm.

Subp. 3. Applicant.

"Applicant" means a potential borrower who submits an application to the RFA through an eligible lender.

Subp. 4. Application.

"Application" means the application for the basic beginning farmer loan participation in the form provided by the RFA.

Subp. 5. Assets.

"Assets" means property, real or personal, tangible or intangible, and all contract rights of value that constitute assets, including cash crops or feed on hand, livestock held for sale, breeding stock, marketable bonds and securities, securities not readily marketable, accounts receivable, notes receivable, cash invested in growing crops, cash value of life insurance, machinery and equipment, cars and trucks, farm and other real estate including life estates and personal residence, and the value of a beneficial interest in trusts.

Subp. 6.

[Repealed, 30 SR 372]

Subp. 7. Borrower.

"Borrower" means the person or persons liable on a first mortgage loan participation made under this program.

Subp. 8. Debt to asset ratio.

"Debt to asset ratio" means the total outstanding liabilities of an applicant divided by the total outstanding assets of the applicant expressed as a percentage.

Subp. 9. Executive director.

"Executive director" means the executive director of the RFA or any other officer authorized to act on behalf of the RFA board or its executive director.

Subp. 9a. First mortgage loan or loan.

"First mortgage loan" or "loan" means a loan participation under this program secured by a first mortgage on real property.

Subp. 10. Liabilities.

"Liabilities" means the debts or other obligations for which an applicant is responsible, including: accounts payable, notes or other indebtedness, taxes, rent, amount owed on real estate contracts or mortgages, judgments, and accrued interest payable.

Subp. 11. Net worth.

"Net worth" means the total value of an applicant's assets and the assets of the applicant's spouse and dependents, less the liabilities of the same parties.

Subp. 12. Note and loan agreement.

"Note and loan agreement" means the form provided by the RFA that is signed by a borrower evidencing the terms of the first mortgage loan and the borrower's obligation to repay the loan.

Subp. 13. Participation agreement.

"Participation agreement" means the document entered into between the RFA and an approved lender that establishes the relationship between the parties and the terms and conditions of first mortgage loans to be offered to the RFA for participation under the basic beginning farmer participation program.

Subp. 14. RFA.

"RFA" means the Rural Finance Authority established by Minnesota Statutes, section 41B.025.

Subp. 15. RFA beginning farmer program.

"RFA beginning farmer program" means the RFA program for the purchase of participation interests in first mortgage real estate loans made to eligible borrowers so that the borrowers may use the real estate for agricultural purposes.

Subp. 16. RFA participation.

"RFA participation" means the RFA's undivided interest in the principal of a first mortgage loan, all rights and interests in the loan documents, all payments arising under the loan, the first security real estate mortgage securing the loan, and any other collateral pledged to secure the loan.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1650.0030 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0031 Borrower Eligibility

Subpart 1. Criteria.

To be eligible for assistance under the basic beginning farmer program, an applicant must meet the criteria in Minnesota Statutes, section 41B.03, subdivisions 1 and 3.

Subp. 2.

[Repealed, 30 SR 372]

Subp. 3.

[Repealed, 30 SR 372]

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1650.0040 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0041 Lender Eligibility

Subpart 1. Statutory eligibility.

A bank, credit union, or savings association chartered by the state or federal government, a subdivision of the farm credit system (Agri Bank), the Federal Deposit Insurance Corporation, or an insurance company, fund, or other financial institution doing business as an agricultural lender within the state may apply to the RFA for certification as an approved lender.

Subp. 2. Approval.

Upon a lender's demonstration of its ability to originate and service agricultural real estate loans, the RFA shall designate it as an approved lender for purposes of RFA programs.

Subp. 3. Participation agreement.

Before offering first mortgage loans to the RFA for participation, each approved lender must enter into an RFA master participation agreement. The agreement must specify the contractual relationship between the parties and the terms and conditions of first mortgage loans to be made by the lender under the basic beginning farmer program and offered to the RFA for participation.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2251(NO. 42)

Minn. R. 1650.0045 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0046 Application Process and Offer of Participation

Subpart 1. Request for a first mortgage loan.

A lender and an applicant must jointly complete and sign an application and prepare all supporting documents identified in the application. Financial statements must be dated within 120 days of the application.

Subp. 2. Lender determination.

Subp. 3. Offer.

The lender, as the originator of the first mortgage loan, shall present the application and loan documents to the RFA. Presentation of the documents constitutes an offer to sell a participation interest in the loan.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1650.0050 [Repealed, 17 SR 1878]

[Repealed, 17 SR 1878]

Minn. R. 1650.0055 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0056 Rfa Review, Notice, Appeal

Subpart 1. RFA review.

The RFA shall accept or reject a lender's offer to participate in the loan within 30 business days after receipt of the lender's offer. If the documentation is not sufficient to make a determination, the RFA may request additional information to establish creditworthiness and eligibility of the applicant.

Subp. 2. RFA acceptance.

The RFA shall accept an offer if:

A. the applicant is eligible in accordance with parts 1650.0011 to 1650.0071 and Minnesota Statutes, section 41B.03, subdivisions 1 and 3;

B. the applicant demonstrates an ability to repay the first mortgage loan and other obligations based on the financial information submitted under part 1650.0046;

C. the sale price of the property is not substantially in excess of its fair market value; and

D. the RFA has sufficient funds available to purchase a participation in the loan.

Subp. 3. RFA notice.

The RFA shall promptly notify the lender in writing whether or not the offer is accepted. If the offer is not accepted, the notice must state the reasons.

Subp. 4. Administrative appeal.

If an offer is rejected, either the lender or the applicant may petition for RFA reconsideration. The petition must be in writing and must be sent within 30 working days of the date of the RFA notice. The petition must state the grounds for the appeal, and may include additional relevant information. Within 15 working days of receiving the petition, the executive director shall send a written response to the petitioner upholding or reversing the original decision and giving the reasons for the decision.

Subp. 5. Formal appeal.

After administrative appeal, a petitioner may appeal the executive director's decision directly to the RFA board by written notice to the executive director within 15 days of receiving the executive director's reconsideration decision. The decision of the board is final.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1650.0060 [Repealed, 17 SR 1878]

[Repealed, 17 SR 1878]

Minn. R. 1650.0065 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0066 Loan Closing, Purchase of Participation, and Loan Management

Subpart 1. Closing.

Upon receiving notification of RFA acceptance, the lender shall close the first mortgage loan. The lender must record security documents relating to the loan. The lender must notify the RFA that the loan is closed and recorded by completing the lender certification section and returning the original RFA application, a copy of the note and loan agreement, copies of the recorded documents, and the final title opinion to the RFA.

Subp. 2. Payment.

Within ten business days of receipt of written notice under subpart 1 that the first mortgage loan is closed and recorded, the RFA shall initiate payment to the lender for the RFA's participation interest in the loan.

Subp. 3. Participation certificate.

Within five working days after receipt of payment under subpart 2, the lender shall complete and return a participation certificate, as provided by the RFA, witnessing the RFA's undivided pro rata interest in the basic beginning farmer first mortgage loan.

Subp. 4. Loan management.

The lender shall manage, administer, and enforce the loan documents in its own name and also on behalf of itself and the RFA, including, without limitation, the right to accelerate a basic beginning farmer first mortgage loan on default and to foreclose or otherwise enforce remedies against the borrower.

Subp. 5. Lender notification.

The lender shall promptly notify the RFA of occurrences that substantially affect the security, collection, or enforcement of any first mortgage loan.

Subp. 6. Prior written consent.

The lender shall obtain the prior written consent of the borrower and the RFA before:

A. making or consenting to a release, substitution, or exchange of collateral that reduces the aggregate value of the collateral;

B. waiving a claim against the borrower or a guarantor, surety, or obligor in connection with the indebtedness; or

C. modifying or waiving a term of the notes or related instruments evidencing or securing the first mortgage loan.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1650.0067 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0068 Participation Repurchase

A. An originating lender is under no obligation to repurchase any RFA participation interest in a basic beginning farmer first mortgage loan, except as provided in this part.

B. A lender may, at its option and upon written approval by the RFA, repurchase an RFA participation interest at any time.

C. A lender must repurchase the RFA participation interest whenever the first mortgage loan is paid in full or refinanced.

D. A lender must repurchase the RFA participation interest if the lender has made misrepresentations or fails to perform its obligations under the participation agreement, has received written notice from the RFA, and has not corrected the representation or performance under the notice.

E. Any repurchase must be for the principal balance of the RFA participation plus accrued interest and any penalties or costs incurred by the RFA to secure repurchase.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2251(NO. 42)

Minn. R. 1650.0070 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0071 Review of Loan and Collateral

Subpart 1. Inspection.

At any time during the term of a basic beginning farmer first mortgage loan, the RFA or the state legislative auditor may inspect the books, records, documents, and accounting practices of the lender relative to the loan to determine compliance with the terms and conditions of the loan and the participation agreement. Inspections must be during the lender's normal business hours. The lender must allow the RFA to copy any documents relating to the first mortgage loan and the RFA participation.

Subp. 2. Collateral.

The lender and the RFA may physically inspect the collateral securing the first mortgage loan upon notice to the borrower. An inspection must be conducted at a reasonable time.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2251(NO. 42)

Minn. R. 1650.0500 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0501 Applicability and Purpose

Subpart 1. Applicability.

Parts 1650.0501 to 1650.0571 establish the criteria and procedures to be used by the RFA in administering the agricultural development bond beginning farmer loan program authorized by Minnesota Statutes, chapter 41C.

Subp. 2. Purpose.

The purpose of the agricultural development bond or "aggie bond" beginning farmer loan program is to facilitate the acquisition of agricultural land and improvements and depreciable agricultural property by beginning farmers. This is accomplished through the issuance of tax exempt bonds, which provides eligible farmers with borrowed capital at below market interest rates.

History

Statutory Authority: MS s 41C.13
History: 20 SR 2251(NO. 42)

Minn. R. 1650.0510 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0511 Definitions

Subpart 1. Scope.

The definitions in this part apply to parts 1650.0501 to 1650.0571.

Subp. 2. Act.

"Act" means the Minnesota Agricultural Development Act in Minnesota Statutes, chapter 41C.

Subp. 3. Agricultural farmland.

"Agricultural farmland" means productive, tillable land or land used for pasture.

Subp. 4. Applicant.

"Applicant" means an individual or partnership who submits a completed application for a loan under the program to the authority through an eligible lender.

Subp. 5. Application.

"Application" means an application for a loan under the program in the form prescribed by the authority.

Subp. 6. Authority or RFA.

"Authority" or "RFA" means the Minnesota Rural Finance Authority established by Minnesota Statutes, section 41B.025, acting through its board or its duly authorized officers.

Subp. 7. Bond.

"Bond" means a special, limited obligation revenue bond issued by the authority to an eligible lender to finance a loan to an eligible borrower for an eligible purpose pursuant to a loan agreement between the eligible lender and the authority.

Subp. 8. Borrower.

"Borrower" means an eligible borrower who has received a loan under the program.

Subp. 9. Code.

"Code" means the Internal Revenue Code of 1986, as amended, and all rules, regulations, and revenue procedures issued under it.

Subp. 10. Depreciable agricultural property.

"Depreciable agricultural property" has the meaning given in Minnesota Statutes, section 41C.02, subdivision 9.

Subp. 11. Eligible borrower.

"Eligible borrower" means a Minnesota resident or a Minnesota partnership consisting only of individuals who are Minnesota residents, who meets the requirements of Minnesota Statutes, section 41C.05, subdivision 2, and is a first time farmer, as defined in subpart 16, who will be the principal user of the property financed under the code, and will materially and substantially participate in the operation of the farm of which the property is a part or on which the property will be used.

Subp. 12. Eligible lender.

"Eligible lender" means a bank, credit union, savings association, insurance company, or other legal entity that is authorized to do business in Minnesota, an individual, or a group of individuals.

Subp. 13. Eligible purpose.

"Eligible purpose" means:

A. the purchase of Minnesota land and improvements on the land, other than a residence, by an eligible borrower for farming purposes;

B. the construction of new improvements, or of additions to or renovations of existing improvements, other than a residence, for farming purposes; or

C. the purchase of depreciable agricultural property by an eligible borrower for farming purposes.

Subp. 14. Executive director.

"Executive director" means the authority's executive director or any other person authorized to act on behalf of the authority's board or its executive director.

Subp. 15. Farming.

"Farming" has the meaning given in Minnesota Statutes, section 41C.02, subdivision 10.

Subp. 16. First-time farmer.

"First-time farmer" means an individual who, together with the individual's spouse and minor children meets the definition of first-time farmer as defined by United States Code, title 26, section 147(c).

Subp. 17. Improvements.

"Improvements" to farm land means items that, when complete, become part of the farm land or fixtures, including but not limited to confinement systems, barns and other out buildings, silos and other crop storage facilities, and improvements to land such as tiling, terraces, ponds, erosion control structures, and waterways.

Subp. 18. Lender.

"Lender" means an eligible lender who has purchased a bond under the program.

Subp. 19. Loan.

"Loan" means the loan of the proceeds of a bond to an eligible borrower for an eligible purpose pursuant to a loan agreement between the authority and the eligible borrower.

Subp. 20. Net worth.

"Net worth" means the total value of an applicant's assets and the assets of the applicant's spouse and dependents, less the liabilities of those parties. For purposes of calculating net worth, "assets" means property, real or personal, tangible or intangible, and all contract rights of value that constitute assets, including cash crops or feed on hand, livestock held for sale, breeding stock, marketable bonds and securities, securities not readily marketable, accounts receivable, notes receivable, cash invested in growing crops, cash value of life insurance, machinery and equipment, cars and trucks, farm and other real estate including life estates and personal residence, and the value of a beneficial interest in any trust. For purposes of calculating net worth, "liabilities" means the debts or other obligations for which an applicant is responsible including accounts payable, notes or other indebtedness owed to any source, taxes and rent due or past due, amounts owed on real estate contracts or mortgages, judgments, and accrued interest payable.

Subp. 21. Principal user.

"Principal user" means a person who is a principal owner, a principal lessee, a principal output purchaser, or an "other" principal user as defined in the code.

Subp. 22. Program.

"Program" means the agricultural development bond beginning farmer loan program established by the authority.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 22 SR 266; 30 SR 372; 34 SR 445

Minn. R. 1650.0520 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0521 Borrower Eligibility

Subpart 1. Eligibility.

To be eligible for a loan under the program an applicant must be an eligible borrower.

Subp. 2. Certification.

An applicant must certify to the authority in each loan application that the applicant understands and meets the definition of eligible borrower for the program.

Subp. 3. Net worth.

A financial statement showing an applicant's net worth must be submitted with the application and may not include the value of the property or improvements to be acquired with the proceeds of the loan or the liability of the loan. At the loan closing the eligible lender must recertify that the applicant's net worth does not exceed program limits.

History

Statutory Authority: MS s 41C.13
History: 20 SR 2251(NO. 42)

Minn. R. 1650.0530 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0531 Operation of Program

Subpart 1. Loan transactions and security.

A. The authority shall make unsecured loans to eligible borrowers for eligible purposes under a loan agreement between the authority as lender and the eligible borrower as borrower. The loans must be evidenced by promissory notes payable to the authority or its assigns.

B. A loan may not be made that violates any of the restrictions in subitems (1) to (6).

C. The authority shall issue a bond to provide money to fund each loan. The authority has no other money available for this purpose. The bond must be issued to the eligible lender who has agreed with the eligible borrower to finance the eligible borrower's loan by jointly submitting a loan application according to part 1650.0541. The bond must be issued in fully registered form under a loan agreement between the lender and the authority.

D. The bond must be a special, limited obligation of the authority payable solely from loan payments payable by the eligible borrower under the borrower's loan agreement and the promissory note evidencing the loan, that must be assigned to the lender and pledged to the payment of the principal of and interest on the bond, without recourse to the authority. The bond must not be a general obligation of the authority, the state of Minnesota, or any department, agency, or political subdivision of the state. The full faith and credit of the authority or the state or any department, agency, or political subdivision of the state must not be pledged for the bond's payment.

E. A bond may be additionally secured by a mortgage on or security interest in the property financed or other property provided by the borrower, or by personal guaranties made by the borrower or another individual. All agreements and documents providing or evidencing additional security must be entered into between the borrower or another individual and the lender. The authority may not be a party to the agreement or document and is not responsible in any way with respect to the authorization, execution, effectiveness, or adequacy of the additional security.

Subp. 2. Loan evaluation.

The lender must determine and evaluate the eligible borrower's financial condition, net worth, and ability to repay the loan of the bond proceeds to be made by the authority, and the lender is solely responsible for that determination. The authority shall not make any independent evaluation of any of these matters, but shall rely upon certifications provided to it by the applicant and the lender as part of an application.

Subp. 3. Loan terms.

The payment terms of each loan and the bond that will be issued to fund the loan must be identical and, subject to the applicable provisions of state and federal law or the code, must be established by the eligible borrower and the lender.

Subp. 4. Loan documents.

Except as provided in subpart 1 with respect to certain loan security agreements, all loan and bond transactions must be evidenced by use of the authority's standard loan documents. The documentation must include loan agreements, a promissory note, a bond, various closing certificates, legal opinions, and other documents as bond counsel requires.

Subp. 5. Tax exemption.

A. The authority must try to issue each bond as a "qualified small issue bond" within the meaning of section 144(a) of the code. Interest payable on a qualified small issue bond is not includable in gross income of the recipient for federal income tax purposes, or in net income of individuals, estates, or trusts for Minnesota income tax purposes. At the loan closing, the authority shall furnish to the lender an opinion of an attorney or firm of attorneys nationally recognized as bond counsel as to the validity of the bond and the tax exempt nature of the interest payable on the bond, addressed to the lender. The form of that opinion is available upon request to the authority by any eligible lender joining in a loan application.

B. The lender may not rely upon information provided by the authority as to state and federal tax matters, but may rely only upon representations, warranties, or covenants made by the authority in the loan documents and the legal opinion.

C. The lender is responsible to determine the applicability and effect of other state and federal laws on the lender's income, deductions, or tax status for state and federal tax purposes as a result of the purchase of a bond.

Subp. 6. Use of bond proceeds; certification.

Bond proceeds may not be used for a purpose other than an eligible purpose or by a person other than an eligible borrower. If funds are not fully disbursed at the time of closing, the lender and borrower must certify to the authority that the proceeds were used for an eligible purpose by an eligible borrower, and were fully expended within six months after the loan closing date.

Subp. 7. Assignment of bond.

A lender may assign a bond in whole or in part to any person, but the lender is responsible for compliance with all state and federal laws applicable to the assignment. Servicing of the loan may also be assigned. The authority must be notified in writing prior to assignment of servicing of a loan.

Subp. 8. Assumption of loans; substitution of collateral and transfer of property.

Loans may not be assumed without the prior approval of the authority, and then only if the purchaser of the property is an eligible borrower. Depreciable agricultural property may be exchanged or traded for similar property, and other property such as breeding livestock may be added or substituted as collateral at the discretion of the lender without the prior approval of the authority. The benefits of the loan made at the tax exempt rate from the proceeds of an authority bond must remain with the eligible lender, and no person to whom property is traded or otherwise transferred may obtain the benefits of the authority loan.

History

Statutory Authority: MS s 41C.13
History: 20 SR 2251(NO. 42); 22 SR 266; 34 SR 445

Minn. R. 1650.0540 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0541 Application Procedures

Subpart 1. Application.

A. An applicant and an eligible lender who wish to request the authority to make a loan to the applicant and issue a bond to the lender to fund the loan must jointly complete, sign, and submit an application to the authority. All supporting documents must be submitted with the application.

B. The eligible lender shall present the documents in item A to the authority by the close of the business day on the Friday prior to the first Wednesday of each month. Presentation of the documents constitutes an offer to purchase a bond to fund the loan.

C. Lenders shall use their own forms of financial statement and other forms considered necessary to document the eligibility of the applicant. Financial statements must be dated as of a date not more than 120 days before the date on which the application is submitted to the authority.

Subp. 2. Application fee.

The applicant shall provide to the eligible lender for submission to the authority with the application a check payable to the Minnesota Department of Agriculture in an amount established by the authority under Minnesota Statutes, section 41C.12, as an application fee. The fee is not refundable.

Subp. 3. Volume cap allocation charge.

The applicant must also provide to the eligible lender for submission to the authority with the application, a check payable to the Minnesota Department of Agriculture in the amount determined under Minnesota Statutes, section 474A.03, as a volume cap allocation fee. If the application is approved and the authority makes application for a volume cap allocation as described in part 1650.0551, subpart 2, the fee must be delivered to the commissioner of management and budget in payment of the application charge imposed by Minnesota Statutes, chapter 474A. If the application is rejected, the volume cap allocation fee must be returned to the applicant.

Subp. 4. Use of allocation.

The allocation purchased from the Management and Budget Department must be used within 90 days. If the allocation expires due to no fault of the authority, the authority may require payment of additional fees to secure a new allocation.

Subp. 5. Insufficient funds.

If there are insufficient funds to allocate to all applications received, priority must be given in the order of the application number. If the allocation requested exceeds the allocation fund balance, the next application must then be allowed to request the allocation. This procedure must be used until the balance of the allocation fund is depleted. Eligible lenders are responsible to verify that an allocation has been secured before closing on their bond.

Subp. 6. Authority review.

The executive director, or a designee, shall review the information provided and accept or reject the application. If the information provided is not sufficient to make a determination, the executive director, or a designee, shall request additional information from the eligible lender and applicant. The review must include, but is not limited to, whether the loan complies with the act and parts 1650.0501 to 1650.0571. The authority shall notify the applicant and eligible lender whether the application has been approved or rejected. If the application is not approved, a written notice must state the reasons for disapproval.

Subp. 7. Administrative reconsideration.

If a proposed application is not approved, the applicant or the eligible lender may petition the executive director for an administrative reconsideration. The petition must be in writing and must be sent within 15 business days of the date of the disapproval. The petition must state the petitioner's reasons for disagreeing with the disapproval and may include additional information relevant to the request for reconsideration. Within 15 business days of receiving the petition, the executive director shall send a written response to the petitioner upholding or reversing the original decision and giving the reasons for the decision.

Subp. 8. Appeal.

A petitioner may appeal the executive director's reconsideration directly to the authority's board, by written notice to the executive director within 15 business days of receiving the executive director's reconsideration decision. The decision of the board is final.

Subp. 9. Application expiration.

An application that remains inactive for 120 days from the date of the preliminary resolution is considered canceled and the application fee is forfeited.

History

Statutory Authority: MS s 41C.13
History: 20 SR 2251(NO. 42); L 2009 c 101 art 2 s 109

Minn. R. 1650.0550 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0551 Hearing and Other Procedural Requirements

Subpart 1. Hearing and approval requirement.

Under section 147(f) of the code, in order to make the interest payable on a bond excludable from gross income for federal tax purposes, prior to the issuance of the bond the authority or its designated representative must hold a public hearing on the issuance of the bond, and the issuance of the bond must be approved by an "applicable elected representative" of the state, which means, in this case, the governor or another elected official of the state designated by the governor. Notice of the hearing must be published at least 14 days before the hearing in a newspaper of general circulation in the state and where the property being financed is or is to be located. The notice must set forth the date, time, place, and purpose of the hearing; the authority's intention to issue the bond; the maximum principal amount of the bond to be issued; the source of payment of the bond; the purpose for which the proceeds of the bond will be loaned to the borrower; the name of the borrower; and the location of the property being acquired with the proceeds of the loan or where it will be used.

Subp. 2. Volume cap allocation requirement.

Under section 146 of the code, in order to make the interest payable on a bond excludable from gross income for federal tax purposes, the authority must obtain a volume cap allocation in an amount equal to the amount of the bond, pursuant to the state volume cap allocation law, Minnesota Statutes, chapter 474A. In order to obtain a volume cap allocation, the authority must submit an application for it to the state Department of Management and Budget together with a preliminary resolution of the authority approving the loan and the issuance of a bond to fund it, a statement of bond counsel that the proposed bond requires an allocation under Minnesota Statutes, chapter 474A, and a statement that the bond is a "qualified small issue bond" within the meaning of section 144 of the code. The authority has no control over whether a volume cap allocation will be received with respect to any volume cap application submitted by it.

Subp. 3. Executive director authority.

If upon review of a loan application and all supporting documents and other information requested by the authority in connection with the application the executive director determines that the application is in compliance with the program and parts 1650.0501 to 1650.0571, the executive director will:

A. cause a preliminary resolution approving the loan and the issuance of the bond requested by the application to be placed upon the agenda of the next meeting of the authority for consideration by it;

B. establish a date, time, and place of the public hearing required in subpart 1 and cause notice of the hearing to be published, which date must be at least three business days after the meeting of the authority at which the preliminary resolution approving the loan and bond described in the notice will be considered by the authority;

C. conduct, or designate other members of the authority's staff to conduct, the public hearing; and

D. following adoption of the preliminary resolution by the authority, make application for a volume cap allocation as described in subpart 2.

Subp. 4. Preliminary resolution.

The authority shall consider the adoption of the preliminary resolution described in subpart 3 at its first meeting following approval of an application by the executive director.

Subp. 5. Public hearing.

A public hearing must be held at the offices of the authority during regular business hours on regular business days. A person appearing in person at the hearing will be allowed ten minutes to present views. A protest may also be made in writing by mailing or faxing it to the authority. The authority is not responsible for delays in delivery of written protests. The person conducting the hearing shall make a written record of the hearing and all information or views presented at the hearing. The record must be maintained as part of the public records of the authority.

Subp. 6. Public approval.

Following the public hearing, if no information is presented indicating that the loan to be made and the bond to be issued are not in accordance with the program and parts 1650.0501 to 1650.0571, the executive director shall cause to be prepared and sent to the governor's office, or the office of the elected official of the state designated by the governor, a statement describing each bond or series of bonds it proposes to issue, along with a summary of the public comments received at the hearings. Any information received at the hearing must be presented to the authority at its next meeting, at which the authority shall confirm or take further action on the application in question that may be indicated.

History

Statutory Authority: MS s 41C.13
History: 20 SR 2251(NO. 42); L 2009 c 101 art 2 s 109

Minn. R. 1650.0560 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0561 Loan Documents; Closing Procedures

Subpart 1. Loan documents.

The executive director shall provide standard forms of all loan documents and closing documents necessary to evidence a bond and related loan transaction to all applicants and prospective lenders. All bond and loan transactions must be done on standard forms, with only insertions and changes necessary to accurately reflect the transaction in question or to assure compliance with section 144 of the code.

Subp. 2. Lender's responsibility.

The lender must use its own form of additional security documents (mortgage, security agreement, or guarantee) it believes are necessary and appropriate under the particular loan circumstances. These items must be referenced in the bond documents. Any additional requirements not specifically provided for in the bond documents, such as insurance coverage and amounts, must also be added. It is the lender's responsibility to ensure that any security agreements, mortgages, guarantees, or other security documents that the lender requires in a transaction, have been completed and signed, and that any financing statements have been filed, mortgages recorded, or any other necessary steps taken to protect the lender's interests. The authority makes no warranties or representations with respect to the effectiveness, validity, or priority of any liens or security interests, that a lender has, or believes it may have, with respect to a particular loan or bond.

Subp. 3. Authority's responsibility.

The authority shall by resolution authorize all documents to be executed by it and is responsible for the preparation, execution, and delivery by the borrower and the authority of the authority's loan documents and closing documents; compliance with the procedures in part 1650.0551; the issuance of necessary legal opinions by the authority's bond counsel; the filing with the Internal Revenue Service of all reports and forms required to be filed in connection with the issuance of a bond; and the furnishing of fully executed copies of those items to the borrower and the lender.

Subp. 4. Origination fee and closing costs.

At the loan closing, the applicant shall deliver to the authority a check payable to the Minnesota Department of Agriculture in an amount sufficient to pay the origination fee as established in Minnesota Statutes, section 41C.12. Under no circumstances shall this fee be less than $200. The authority shall estimate and the borrower shall pay these costs at closing. Loan proceeds may be used to pay closing costs subject to the limitation established by the code, which is described in part 1650.0531, subpart 1, item B, subitem (2).

History

Statutory Authority: MS s 41C.13
History: 20 SR 2251(NO. 42)

Minn. R. 1650.0570 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1650.0571 General Matters

Subpart 1. Forms.

The executive director shall provide forms necessary for administration and implementation of the program. The number and type of forms must be sufficient to safeguard the interests of the authority.

Subp. 2. Waivers.

The authority or the executive director may waive or vary particular provisions of parts 1650.0501 to 1650.0571 to conform to requirements of the code necessary to make the interest on any bond excludable from gross income of the recipient for federal tax purposes. No waiver may conflict with Minnesota Statutes, chapter 41C.

Subp. 3. Right to audit.

The authority may audit at any time the records of the lender and the borrower relating to a loan and bond to ensure that bond proceeds were used for an eligible purpose by an eligible borrower.

Subp. 4. Data privacy.

Financial information, including credit reports, financial statements, and net worth calculations received by the authority regarding any loan and the name of each eligible borrower who is the recipient of a loan are private data under Minnesota Statutes, chapter 13, and may be disclosed only in accordance with Minnesota Statutes, chapter 13. The name of an eligible borrower, the proposed amount of any loan, the purpose of the loan, and the location of the property to be acquired with the loan proceeds or the location where it is to be used must be disclosed as provided in part 1650.0551 and as required by the code in order to make the interest payable on the bond issued to fund the loan excludable from gross income for federal tax purposes.

History

Statutory Authority: MS s 41C.13
History: 20 SR 2251(NO. 42)

Minn. R. 1650.0600 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1650.0601 Applicability and Purpose

Subpart 1. Applicability.

Parts 1650.0601 to 1650.0661 establish the criteria and procedures to be used by the RFA in administering the agricultural improvement loan program authorized by Minnesota Statutes, section 41B.043.

Subp. 2. Purpose.

The purpose of the agricultural improvement loan program and for the issuance of bonds to finance the program is to preserve and develop the state's agricultural resources. This is accomplished by extending credit on real estate security through the purchase of participation interests in first priority mortgage farm real estate loans.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1650.0610 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1650.0611 Definitions

Subpart 1. Scope.

The definitions in this part apply to parts 1650.0601 to 1650.0651.

Subp. 2. Agricultural improvements.

"Agricultural improvements" has the meaning given in Minnesota Statutes, section 41B.02, subdivision 19.

Subp. 3. Agricultural improvement loan program or program.

"Agricultural improvement loan program" or "program" means the program authorized by Minnesota Statutes, section 41B.043.

Subp. 4. Agricultural land.

"Agricultural land" means land suitable for use in farming.

Subp. 5. Applicant.

"Applicant" means a potential borrower who submits an application directly to the RFA for a direct loan or through an eligible lender for a loan participation.

Subp. 6. Application.

"Application" means an application for a loan under the agricultural improvement loan program in the form provided by the RFA.

Subp. 7. Assets.

"Assets" means all property, real or personal, tangible or intangible, and all contract rights of value that constitute assets, including cash crops or feed on hand, livestock held for sale, breeding stock, receivable notes, receivables, cash invested in growing crops, cash value of life insurance, machinery and equipment, cars, trucks, farms and other real estate including life estates and personal residences, and the value of a beneficial interest in trusts.

Subp. 8. Borrower.

"Borrower" means the person or persons liable on a mortgage loan made under the program.

Subp. 9. Collateral.

"Collateral" means all assets pledged as security for a borrower's obligation under a mortgage loan made under the program, including all assets, guarantees, money, letters of credit, or assignments of collateral or a pledge for a loan on which the lender has a security interest or lien.

Subp. 10. Direct loan.

"Direct loan" means a loan originated and serviced by the RFA without involvement of an eligible lender.

Subp. 11. Executive director.

"Executive director" means the executive director of the RFA or any other officer authorized to act on behalf of the board of the RFA or its executive director.

Subp. 12. Farming.

"Farming" means the cultivation or use of land or land improvements, and personal property for the production of agricultural crops, vegetables, fruit or other horticultural crops, forest products, bees and apiary products, livestock, dairy animals, dairy products, poultry or poultry products, fur-bearing animals, aquaculture, hydroponics, exotic species of plants or animals, or other products related to agriculture. Farming also includes:

A. the use of wetlands, pasture, forest land, wildlife, and homestead and other real property associated with the agricultural use of land; and

Subp. 13. Fixtures.

"Fixtures" means an article of personal property that has been affixed or annexed to real estate so that it is regarded as a part of the real property. A thing is considered to be affixed or annexed to real estate if it is attached to it by roots, imbedded in it, permanently resting upon it, or permanently attached to it, as by means of cement, plaster, nails, bolts, or screws.

Subp. 14. Liabilities.

"Liabilities" means debts or other obligations for which an applicant is responsible, including accounts payable, notes or other indebtedness owed, taxes, rent, amounts owed on real estate contracts or mortgages, judgments, and accrued interest payable.

Subp. 15. Mortgage loan or loan.

"Mortgage loan" or "loan" means a direct loan from the RFA or loan participation under the program that is secured by a first mortgage on real property.

Subp. 16. Net worth.

"Net worth" means the total value of an applicant's assets and the assets of the applicant's spouse and dependents, less the liabilities of the same parties.

Subp. 17. Real estate.

"Real estate" means land and anything permanently affixed to the land, such as buildings, fences, and things attached to the buildings, such as light fixtures, plumbing, and heating fixtures, or other items that would be personal property if not attached.

Subp. 18. RFA.

"RFA" means the Rural Finance Authority established by Minnesota Statutes, section 41B.025.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1650.0620 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1650.0621 Direct Loans

Subpart 1. Borrower eligibility.

To receive a direct loan under the agricultural improvement loan program, an applicant must meet the criteria in items A to G.

A. The applicant must be a resident of Minnesota or a domestic family farm corporation as defined in Minnesota Statutes, section 500.24, subdivision 2.

B. At least one of the applicants must be the principal operator of the farm upon which the agricultural improvements will be located.

C. At least one of the applicants must be actively engaged in farming.

D. The applicant must show the ability to repay the loan.

E. The applicant must show an inability to make the proposed improvements without the availability of financing under parts 1650.0601 to 1650.0651.

F. The applicant's total net worth must not exceed the total net worth established for the basic beginning farmer loan participation program.

G. The applicant must not be a current or previous participant in the RFA Restructure II Program.

Subp. 2. Application and procedures.

A. An applicant shall complete an application form provided by the RFA and submit it to the RFA along with other information required by the RFA. Financial statements must be dated within 90 days of the application.

B. A personal history letter may be submitted with the application to explain the type of project for which funds will be used, the applicant's background, and the type of farming unit.

C. The applicant must submit with the application the nonrefundable application fee as established in Minnesota Statutes, section 41B.043, subdivision 3. The loan origination fee as established in Minnesota Statutes, section 41B.043, subdivision 3, must be submitted by the applicant at the closing of the loan. The loan origination fee and other loan closing expenses may be financed with proceeds of the loan. The applicant must also pay all other out-of-pocket costs required to complete the closing of the loan, such as filing fees, mortgage registration, taxes, and appraisal fees. The RFA shall pay its own legal fees.

D. The maximum term of a loan is ten years. The applicant must agree on the loan terms such as interest rate, length of loan, repayment schedule, and prepayment options. The maximum loan amount is $35,000 and the loan may not have a balloon.

E. The collateral securing the loan must have a value of at least 150 percent of the loan.

F. The applicant shall not begin acquisition or construction of any part of the agricultural improvements before the RFA approves the application. If the application is approved, upon notice to and approval by the RFA, the applicant may move forward with acquisition or construction of the agricultural improvements. A lender may provide interim financing for the agricultural improvements until the closing of the loan. The principal of the interim financing must be paid with the proceeds of the loan.

G. If a change occurs in the information provided by the applicant to the RFA, the applicant shall immediately update and correct that information. Misrepresentation in the application or failure to update any required information is grounds to reject an application, revoke a notice of approval, or refuse to close the loan.

Subp. 3. RFA review, notice, appeal.

A. The RFA shall accept or reject applications within 45 working days of their receipt. If the documentation is not sufficient to make a determination, the RFA may request additional information to establish creditworthiness and eligibility of the applicant.

B. The RFA shall accept an application if:

C. The RFA shall promptly notify the applicant in writing whether or not the application is approved. If the application is rejected, the notice must state the reasons. For accepted applications, the notice shall delineate any conditions related to the acceptance of the application.

D. If the application is rejected, the applicant may petition the executive director for reconsideration. The petition must be in writing and must be sent within 15 working days of the RFA's mailing of its notice of rejection. The petition must state the grounds for the appeal and may include additional relevant information. Within 15 working days of receiving the petition, the executive director shall send a written response to the petitioner upholding or reversing the original decision and giving reasons for the decision.

E. After appeal to the executive director, a petitioner may appeal the executive director's decision directly to the RFA board by written notice to the executive director within 15 working days of the executive director's mailing of its notice of rejection. The decision of the board is final.

Subp. 4. Loan administration, enforcement, inspection.

A. The RFA shall perform all tasks and functions customarily performed in administering the loans with the degree of care and diligence usually maintained by agricultural real estate lenders. The RFA has custody and control of all loan documents.

B. The RFA shall manage, administer, and enforce the loan, including, without limitation, the right to accelerate the loan on default and to foreclose or otherwise enforce remedies against the borrower.

C. At any time during the term of a loan, the RFA or the state legislative auditor may inspect the collateral during normal business hours.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1650.0630 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1650.0640 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1650.0650 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1650.0660 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1650.0661 Loan Participation

Subpart 1. Borrower eligibility.

To be eligible for assistance through a loan participation under the agricultural improvement loan program, an applicant must meet the criteria in items A to E.

A. The applicant must meet the requirements of Minnesota Statutes, section 41B.03, subdivision 1, clause (1).

B. At least one of the applicants must be the principal operator of the farm upon which the agricultural improvement will be located.

C. At least one of the applicants must be actively engaged in farming.

D. The applicant must show the ability to repay the loan.

E. The applicant's total net worth must not exceed the total net worth established for the basic beginning farmer loan participation program.

Subp. 2. Lender eligibility.

A. A bank, credit union, or savings association chartered by the state or federal government, a subdivision of the Farm Credit System (Agri Bank), the Federal Deposit Insurance Corporation, or an insurance company, fund, or other financial institution doing business as an agricultural lender in Minnesota may apply to the RFA for certification as an approved lender.

B. Upon a lender's demonstration of its ability to originate and service agricultural real estate loans, the RFA shall designate the lender as an approved lender for purposes of RFA programs.

C. Before offering mortgage loans to the RFA for participation, each approved lender must enter into an RFA master participation agreement. The agreement must specify the relationship between the parties and the terms and conditions of mortgage loans to be made by the lender under the agricultural improvement loan program and offered to the RFA for participation.

Subp. 3. Application process and offer of participation.

A. All applications under the program must be in forms provided by the RFA. A lender and an applicant must jointly complete and sign an application and prepare all supporting documents identified in the application. Financial statements must be dated within 120 days of the application.

B. The applicant shall not begin acquisition or construction of any part of the agricultural improvements before RFA approval of the application. Upon notice to the lender of approval by the RFA, the applicant may move forward with acquisition or construction of the agricultural improvements.

C. The lender shall complete the initial review of the proposal and determine the creditworthiness of the applicant and the value of the collateral to be used to secure the loan. If the lender agrees to make a mortgage loan to the applicant, the lender and the applicant shall jointly prepare the application and the required loan documents.

D. The lender, as the originator of the mortgage loan, shall present the application and loan documents to the RFA. Presentation of the documents constitutes an offer to sell a participation interest in the loan.

E. The nonrefundable application fee as established in Minnesota Statutes, section 41B.043, subdivision 3, must be submitted with the application.

F. The loan must be for a maximum term of ten years. The maximum participation is the amount established in Minnesota Statutes, section 41B.043, subdivision 1b.

G. The RFA is restricted to participation in loans that do not exceed 80 percent of the appraised value of the real estate offered for collateral. Additional collateral may be required based on the depreciability and saleability of the collateral and creditworthiness of the applicant.

H. If a change occurs in the information provided by the lender to the RFA, the lender shall immediately update and correct that information. Misrepresentation in the application or failure to update any required information is grounds to reject an application, revoke a notice of approval, or refuse to close the loan.

Subp. 4. RFA review, notice, appeal.

A. Within 30 business days after receipt of a lender's offer, the RFA shall accept or reject the lender's offer to participate in the loan. If the documentation is not sufficient to make a determination, the RFA may request additional information to establish creditworthiness and eligibility of the applicant.

B. The RFA shall accept an application if:

C. The RFA shall promptly notify the lender in writing whether or not the offer is accepted. If the offer is not accepted, the notice must state the reasons.

D. If an offer is rejected, either the lender or the applicant may petition for RFA reconsideration. The petition must be in writing and must be sent within 30 days of the date of the RFA notice. The petition must state the grounds for the appeal, and may include additional relevant information. Within 15 working days of receiving the petition, the executive director shall send a written response to the petitioner upholding or reversing the original decision and giving the reasons for the decision.

E. After administrative appeal, a petitioner may appeal the executive director decision directly to the RFA board by written notice to the director within 15 days of receiving the director's reconsideration decision. The decision of the board is final.

Subp. 5. Loan closing, purchase of participation, and loan management.

A. Upon receiving notification of authority acceptance, the lender shall close the mortgage loan. The lender must record security documents relating to the loan. The lender must notify the RFA that the loan is closed and recorded by completing the lender certification section and returning the original RFA application and copies of the recorded documents, note and loan agreement, and final title opinion to the RFA.

B. Within ten business days of receipt of written notice under item A that the mortgage loan is closed and recorded, the RFA shall initiate payment to the lender for the RFA's participation interest in the loan.

C. Within five business days after the receipt of finally collected funds, the lender shall complete and return a participation certificate provided by the RFA witnessing the RFA's undivided pro rata interest in the agricultural improvement mortgage loan.

D. The lender shall manage the loan, including the RFA participation interest, with the degree of care and diligence usually maintained by agricultural real estate lenders. The lender shall have custody and control of all loan documents except the original application, which must be kept by the RFA. The lender shall manage, administer, and enforce the loan documents in the lender's own name and also on behalf of itself and the RFA, including, without limitation, the right to accelerate a mortgage loan on default and to foreclose or otherwise enforce remedies against the borrower.

E. The lender shall promptly notify the RFA of occurrences that substantially affect the security, collection, or enforcement of a mortgage loan.

F. The lender shall obtain the prior written consent of the borrower and the RFA before:

Subp. 6. Participation repurchase.

A. An originating lender is under no obligation to repurchase RFA participation interest in an agricultural improvement mortgage loan except as provided in this subpart.

B. A lender may, at its option and upon written approval by the RFA, repurchase RFA participation interest at any time.

C. A lender shall repurchase the RFA participation interest when the first mortgage loan is paid in full or refinanced.

D. A lender shall repurchase the RFA participation interest if the lender has made misrepresentations or fails to perform its obligations under the participation agreement, has received written notice from the RFA, and has not corrected the representation or performance under the notice.

E. A repurchase must be for the principal balance of the RFA participation plus accrued interest and any penalties or costs incurred by the RFA to secure repurchase.

Subp. 7. Review of loan and collateral.

A. At any time during the term of an agricultural improvement mortgage loan, the RFA or the state legislative auditor may inspect the books, records, documents, and accounting practices of the lender relative to the loan to determine compliance with the terms and conditions of the loan and the participation agreement. An inspection must be made during the lender's normal business hours. The lender shall allow the RFA to copy any documents relating to the mortgage loan and the RFA participation.

B. The lender and the RFA may physically inspect the collateral securing the mortgage loan upon notice to the borrower. An inspection must be conducted at a reasonable time.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Chapter 1651 SELLER-SPONSORED LOAN PARTICIPATION

Minn. R. 1651.0010 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0011 Applicability and Purpose

Subpart 1. Applicability.

Parts 1651.0011 to 1651.0101 establish the criteria and procedures to be used by the RFA in administering the seller-sponsored loan participation program authorized by Minnesota Statutes, chapter 41B.

Subp. 2. Purpose.

The purpose of the RFA seller-sponsored loan participation program and for the issuance of bonds to finance or provide security for the program is to preserve and develop the state's agricultural resources. This is accomplished by extending credit on real estate security through the purchase of participation interests in first priority mortgage farm real estate loans. Loans to persons entering or reentering farming and meeting the eligibility criteria in this chapter are eligible for participation. Under this program, the eligible seller of a farm must partially finance the sale of the farm through a loan to an eligible borrower. An eligible lender and the state, acting through the RFA, shall jointly provide the remainder of the financing needed by the borrower.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2251(NO. 42)

Minn. R. 1651.0020 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0021 Definitions

Subpart 1. Scope.

The definitions in this part apply to parts 1651.0011 to 1651.0101.

Subp. 2. Agricultural purposes or farming.

A. the use of wetlands, pasture, forest land, wildlife, and homestead and other real property associated with the agricultural use of land; and

Subp. 3. Applicant.

"Applicant" means a potential borrower who submits an application to the RFA through an eligible lender.

Subp. 4. Application.

"Application" means the application for the seller-sponsored loan participation in the form provided by the RFA.

Subp. 5. Assets.

"Assets" mean property, real or personal, tangible or intangible, and all contract rights of value that constitute assets, including cash crops or feed on hand, livestock held for sale, breeding stock, marketable bonds and securities, securities not readily marketable, accounts receivable, notes receivable, cash invested in growing crops, cash value of life insurance, machinery and equipment, cars and trucks, farm and other real estate including life estates and personal residence, and the value of a beneficial interest in trusts.

Subp. 6. Borrower.

"Borrower" means the person or persons liable on a first mortgage loan made under this program.

Subp. 7. Collateral.

"Collateral" means all assets pledged as security for a borrower's obligation under a first mortgage loan made under this program. It includes all instruments, personal and real property, guaranties, money, letters of credit, and assignments and pledges of money or property for or on which the lender has a security interest or lien.

Subp. 8. Executive director.

"Executive director" means the executive director of the RFA or any other officer authorized to act on behalf of the RFA board or its executive director.

Subp. 9. First mortgage loan, mortgage loan, or loan.

"First mortgage loan," "mortgage loan," or "loan" means loan participation under the seller-sponsored program, which is secured by a first mortgage on real property.

Subp. 10. Liabilities.

"Liabilities" means the debts or other obligations for which an applicant is responsible, including: accounts payable, notes or other indebtedness, taxes, rent, amounts owed on real estate contracts or mortgages, judgments, and accrued interest payable.

Subp. 11. Net worth.

"Net worth" means the total value of an applicant's assets and the assets of the applicant's spouse and dependents, less the liabilities of the same parties.

Subp. 12. Note and loan agreement.

"Note and loan agreement" means the form provided by the RFA that is signed by a borrower evidencing the terms of the first mortgage loan and the borrower's obligation to repay the loan.

Subp. 13. Participation agreement.

Subp. 14. RFA.

"RFA" means the Rural Finance Authority established by Minnesota Statutes, section 41B.025.

Subp. 15. RFA participation.

"RFA participation" means the RFA's undivided interest in the principal of a first mortgage loan, all payments arising under the loan, the first security real estate mortgage securing the loan, any other collateral pledged to secure the loan, and the first mortgage loan documents.

Subp. 16. RFA seller-sponsored loan participation program; seller-sponsored program; or seller-assisted loan participation program.

"RFA seller-sponsored loan participation program," "seller-sponsored program," or "seller-assisted loan participation program" means the RFA program for the purchase of participation interests in first security mortgage real estate loans made under parts 1651.0011 to 1651.0101.

Subp. 17. Seller.

"Seller" means the person or persons selling a farm under the seller-sponsored program.

Subp. 18. Seller-sponsor's loan commitment form or seller-assisted loan commitment form.

"Seller-sponsor's loan commitment form" or "seller-assisted loan commitment form" means the form provided by the RFA that is signed by a seller evidencing the seller's understanding of the seller-sponsored program, its rules, and the seller's commitment to make a loan to an applicant and to subordinate the seller's loan to the first mortgage loan made by an eligible lender.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1651.0030 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0031 Seller Eligibility

To qualify as an eligible seller under the program, a seller must meet the following criteria:

A. a seller must be in compliance with Minnesota Statutes, section 500.24, and selling a farm located within Minnesota;

B. the seller must complete a seller-assisted loan commitment form certifying that the seller will partially finance the purchase of the farm property by making a loan to the borrower;

C. the seller's loan to the borrower must be for the additional required financing necessary to complete the transaction after the down payment, if any;

D. the seller's financing made to the borrower must be subordinated to the first mortgage loan of the lender in which the RFA is a participant; and

E. the seller must disclose all of the terms and conditions of the seller-assisted sale in a written purchase agreement to be given to the lender at the time of application.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1651.0040 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0041 Borrower Eligibility

Subpart 1. Criteria.

To be eligible for assistance under the seller-sponsored program, all applicants must meet the criteria in subpart 2. Applicants must also meet the requirements of either subpart 3 or 4.

Subp. 2. General eligibility criteria.

Each applicant must:

A. meet the requirements of Minnesota Statutes, section 41B.03, subdivision 5;

B. certify that the applicant or one of the applicants will be the principal operator of the farm and will make farming their principal occupation, and that the farm being purchased will be used for agricultural purposes only;

C. certify that the applicant is eligible for the program according to Minnesota Statutes, chapter 41B; and

D. submit the correct fees as established in Minnesota Statutes, section 41B.03, subdivision 6.

Subp. 3. Beginning farmer criteria.

In addition to the requirements of subpart 2, a beginning farmer applicant must meet the requirements of Minnesota Statutes, section 41B.03, subdivision 3.

Subp. 4. Reentry farmer criteria.

In addition to the requirements of subpart 2, a reentry farmer applicant must:

A. fulfill the criteria in subpart 3;

B. have a total net worth not to exceed the amount established pursuant to Minnesota Statutes, section 41B.03, subdivision 3, excluding the value of the applicant's residential structure;

C. have previously owned and operated a farm; and

D. not currently own any real estate that is used for an agricultural purpose other than a homestead as defined by Minnesota Statutes, chapter 510.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1651.0050 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0051 Lender Eligibility

Subpart 1. Statutory eligibility.

A bank, credit union, or savings association chartered by the state or federal government, a subdivision of the Farm Credit System (Agri Bank), the Federal Deposit Insurance Corporation, or an insurance company, fund, or other financial institution doing business as an agricultural lender within the state may apply to the RFA for certification as an approved lender.

Subp. 2. Approval.

Upon a lender's demonstration of its ability to originate and service agricultural real estate loans, the RFA shall designate it as an approved lender for purposes of RFA programs.

Subp. 3. Participation agreement.

Before offering first mortgage loans to the RFA for participation, each approved lender must enter into an RFA participation agreement. The agreement must specify the contractual relationship between the parties and the terms and conditions of first mortgage loans to be made by the lender under the seller-sponsored program and offered to the RFA for participation.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2251(NO. 42)

Minn. R. 1651.0060 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0061 Application Process and Offer of Participation

Subpart 1. Request for a first mortgage loan.

A sponsoring seller and an applicant must jointly present an initial proposal to an approved lender. The proposal must include a signed and dated purchase agreement and a completed seller-sponsor's loan commitment form evidencing the seller's intent to make a loan to the applicant and agreeing to subordinate their financing as required under the program.

Subp. 2. Lender determination.

The lender shall review the proposal and determine the creditworthiness of the applicant and the value of the collateral to be used to secure the loan. If the lender agrees to make a first mortgage loan to the applicant, the lender and the applicant shall jointly prepare an application and the required loan documents described in the application and master participation agreement. Financial statements must be dated within 120 days of the application.

Subp. 3. Offer.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1651.0070 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0071 Rfa Review, Notice, and Appeal

Subpart 1. RFA review.

Subp. 2. RFA acceptance.

The RFA shall accept an offer if:

A. the seller is eligible;

B. the applicant is eligible in accordance with this chapter and Minnesota Statutes, section 41B.03, subdivision 5;

C. the applicant demonstrates an ability to repay the first mortgage loan and other obligations based on the financial information submitted under part 1651.0061, subpart 2;

D. the sale price of the property is not substantially in excess of its fair market value; and

E. the RFA has sufficient funds available to purchase a participation in the loan.

Subp. 3. RFA notice.

The RFA shall promptly notify the lender in writing whether or not the offer is accepted. If the offer is not accepted, the notice must state the reasons.

Subp. 4. Administrative appeal.

Subp. 5. Formal appeal.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1651.0080 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0081 Loan Closing, Purchase of Participation, and Loan Management

Subpart 1. Closing.

Upon receiving notification of RFA acceptance, the lender shall close the first mortgage loan. At the time of closing, the sponsoring seller must present all legal documents relating to the sale, including the seller's proposed financing for the seller's loan to the applicant. The lender must record security documents relating to the loan. The lender is not responsible for preparation of the seller's financing, but must record the seller's financing to ensure that it is recorded in a secondary security position. The lender must notify the RFA that the loan is closed and recorded by completing the lender certification section and returning the original RFA application, a copy of the note and loan agreement, and copies of the recorded documents and final title opinion to the RFA.

Subp. 2. Payment.

Subp. 3. Participation certificate.

Within five working days after receipt of finally collected funds, the lender shall complete and return a participation certificate as provided by the RFA witnessing the RFA's undivided pro rata interest in the seller-sponsored first mortgage loan.

Subp. 4. Loan management.

The lender shall manage, administer, and enforce the loan documents in its own name and also on behalf of itself and the RFA, including, without limitation, the right to accelerate a seller-sponsored first mortgage loan on default and to foreclose or otherwise enforce remedies against the borrower.

Subp. 5. Lender notification.

The lender shall promptly notify the RFA of occurrences that substantially affect the security, collection, or enforcement of any first mortgage loan. The lender shall also notify the seller of any defaults that remain unresolved over 45 days.

Subp. 6. Prior written consent.

The lender shall obtain the prior written consent of the borrower and the RFA before:

A. making or consenting to a release, substitution, or exchange of collateral that reduces the aggregate value of the collateral;

B. waiving a claim against the borrower or a guarantor, surety, or obligor in connection with the indebtedness; or

C. modifying or waiving a term of the notes or related instruments evidencing or securing the first mortgage loan.

Subp. 7. Limitations on responsibility.

Neither the lender nor the RFA is in any way responsible for the administration of the seller-sponsor's loan, or the protection of any of the seller's legal rights.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2251(NO. 42); 30 SR 372

Minn. R. 1651.0090 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0091 Participation Repurchase

A. An originating lender is under no obligation to repurchase any RFA participation interest in a seller-sponsored first mortgage loan except as provided in this part.

B. A lender may, at its option and upon written approval by the RFA, repurchase a RFA participation interest at any time.

C. A lender must repurchase the RFA participation interest whenever the first mortgage loan is paid in full or refinanced.

E. Any repurchase must be for the principal balance of the RFA participation plus accrued interest and any penalties or costs incurred by the RFA to secure repurchase.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2251(NO. 42)

Minn. R. 1651.0100 [Repealed, 20 SR 2251(NO. 42)]

[Repealed, 20 SR 2251(NO. 42)]

Minn. R. 1651.0101 Review of Loan and Collateral

Subpart 1. Inspection.

At any time during the term of a seller-sponsored first mortgage loan, the RFA or the state legislative auditor may inspect the books, records, documents, and accounting practices of the lender relative to the loan to determine compliance with the terms and conditions of the loan and the participation agreement. Inspections must be during the lender's normal business hours. The lender must allow the RFA to copy any documents relating to the first mortgage loan.

Subp. 2. Collateral.

The lender and the RFA may physically inspect the collateral securing the first mortgage loan upon notice to the borrower. An inspection must be conducted at a reasonable time.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2251(NO. 42)

Chapter 1652 AGRICULTURAL BUSINESS ENTERPRISE LOANS

Minn. R. 1652.0010 Establishment of Program; Program Rules

Subpart 1. Establishment of program.

The authority, by its Resolution No. 92-06, has established an agricultural business enterprise loan program, comprising the issuance of bonds to finance loans to be made to a small business, as defined in Minnesota Statutes, section 41C.02, subdivision 2.

Subp. 2. Authority and purpose.

Parts 1652.0010 to 1652.0080 are adopted by the authority pursuant to Minnesota Statutes, section 41C.13, to define and provide for the administration of the program.

Subp. 3. Application.

Parts 1652.0010 to 1652.0080 apply to all applications for and loans made and bonds issued pursuant to the program, the use of loan proceeds, all loan applicants, and all eligible borrowers and lenders participating in the program.

History

Statutory Authority: MS s 41C.13
History: 17 SR 2323

Minn. R. 1652.0020 Definitions

Subpart 1. Scope.

The definitions in this part apply to parts 1652.0010 to 1652.0080.

Subp. 2. Act.

"Act" means the Minnesota Agricultural Development Act, Minnesota Statutes, chapter 41C.

Subp. 3. Agricultural business activity.

"Agricultural business activity" means the general processing of agricultural products and the manufacturing, assembly, or fabrication of agriculture-related equipment.

Subp. 4. Applicant.

"Applicant" means a small business who submits a completed application for a loan under the program to the authority.

Subp. 5. Application.

"Application" means an application for a loan under the program in the form prescribed by the authority or its executive director.

Subp. 6. Authority.

"Authority" means the Minnesota Rural Finance Authority established by Minnesota Statutes, section 41B.025, acting through its board or its duly authorized officers.

Subp. 7. Bond.

Subp. 8. Borrower.

"Borrower" means an eligible borrower who has received a loan under the program.

Subp. 9. Code.

"Code" means the Internal Revenue Code of 1986, as amended, and all rules, regulations, and revenue procedures issued under it.

Subp. 10. Depreciable agricultural business property.

"Depreciable agricultural business property" means property of a character that is subject to the allowance for depreciation under the code and that is to be owned and used by an eligible borrower in an agricultural business enterprise.

Subp. 11. Eligible borrower.

"Eligible borrower" means a small business, as defined in Minnesota Statutes, section 645.445, subdivision 2, that:

A. will engage in an agricultural business enterprise;

B. will be the "principal user" of the property financed under the code, and will materially and substantially participate in the operation of the business of which the property is a part; and

C. has not received other similar tax-exempt financing from the authority in an amount which, together with the current loan, exceeds $250,000.

Subp. 12. Eligible lender.

"Eligible lender" means a bank, credit union, savings association, insurance company, or other financial institution authorized to do business in Minnesota, or an individual.

Subp. 13. Eligible purpose.

"Eligible purpose" means the acquisition or improvement of real or personal property for use in new or expanded operations of an agricultural business enterprise located or to be located in a Minnesota community with a population of 5,000 or less.

Subp. 14. Executive director.

"Executive director" means the authority's executive director or any other officer duly authorized to act on behalf of the authority's board or its executive director.

Subp. 15. Improvements.

"Improvements" means items that, when complete, become part of the real or personal property used in an agricultural business enterprise.

Subp. 16. Lender.

"Lender" means an eligible lender who has purchased a bond under the program.

Subp. 17. Loan.

"Loan" means the loan of the proceeds of a bond to an eligible borrower for an eligible purpose pursuant to a loan agreement between the authority and the eligible borrower.

Subp. 18. Principal user.

"Principal user" means a person who is a principal owner, a principal lessee, a principal output purchaser, or an "other" principal user as defined in the code.

Subp. 19. Program.

"Program" means the agricultural business enterprise loan program established by the authority.

Subp. 20. Related person.

"Related person" means a spouse, a lineal descendent, a brother or sister, or a partnership or corporation owned, directly or indirectly, more than 50 percent by the borrower or one or more of the persons listed in this subpart.

History

Statutory Authority: MS s 41C.13
History: 17 SR 2323; L 1995 c 202 art 1 s 25

Minn. R. 1652.0030 Borrower Eligibility

Subpart 1. Eligibility.

To be eligible for a loan under the program an applicant must be an eligible borrower.

Subp. 2. Certification.

An applicant must certify to the authority in each loan application that the applicant understands and meets the definition of eligible borrower for the program.

History

Statutory Authority: MS s 41C.13
History: 17 SR 2323

Minn. R. 1652.0040 Operation of Program

Subpart 1. Loan transactions and security.

A. The authority shall make loans to eligible borrowers for eligible purposes pursuant to a loan agreement between the authority as lender and the eligible borrower as borrower. The loans must be evidenced by promissory notes payable to the authority or its assigns, and except as provided in item E must be unsecured.

B. A loan may not be made if it violates any of the restrictions in subitems (1) to (6).

C. The authority shall issue a bond to provide money to fund each loan. The authority has no other money available for this purpose. The bond must be issued to the eligible lender who has agreed with the eligible borrower to finance the eligible borrower's loan by jointly submitting a loan application in accordance with part 1652.0050. The bond must be issued in fully registered form pursuant to a loan agreement between the lender and the authority.

D. The bond must be a special, limited obligation of the authority payable solely from loan payments payable by the eligible borrower under the borrower's loan agreement and the promissory note evidencing the loan, which will be assigned to the lender and pledged to the payment of the principal of and interest on the bond, without recourse to the authority. The bond must not be a general obligation of the authority, the state of Minnesota, or any department, agency, or political subdivision of the state, and the full faith and credit of the authority, the state, or any department, agency, or political subdivision of the state must not be pledged for its payment.

E. A bond may be additionally secured by a mortgage on or security interest in the property financed or other property provided by the borrower, or by personal guaranties made by the borrower or another individual. All agreements and documents providing or evidencing such additional security must be entered into between the borrower or another individual and the lender. The authority may not be a party to the agreement or document and may not be responsible in any way with respect to the authorization, execution, effectiveness, or adequacy of the additional security.

Subp. 2. Loan evaluation.

The lender must determine and evaluate the eligible borrower's financial condition, net worth, and ability to repay the loan of the bond proceeds to be made by the authority, and the lender is solely responsible for that determination. The authority may not make any independent evaluation of any of these matters, but must rely upon certifications provided to it by the applicant and the lender as part of an application.

Subp. 3. Loan terms.

Subp. 4. Loan documents.

Subp. 5. Tax exemption.

A. The authority shall try to issue each bond as a "qualified small issue bond" within the meaning of section 144(a) of the code. Interest payable on a qualified small issue bond is not includable in gross income of the recipient for federal income tax purposes, or in net income of individuals, estates, or trusts for Minnesota income tax purposes. At the loan closing, the authority shall furnish to the lender an opinion of an attorney or firm of attorneys nationally recognized as bond counsel as to the validity of the bond and the tax-exempt nature of the interest payable on the bond, addressed to the lender. The form of that opinion is available upon request to the authority by any eligible lender joining in a loan application.

B. The lender may not rely upon information provided by the authority as to state and federal tax warranties or covenants made by the authority in the loan documents, but may rely on the legal opinion.

Subp. 6. Use of bond proceeds; certification.

Bond proceeds may not be used for a purpose other than an eligible purpose or by a person other than an eligible borrower. Following disbursement of the bond proceeds, the lender and borrower may be required to certify to the authority that the proceeds were used for an eligible purpose by an eligible borrower, and evidencing compliance with subpart 1, item B.

Subp. 7. Assignment of bond.

A lender may assign a bond in whole or in part to any person, but the lender is responsible for compliance with all state and federal laws applicable to the assignment. Servicing of the loan may also be assigned, but must at all times be with an eligible lender. The authority must be notified in writing prior to assignment of servicing of a loan.

Subp. 8. Assumption of loans, substitution of collateral, and transfer of property.

Loans may not be assumed without the prior approval of the authority, and then only if the purchaser of the property is an eligible borrower. The benefits of the loan made at the tax-exempt rate from the proceeds of an authority bond must remain with an eligible borrower, and no other person or entity to whom property is traded or otherwise transferred may obtain the benefits of the authority loan.

History

Statutory Authority: MS s 41C.13
History: 17 SR 2323

Minn. R. 1652.0050 Application Procedures

Subpart 1. Application.

A. An applicant and an eligible lender who wish to request the authority to make a loan to the applicant and issue a bond to the lender to fund the loan must jointly complete, sign, and submit to the authority an application, and prepare and submit to the authority all supporting documents identified in the application.

B. The lender shall present these documents to the authority. Presentation of the documents constitutes an offer to purchase a bond to fund the loan.

C. Lenders shall use their own forms of financial statement and other forms considered necessary to document the eligibility of the applicant. Financial statements must be dated as of a date not more than 15 days before the date on which the application is submitted to the authority.

Subp. 2. Application fee.

The applicant shall provide to the eligible lender for submission to the authority with the application, a check payable to the Minnesota Department of Agriculture in an amount established by the authority under Minnesota Statutes, section 41C.12, as an application fee. The fee is not refundable.

Subp. 3. Volume cap allocation charge.

The applicant shall also provide to the eligible lender for submission to the authority with the application, a check payable to the Minnesota Department of Agriculture in the amount determined under Minnesota Statutes, section 474A.03, as a volume cap allocation fee. If the application is approved and the authority makes application for a volume cap allocation as described in part 1652.0060, subpart 2, the check must be endorsed to the commissioner of management and budget in payment of the application fee imposed by Minnesota Statutes, chapter 474A. If the application is rejected, the volume cap allocation fee must be returned to the applicant.

Subp. 4. Authority review.

The executive director shall review the information provided and accept or reject the application. If the information provided is not sufficient to make a determination, the executive director shall request additional information from the lender and applicant. The executive director's review must include, but is not limited to, whether the loan complies with the act and parts 1652.0010 to 1652.0080. The authority shall notify the lender whether the application has been approved or rejected. If the application is not approved, a written notice must state the reasons for disapproval.

Subp. 5. Administrative reconsideration.

If a proposed application is not approved by the executive director, the applicant or the lender may petition the executive director for an administrative reconsideration. The petition must be in writing and must be sent within 15 business days of the date of the disapproval. The petition must state the petitioner's reasons for disagreeing with the disapproval and may include additional information relevant to the request for reconsideration. Within 15 business days of receiving the petition, the executive director shall send a written response to the petitioner upholding or reversing the original decision and giving the reasons for the decision.

Subp. 6. Appeal.

History

Statutory Authority: MS s 41C.13
History: 17 SR 2323; L 2009 c 101 art 2 s 109

Minn. R. 1652.0060 Hearing and Other Procedural Requirements

Subpart 1. Hearing and approval requirement.

Under section 147(f) of the code, in order to make the interest payable on a bond excludable from gross income for federal tax purposes, prior to the issuance of the bond, the authority or its designated representative must hold a public hearing on the issuance of the bond, and the issuance of the bond must be approved by an "applicable elected representative" of the state, which means, in this case, the governor or another elected official of the state designated by the governor. Notice of the hearing must be published at least 14 days before the hearing in a newspaper of general circulation in the state and where the property is being financed is or is to be located. The notice must set the date, time, place, and purpose of the hearing; the authority's intention to issue the bond; the maximum principal amount of the bond to be issued; the source of payment of the bond; the purpose for which the proceeds of the bond will be loaned to the borrower; the name of the borrower; and the location of the property being acquired with the proceeds of the loan or where it will be used.

Subp. 2. Volume cap allocation requirement.

Subp. 3. Executive director authority.

If upon review of a loan application and all supporting documents and other information requested by the authority in connection with the application, the executive director or the program director determines that the application is in compliance with the program and parts 1652.0010 to 1652.0080, the executive director may:

B. establish a date, time, and place of the public hearing required as described in subpart 1 and cause notice to be published, which date must be at least three business days after the meeting of the authority at which the preliminary resolution approving the loan and bond described in the notice will be considered by the authority;

C. conduct, or designate other members of the authority's staff to conduct, the public hearing; and

D. following adoption of the preliminary resolution by the authority, make application for a volume cap allocation as described in subpart 2.

Subp. 4. Preliminary resolution.

The authority shall consider the adoption of the preliminary resolution described in subpart 3 at its first meeting following approval of an application by the executive director or program director.

Subp. 5. Public hearing.

Each public hearing must be held at the offices of the authority during regular business hours on regular business days. A person appearing at the hearing must be allowed to present views either orally or in writing. The person conducting the hearing shall make a written record of the hearing and all information or views presented at the hearing. The record must be maintained as part of the public records of the authority.

Subp. 6. Public approval.

Following the public hearing, if no information is presented indicating that the loan to be made and the bond to be issued are not in accordance with the program and parts 1652.0010 to 1652.0080, the executive director shall cause to be prepared and sent to the governor's office, or the office of the elected official of the state designated by the governor, a statement describing each bond or series of bonds it proposes to issue, along with a summary of the public comments received at the hearing. Any information received at the hearing must be presented to the authority at its next meeting, at which the authority shall confirm or take further action on the application in question that may be indicated.

History

Statutory Authority: MS s 41C.13
History: 17 SR 2323; L 2009 c 101 art 2 s 109

Minn. R. 1652.0070 Loan Documents; Closing Procedures

Subpart 1. Loan documents.

The executive director shall cause to be prepared and revised from time to time as necessary, standard forms of all loan documents and closing documents necessary to evidence a bond and related loan transaction, and shall provide the forms to all applicants and prospective lenders. All bond and loan transactions must be done on standard forms, with only insertions and changes necessary to accurately reflect the transaction in question or to assure compliance with the code.

Subp. 2. Lender's responsibility.

The lender should use its own form of additional security documents (mortgage, security agreement, or guarantee) it believes are necessary and appropriate under the particular loan circumstances. These items must be referenced in the bond documents. Any additional requirements not specifically provided for in the bond documents, such as insurance coverage and amounts, must also be added. It is the lender's responsibility to ensure that any security documents that the lender requires in a transaction have been completed and signed, and that any financing statements have been filed, mortgages recorded, or any other necessary steps taken to protect the lender's interests. The authority makes no warranties or representations with respect to the effectiveness, validity, or priority of any liens or security interests, that a lender has, or believes it may have, with respect to a particular loan or bond.

Subp. 3. Authority's responsibility.

The authority shall by resolution authorize all documents to be executed by it and is responsible for the preparation, execution, and delivery by the borrower and the authority of the authority's loan documents and closing documents; compliance with the procedures specified in part 1652.0060; the issuance of necessary legal opinions by the authority's bond counsel; the filing with the Internal Revenue Service of all reports and forms required to be filed in connection with the issuance of a bond; and the furnishing of fully executed copies of those items to the borrower and the lender.

Subp. 4. Origination fee and closing costs.

At the loan closing, the applicant shall deliver to the authority a check payable to the Minnesota Department of Agriculture in an amount equal to 1.5 percent of the amount of the loan as an origination fee. The authority shall estimate and the borrower shall pay all closing costs at closing. Loan proceeds may be used to pay closing costs subject to the limitation established by the code which is described in part 1652.0040, subpart 1, item B, subitem (2).

History

Statutory Authority: MS s 41C.13
History: 17 SR 2323

Minn. R. 1652.0080 General Matters

Subpart 1. Forms.

The executive director shall prepare and, as needed, revise and amend forms necessary for administration and implementation of the program. The number and type of forms must be sufficient to safeguard the interests of the authority. The authority shall annually assess the effectiveness of parts 1652.0010 to 1652.0080 and its administrative procedures, including all forms, and make any modifications which, in the judgment of the authority, are necessary or would facilitate efficient operation of the program.

Subp. 2. Waivers.

The authority or the executive director may waive or vary particular provisions of parts 1652.0010 to 1652.0080 to conform to requirements of the code necessary to make the interest on any bond excludable from gross income of the recipient for federal tax purposes, or to avoid inequitable, harsh, or unforeseen results from the application of parts 1652.0010 to 1652.0080. No waiver may conflict with Minnesota Statutes, chapter 41C.

Subp. 3. Right to audit.

The authority shall have the right to audit at any time the records of the lender and the borrower relating to a loan and bond to ensure that bond proceeds were used for an eligible purpose by an eligible borrower.

Subp. 4. Data privacy.

Financial information, including credit reports, financial statements, and net worth calculations received by the authority regarding any loan and the name of each eligible borrower who is the recipient of a loan are private data under Minnesota Statutes, chapter 13, and section 41B.211, and may be disclosed only in accordance with Minnesota Statutes, chapter 13, and section 41B.211. The name of an eligible borrower, the proposed amount of any loan, the purpose of the loan, and the location of the property to be acquired with the loan proceeds or the location where it is to be used must be disclosed as provided in part 1652.0060 and as required by the code in order to make the interest payable on the bond issued to fund the loan excludable from gross income for federal tax purposes.

History

Statutory Authority: MS s 41C.13
History: 17 SR 2323

Chapter 1653 RESTRUCTURE II PROGRAM

Minn. R. 1653.0010 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0011 Applicability and Purpose

Subpart 1. Applicability.

Parts 1653.0011 to 1653.0111 establish the criteria and procedures to be used by the RFA in administering the restructure participation program authorized by Minnesota Statutes, section 41B.04.

Subp. 2. Purpose.

The purpose of the RFA restructure II program and the issuance of bonds to finance or provide security for the program is to preserve and develop the state's agricultural resources. This is accomplished by extending credit on real estate security through the purchase of participation interests in first priority mortgage farm real estate loans.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1653.0020 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0021 Definitions

Subpart 1. Scope.

The definitions in this part apply to parts 1653.0011 to 1653.0111 and the master participation agreement.

Subp. 2. Agricultural purposes.

"Agricultural purposes" means the cultivation or use of land, land improvements, and personal property for the production of agricultural crops, vegetables, fruit or other horticultural crops, forest products, bees and apiary products, livestock, dairy animals, dairy products, poultry or poultry products, fur-bearing animals, aquaculture, hydroponics, exotic species of plants or animals, and other agriculturally related products. "Agricultural purposes" also includes the use of wetlands, pasture, forest land, wildlife, and homestead and other real property associated with the agricultural use of land. "Agricultural purposes" also includes the practices and facilities needed to conserve soil and water, protect human and animal health, have a safe and efficient operation, and meet local, state, and federal laws, rules, and regulations relating to the operation of a farm.

Subp. 3. Amortized loan.

"Amortized loan" means a loan that will be fully paid, including all principal and interest, in a specific period of time.

Subp. 4. Annual expenses.

"Annual expenses" means the total of all expenses incurred during the year plus an estimate of family living expenses.

Subp. 5. Annual gross income.

"Annual gross income" means the total of all income earned on or off the farm for the calendar year.

Subp. 6. Applicant.

"Applicant" means a potential borrower who submits an application to the RFA through an eligible lender.

Subp. 7. Application.

"Application" means the application for the restructure loan participation in the form provided by the RFA.

Subp. 8. Appraised value.

"Appraised value" means the dollar value placed on the farm being offered for collateral for a first mortgage loan.

Subp. 9. Assets.

"Assets" means property, real or personal, tangible or intangible, and all valuable contract rights, including cash crops or feed on hand, livestock held for sale, breeding stock, marketable bonds and securities, securities not readily marketable, accounts receivable, notes receivable, cash invested in growing crops, cash value of life insurance, machinery and equipment, cars, trucks, farm and other real estate including life estates and personal residence, and the value of a beneficial interest in trusts.

Subp. 10. Borrower.

"Borrower" means the person or persons liable on a first mortgage participation made under this program.

Subp. 11. Debt-to-asset ratio.

"Debt-to-asset ratio" means the total outstanding liabilities of an applicant divided by the total outstanding assets of the applicant expressed as a percentage.

Subp. 11a. First mortgage loan, mortgage loan, or loan.

"First mortgage loan," "mortgage loan," or "loan" means a loan participation under this program which is secured by a first mortgage on real property.

Subp. 12. Liabilities.

"Liabilities" means debts or other obligations for which an applicant is responsible, including accounts payable, notes or other indebtedness owed, taxes, rent, amount owed on real estate contracts or mortgages, judgments, and accrued interest payable.

Subp. 13. Net worth.

"Net worth" means the total value of an applicant's assets and the assets of the applicant's spouse and dependents, less the liabilities of the same parties.

Subp. 14. Note and loan agreement.

"Note and loan agreement" means the form provided by the RFA that is signed by a borrower evidencing the terms of the first mortgage loan and the borrower's obligation to repay the loan.

Subp. 15. Participation agreement.

Subp. 16. Restructure loan.

"Restructure loan" means a first mortgage loan made by an eligible lender to an eligible borrower, offered to the RFA for participation, and in which the RFA has purchased a participation.

Subp. 17. RFA.

"RFA" means the Rural Finance Authority established by Minnesota Statutes, section 41B.025.

Subp. 18. RFA participation.

Subp. 19. RFA restructure II program.

"RFA restructure II program" means the RFA program redefined on or after July 1, 1993, for the purchase of a participation interest in first mortgage real estate loans made to eligible borrowers so that the borrowers may reorganize their agricultural debt.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1653.0030 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0031 Borrower Eligibility

Subpart 1. Criteria.

To be eligible for assistance under the RFA restructure II program, an applicant must meet the criteria in subpart 2.

Subp. 2. General requirements.

Each applicant must:

A. meet the requirements of Minnesota Statutes, section 41B.03, subdivisions 1 and 2; and

B. obtain a signature on the program application from the local soil and water conservation service office in the county where the land is located which verifies if a soil and water conservation plan has been submitted, if needed for the identified farm property.

Subp. 3.

[Repealed, 30 SR 372]

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1653.0040 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0041 Collateral Requirements

The RFA may participate only in loans that do not exceed 80 percent of the appraised value of the real estate offered for collateral. Additional collateral may be required based on the depreciability and saleability of the collateral and creditworthiness of the applicant.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1653.0050 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0051 Appraisal

The appraisal to determine appraised value must be completed by a person with knowledge of agricultural appraising that is approved by both the lender and the RFA. An appraisal must be completed in a manner approved by the appraisal industry and must contain comparable sales information. If comparable sales information is not available, either the cost approach or the income approach must be used.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1653.0060 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0061 Lender Eligibility

Subpart 1. Statutory eligibility.

Any bank, credit union, or savings association chartered by the state or federal government, a subdivision of the farm credit system (Agri Bank), the Federal Deposit Insurance Corporation, or any insurance company, fund, or other financial institution doing business as an agricultural lender within the state may apply to the RFA for certification as an approved lender.

Subp. 2. Approval.

If a lender demonstrates its ability to originate and service agricultural real estate loans, the RFA shall designate the lender as an approved lender for purposes of RFA programs.

Subp. 3. Participation agreement.

Before offering first mortgage loans to the RFA for participation, each approved lender must enter into an RFA master participation agreement specifying the relationship between the parties and the terms and conditions of first mortgage loans to be made by the lender under the restructure participation program and offered to the RFA for participation.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1653.0070 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0071 Application Process and Offer of Participation

Subpart 1. Request for a first mortgage loan.

Subp. 2. Lender determination.

The lender shall complete the initial review of the applicant's proposal. The lender shall determine the creditworthiness of the applicant and the value of the collateral to be used to secure the loan. If the lender agrees to make a first mortgage loan to the applicant, the lender and the applicant shall jointly prepare the application and the required loan documents.

Subp. 3. Offer.

The lender, as the originator of the first mortgage loan, shall present a completed application and loan documents to the RFA. Presentation of the documents constitutes an offer to sell a participation interest in the loan.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1653.0080 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0081 Rfa Review, Notice, Appeal

Subpart 1. RFA review.

Within 30 days after receipt of a lender's offer the RFA shall accept or reject the lender's offer to participate in the loan. If the documentation is not sufficient to make a determination, the RFA may request additional information to establish the creditworthiness and eligibility of an applicant.

Subp. 2. RFA acceptance.

The RFA shall accept applications if:

A. the applicant meets all eligibility criteria in this chapter and Minnesota Statutes, chapter 41B;

B. the applicant demonstrates an ability to repay the first mortgage loan and other obligations based on financial information submitted with the application;

C. collateral offered as security for the first mortgage real estate loan is sufficient to protect the state's interests; and

D. the RFA has sufficient funds available to purchase a participation in the loan.

Subp. 3. RFA notice.

The RFA shall notify the lender in writing whether or not an offer is accepted. If the offer is not accepted, the notice must state the reasons.

Subp. 4. Administrative appeal.

If an offer is rejected, either the lender or the applicant may petition for RFA reconsideration. The petition must be in writing and must be sent within 30 working days of the date of the RFA notice. The petition must state the grounds for the appeal, and may include additional relevant information. Within 15 working days of receiving the petition, the RFA program director shall send a written response to the petitioner upholding or reversing the original decision and giving the reasons for the decision.

Subp. 5. Formal appeal.

After administrative appeal, a petitioner may appeal the program director's decision directly to the RFA board by written notice to the director within 15 days of receiving the director's reconsideration decision. The decision of the board is final.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1653.0090 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0091 Loan Closing, Purchase of Participation, and Loan Management

Subpart 1. Closing.

Upon receiving notification of RFA acceptance, the lender shall close the first mortgage loan. The lender must record security documents relating to the loan. The lender must notify the RFA that the loan is closed and recorded by completing the lender certification section and returning the original RFA application, a copy of the note and loan agreement, copies of recorded documents, and the final title opinion to the RFA.

Subp. 2. Payment.

Subp. 3. Participation certificate.

Within five business days after the receipt of finally collected funds, the lender shall complete and return a participation certificate as provided by the RFA witnessing the RFA's undivided pro rata interest in the first mortgage loan.

Subp. 4. Loan management.

The lender shall manage the first mortgage loan, including the RFA participation interest, with the degree of care and diligence usually maintained by agricultural real estate lenders. The lender shall have custody and control of all loan documents except the original application, which must be kept by the RFA. The lender shall manage, administer, and enforce the loan documents in its own name and also on behalf of itself and the RFA, including, without limitation, the right to accelerate first mortgage loans on default and to foreclose or otherwise enforce remedies against the borrower.

Subp. 5. Lender notification.

The lender shall promptly notify the RFA of occurrences that substantially affect the security, collection, or enforcement of any first mortgage loan.

Subp. 6. Prior written consent.

The lender shall obtain the prior written consent of the borrower and the RFA before:

A. making or consenting to a release, substitution, or exchange of collateral that reduces the aggregate value of the collateral;

B. waiving a claim against the borrower or a guarantor, surety, or obligor in connection with the indebtedness; or

C. modifying or waiving a term of the notes or related instruments evidencing or securing the first mortgage loan.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1653.0100 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0101 Participation Repurchase

An originating lender is under no obligation to repurchase an RFA participation interest in a restructure first mortgage loan covered by parts 1653.0011 to 1653.0111 except as provided in this part.

A lender may, at its option and upon written approval by the RFA, repurchase an RFA participation interest at any time.

A lender must repurchase the RFA participation interest whenever the first mortgage loan is paid in full or refinanced.

A lender must repurchase the RFA participation interest if the lender:

A. has made misrepresentations or is aware that the applicant has made them or fails to perform its obligations under the participation agreement;

B. has received written notice from the RFA; and

C. has not corrected the representation or performance under the notice. A repurchase under this part must be for the principal balance of the RFA participation plus accrued interest and any penalties or costs incurred by the RFA to secure repurchase.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1653.0110 [Repealed, 20 SR 2427]

[Repealed, 20 SR 2427]

Minn. R. 1653.0111 Review of Loan and Collateral

Subpart 1. Inspection.

At any time during the term of a restructure first mortgage loan, the RFA or the state legislative auditor may inspect the books, records, documents, and accounting practices of the lender relative to the loan to determine compliance with the terms and conditions of the loan and the participation agreement. An inspection must be during the lender's normal business hours. The lender must allow the RFA to copy any documents relating to the first mortgage loan and the RFA participation.

Subp. 2. Collateral.

The lender and the RFA may physically inspect the collateral securing the first mortgage loan upon notice to the borrower. An inspection must be conducted at a reasonable time.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Chapter 1654 ETHANOL PRODUCTION FACILITY LOAN PROGRAM

Minn. R. 1654.0010 Establishment of Program; Program Rules

Subpart 1. Establishment of program.

The authority, by its Resolution No. 93-07 has established an ethanol production facility loan program to provide financial assistance for ethanol production facilities.

Subp. 2. Authority and purpose.

These rules are adopted by the authority pursuant to Minnesota Statutes, section 41B.07, to define and provide for the administration of the program.

Subp. 3. Application.

These rules apply to all applications for and loans made and bonds issued pursuant to the program, the use of loan and bond proceeds, and all eligible borrowers and lenders participating in the program.

History

Statutory Authority: MS s 41B.07
History: 18 SR 774

Minn. R. 1654.0020 Definitions

Subpart 1. Scope.

The definitions in this part apply to parts 1654.0010 to 1654.0070.

Subp. 2. Applicant.

"Applicant" means an individual, corporation, limited liability company, cooperative, partnership, or joint venture who submits a completed application for assistance under the program to the authority.

Subp. 3. Application.

"Application" means an application for financial assistance under the program in the form prescribed by the authority or its executive director.

Subp. 4. Authority.

"Authority" means the Rural Finance Authority established by Minnesota Statutes, section 41B.025, acting through its board or its duly authorized officers.

Subp. 5. Board.

"Board" means the Rural Finance Authority Board as established in Minnesota Statutes, section 41B.025.

Subp. 6. Ethanol production facility.

"Ethanol production facility" means a facility as defined in Minnesota Statutes, section 41A.09, subdivision 2, paragraph (a).

Subp. 7. Executive director.

"Executive director" means the executive director of the authority, or any other officer authorized to act on behalf of the authority's board or its executive director.

Subp. 8. Program.

"Program" means the authority's ethanol production facility loan program.

History

Statutory Authority: MS s 41B.07
History: 18 SR 774

Minn. R. 1654.0030 Assistance Applications

Subpart 1. In general.

To apply for assistance from the authority under the program, an applicant must submit a completed application which is dated and signed by an owner, general partner, or an authorized officer of the applicant.

Subp. 2. Contents.

An application must contain at a minimum the following information:

A. a funding request indicating the desired financial assistance from the program, collateral offered for the financial assistance requested, capitalization of the project, use of funds, and future financing needs;

B. project cost summary;

C. financial statements of the applicant, including a balance sheet, an operating statement, a statement of the sources and uses of funds, and footnotes to the statements, if available, for the following time periods:

D. a complete business plan for the applicant, complying with subpart 3;

E. signed personal financial statements dated as of the date of the application for any person who owns 20 percent or more interest in the applicant;

F. a resolution of support or other comparable preliminary approval from the local government unit with respect to the project to be financed;

G. an authorization which will allow the authority to disseminate all or any part of the loan application package supplied by the applicant to any outside sources which the authority deems necessary in order to process, review, and analyze the application;

H. certification that the applicant will not discriminate in employment in a manner contrary to applicable federal, state, or local laws, regulations, rulings and decisions; and

I. a statement of all permits, licenses, and other similar authorizations which must be obtained in order to construct and operate the proposed facility and evidence that the applicant will be able to obtain such items.

Subp. 3. Business plan.

As part of the application, the applicant shall also submit to the authority a comprehensive business plan. The business plan must include, but is not limited to, the following:

A. a management summary of the plan including:

B. a description of the applicant including the following:

C. a market analysis including:

D. a description of the marketing strategy including:

E. the management plan including:

F. an operating plan including:

G. a schedule indicating the completion dates for realizing the significant aspects of the business plan; and

H. a discussion of the risks and problems inherent to the business plan, including the negative factors and plans to minimize the impact of those factors.

History

Statutory Authority: MS s 41B.07
History: 18 SR 774

Minn. R. 1654.0040 Collateral Requirements and Additional Information or Certifications

Subpart 1. Collateral requirements.

When providing financial assistance, the authority may require collateral as it considers necessary in accordance with generally accepted commercial lending practices to protect the interests of the authority. The collateral may take one or more of the following forms:

A. mortgage on real property;

B. security interest in personal property;

C. guarantees or other assurances of repayment of applicant, affiliates of the applicant, shareholders or partners who have 20 percent or more ownership in the applicant, or other interested parties with respect thereto;

D. bond insurance or other credit enhancements;

E. assignments of leases or rents on property of equipment, or of contracts and other assets of the applicant;

F. letters of credit;

G. escrow account; and

H. any other form of collateral that the authority deems necessary and appropriate.

Subp. 2. Additional information or certifications.

The following additional information, as applicable, is required by the authority before providing financial assistance, as well as any other information or item that the authority in its sole discretion considers advisable for prudent financial management of the authority's financial assistance:

A. a lease agreement on property or equipment;

B. a listing of property, including serial numbers for machinery and equipment, that will serve as collateral for the financial assistance;

C. certification of insurance for workers' compensation and employer's liability;

D. a statement provided by the Internal Revenue Service of tax clearance;

E. an appraisal of collateral offered to the authority for the financial assistance; and

F. a certificate of the insurers of collateral that insurance is in force and effect. Prior to expiration of any insurance policy, the applicant shall furnish the authority with evidence that the policy has been renewed, replaced, or is no longer required.

History

Statutory Authority: MS s 41B.07
History: 18 SR 774

Minn. R. 1654.0050 Application Processing

Subpart 1. Fees.

A. The applicant shall submit to the authority with the application a check payable to the Department of Agriculture in the amount of $2,000 as an application fee. The fee is not refundable.

B. A loan origination fee equal to 1-1/2 percent of the amount of appropriated funds utilized to assist the applicant must be submitted by the applicant at time of closing on the assistance.

C. The applicant must also agree to pay all other out-of-pocket costs which are required to process, review, and analyze the application and complete the closing on the financial assistance.

D. When bonds are sold as part of the assistance, all costs of issuance of the bonds shall be paid from bond proceeds or funds of the applicant at the time of closing on the financial assistance.

Subp. 2. Completed applications.

An application is complete when the authority receives the application fee and all required documentation and exhibits. If a completed application is received by the authority after an application period has expired, the application and application fee must be returned.

Subp. 3. Incomplete applications.

If an incomplete application is received, the authority shall notify the applicant of specific deficiencies in the application. If the additional information necessary to complete the application is not received within an application period, the application is deemed to be rejected.

Subp. 4. Review of eligibility of project and applicant.

The authority shall review all completed applications to determine if the project and the applicant are eligible and meet the requirements of Minnesota Statutes, section 41B.044, and these rules. If the project and applicant are eligible, the authority shall review the application for economic feasibility as provided in subpart 6.

Subp. 5. Ineligible project or applicant.

The authority shall notify the applicant in writing if the applicant or the project is ineligible. If the application is not amended within the application period, the application must be rejected and will not receive any further consideration.

Upon receipt of an amended application, the authority shall review the amended application under subpart 4.

Subp. 6. Economic feasibility review.

A. The authority shall review the application in accordance with generally accepted commercial lending practices and may check personal references. The authority may utilize outside consultants and others knowledgeable in commercial lending and ethanol production in the review of applications submitted.

B. The review must include such factors as:

Subp. 7. Rejection of application based on economic feasibility.

The authority shall notify the applicant in writing if the project is judged not to be economically feasible and the application is rejected.

If the application is rejected due to economic feasibility, the applicant may, within 30 days after written notification by the authority, request that the authority submit the rejected application to the board for review at the next regularly scheduled meeting of the board for which the agenda has not been established.

If so submitted, the board must evaluate the application at its board meeting, in accordance with subpart 8.

Subp. 8. Board evaluation.

The board shall review and consider approval of an application on the basis of effectuating the purposes of Minnesota Statutes, section 41B.044 and economic feasibility of the project. If the board disapproves the application, the authority shall so notify the applicant within five days of the board meeting. If the board approves the application, it shall pass a resolution giving approval to the project and stating the name of the project owner, a brief description of the project, the assistance to be provided and other provisions as the board in its discretion deems advisable. The amount of financial assistance approved by the board may be less than the amount requested by the applicant.

Throughout the application review and evaluation process, if neither the authority nor the board commits in writing to provide financial assistance to the applicant for the project described in the application, they shall have no liability to the applicant.

History

Statutory Authority: MS s 41B.07
History: 18 SR 774

Minn. R. 1654.0060 Funding of Financial Assistance by Bonds

If the authority intends to fund the financial assistance by issuing bonds, the board shall first pass a preliminary resolution. The preliminary resolution must not obligate the authority to issue bonds or to fund the financial assistance, but must only constitute an expression of current intention of the authority to issue bonds or to fund the financial assistance. If the authority subsequently determines that there are no adverse changes in the financial conditions or key personnel of the applicant, market conditions, availability of bond issuance authority, and other conditions that the authority deems necessary and the authority decides in accordance with generally accepted commercial lending practices to make financial assistance available, the board shall pass a final resolution that authorizes the issuance and sale of bonds to extend financial assistance. The final resolution must specify the conditions under which bonds will be issued. The preliminary resolution may contain a time limit with respect to the issuance of the bonds, may be revoked or amended by the board at any time prior to the final resolution of the board without liability to the authority, and may impose any conditions or requirements that the board deems desirable. The executive director shall notify the applicant of the board's approval and provide the applicant with a copy of the resolution passed.

History

Statutory Authority: MS s 41B.07
History: 18 SR 774

Minn. R. 1654.0070 Authority Participation

Subpart 1. Procedure.

If the financial assistance is in the form of participation with a lender, the procedures in this section must be followed.

Subp. 2. Lender eligibility.

A. Any bank, credit union, or savings association chartered by the state or federal government, a subdivision of the farm credit system (Agri Bank), the Federal Deposit Insurance Corporation, or any insurance company, fund, or other financial institution doing business as an agricultural lender within the state may apply to the authority for certification as an approved lender.

B. Upon a lender's demonstration of its ability to originate and service commercial real estate and equipment loans, the authority shall designate them as an approved lender for purposes of the ethanol production facility loan program.

C. Before offering loans to the authority for participation, each approved lender must enter into a master participation agreement. The agreement shall specify the contractual relationship between the parties and terms and conditions of loans to be made by the lender under the ethanol production facility loan program and offered to the authority for participation.

Subp. 3. Loan closing, purchase of participation, and loan management.

A. Upon receiving notification of approval by the authority of a loan participation, the lender shall proceed to close the loan. The lender must record and cross-reference all documents relating to the loan including the authority note and loan agreement. The lender must notify the authority that the loan is closed and recorded and submit copies of the recorded documents to the authority.

B. Within ten business days of receipt of written notice under item A, that the loan is closed and recorded, the authority shall pay the lender the authority's participation interest in the loan.

C. Within five working days after the receipt of finally collected funds, the lender shall complete and return a participation certificate as prescribed by the authority evidencing the authority's undivided pro rata interest in the ethanol production facility loan.

D. The lender shall manage the loan, including the authority participation interest, with the degree of care and diligence usually maintained by commercial real estate lenders. The lender shall have custody and control of all loan documents, except the original application, which shall be retained by the authority. The lender shall manage, administer, and enforce the loan documents in its own name and also on behalf of itself and the authority, including, without limitation, the right to foreclose or otherwise enforce remedies against the borrower.

E. The lender shall promptly notify the authority of occurrences that substantially affect the security, collection, or enforcement of any loan.

F. The lender shall obtain the prior written consent of the borrower and the authority before:

Subp. 4. Participation repurchase.

An originating lender is under no obligation to repurchase any authority participation interest in an ethanol production facility loan except as provided in this section.

A. A lender may, at its option and upon written approval by the authority, repurchase the authority's participation interest at any time.

B. A lender must repurchase the authority's participation interest whenever the loan is refinanced.

C. A lender must repurchase the authority's participation interest if the lender has made misrepresentations or fails to perform its obligations under the participation agreement, has received written notice from the authority, and has not corrected the representation of performance under the notice.

D. Any repurchase shall be for the principal balance of the authority's participation plus accrued interest and any penalties or costs incurred by the authority to secure repurchase.

Subp. 5. Review of loan and collateral.

A. At any time during the term of an ethanol production facilities loan, the authority or the state legislative auditor may inspect the books, records, documents, and accounting practices of the lender relative to the loan to determine compliance with the terms and conditions of the loan and participation agreement. Any inspections shall be during the lenders normal business hours. The lender must allow the authority to copy any documents relating to the loan and the authority's participation.

B. The lender and the authority may physically inspect the collateral securing the loan upon notice to the borrower. Any inspections must be conducted at a reasonable time.

History

Statutory Authority: MS s 41B.07
History: 18 SR 774: L 1995 c 202 art 1 s 25

Chapter 1655 LIVESTOCK EXPANSION LOAN PROGRAM

Minn. R. 1655.0010 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0011 Applicability and Purpose

Subpart 1. Applicability.

This chapter establishes the criteria and procedures to be used by the RFA in administering the livestock expansion loan program authorized by Minnesota Statutes, section 41B.045.

Subp. 2. Purpose.

The purpose of the RFA livestock expansion loan program and for the issuance of bonds to finance the program is to promote livestock in the state and encourage the adoption of efficient, state of the art production facilities and practices. This is accomplished by participating in loans made to applicants who meet the eligibility requirements in this chapter. The repayment of the loans must be secured by mortgage liens on real property.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1655.0020 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0021 Definitions

Subpart 1. Scope.

The definitions in this part apply to this chapter.

Subp. 2. Applicant.

"Applicant" means a potential borrower who submits an application to the RFA through an eligible lender.

Subp. 3. Application.

"Application" means the application for a loan participation under the livestock expansion loan program in the form provided by the RFA.

Subp. 4. Assets.

Subp. 5. Borrower.

"Borrower" means the person or persons liable on a mortgage loan made under the program.

Subp. 6. Collateral.

"Collateral" means all assets pledged as security for a borrower's obligation under a mortgage loan made under the program, including assets, guarantees, money, letters of credit, assignment of collateral, or pledge for a loan on which the lender has a security interest or lien.

Subp. 7. Executive director.

"Executive director" means the executive director of the RFA or another officer authorized to act on behalf of the RFA board or its executive director.

Subp. 8. Fixture.

"Fixture" means an article in the nature of personal property that has been affixed or annexed to real estate so that it is regarded as a part of the real estate. A thing is "affixed or annexed to real estate" when it is attached to it by roots, embedded in it, permanently resting upon it, or permanently attached to it, as by means of cement, plaster, nails, bolts, or screws.

Subp. 9. Liabilities.

Subp. 10. Livestock expansion.

"Livestock expansion" has the meaning given in Minnesota Statutes, section 41B.02, subdivision 10a.

Subp. 11. Livestock expansion loan program or program.

"Livestock expansion loan program" or "program" means the program authorized and created by Minnesota Statutes, section 41B.045.

Subp. 12. Livestock operation.

"Livestock operation" means the use of land or land improvements and personal property for the production of livestock as defined in Minnesota Statutes, section 17A.03, subdivision 5, dairy products, and poultry or poultry products. "Livestock operation" also includes:

A. the use of wetlands, pasture, forest land, wildlife, and homestead and other real property associated with the agricultural use of land; and

Subp. 13. Mortgage loan or loan.

"Mortgage loan" or "loan" means a loan participation under the program that is secured by a first mortgage on real property.

Subp. 14. Net worth.

"Net worth" means the total value of an applicant's assets and the assets of the applicant's spouse and dependents, less the liabilities of the same parties.

Subp. 15. Real estate or real property.

"Real estate" or "real property" means land and anything permanently affixed to the land, such as buildings, fences, and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, and other items that would be personal property if not attached.

Subp. 16. RFA.

"RFA" means the Rural Finance Authority established by Minnesota Statutes, section 41B.025.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1655.0030 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0031 Borrower Eligibility

To be eligible for assistance under the livestock expansion loan program, an applicant must meet the criteria in Minnesota Statutes, section 41B.045.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1655.0040 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0041 [Repealed, 30 SR 372]

[Repealed, 30 SR 372]

Minn. R. 1655.0050 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0051 Lender Eligibility

Subpart 1. Statutory eligibility.

Subp. 2. Approval.

If a lender demonstrates its ability to originate and service agricultural real estate loans, the RFA shall designate the lender as an approved lender for purposes of RFA programs.

Subp. 3. Participation agreement.

Before offering mortgage loans to the RFA for participation, each approved lender must enter into an RFA master participation agreement specifying the relationship between the parties and the terms and conditions of mortgage loans to be made by the lender under the livestock expansion loan program and offered to the RFA for participation.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1655.0060 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0061 Application Process and Offer of Participation

Subpart 1. Request for livestock expansion loan participation.

Subp. 2. Acquisition or construction.

The applicant shall not begin acquisition or construction of any part of the livestock expansion before RFA approval of the application. Once the application has been approved, upon notice to the lender of RFA approval, the applicant may move forward with acquisition or construction of the livestock expansion collateral requirements.

Subp. 3. Collateral requirements.

Subp. 4. Lender determination.

The lender shall complete the initial review of the proposal and determine the creditworthiness of the applicant and the value of the collateral to be used to secure the loan. If the lender agrees to make a mortgage loan to the applicant, the lender and the applicant shall jointly prepare the application and the required loan documents.

Subp. 5. Offer.

The lender, as the originator of the mortgage loan, shall present a completed application and loan documents to the RFA. Presentation of the documents constitutes an offer to sell a participation interest in the loan.

Subp. 6. Fees.

A nonrefundable application fee as established by Minnesota Statutes, section 41B.045, subdivision 4, must be submitted with each application. The loan origination fee established by Minnesota Statutes, section 41B.045, subdivision 4, must be submitted by the applicant at the closing of the loan. The loan origination fee and other loan closing expenses may be financed with proceeds of the loan.

Subp. 7. Terms and conditions of loan.

The maximum term of a loan participation is ten years. The maximum participation is as stipulated in Minnesota Statutes, section 41B.045, subdivision 2. The loan may have a balloon payment.

Subp. 8. Misrepresentation in application.

If a change occurs in the information provided by the lender to the RFA prior to the closing of a loan, the lender shall immediately update and correct that information. Misrepresentation in the application or failure to update any required information is grounds to reject an application, revoke a notice of approval, or refuse to close the loan.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1655.0070 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0071 Rfa Review, Notice, Appeal

Subpart 1. RFA review.

The RFA shall accept or reject all applications within 60 days after their receipt. If the documentation is not sufficient to make a determination, the RFA may request additional information to establish the creditworthiness and eligibility of an applicant.

Subp. 2. RFA acceptance.

The RFA shall accept applications based upon whether:

A. the applicant meets all eligibility criteria in this chapter and Minnesota Statutes, section 41B.045, subdivision 2;

B. the applicant demonstrates an ability to repay the the mortgage loan and other obligations;

C. the proposed livestock expansion meets specifications set by statute and rule;

D. none of the loan proceeds are being used to refinance existing debt; and

E. the RFA has sufficient funds available to purchase a participation in the loan.

Subp. 3. RFA notice.

The RFA shall notify the lender in writing whether or not an application is accepted. If the application is not accepted, the notice must state the reasons.

Subp. 4. Administrative appeal.

If an application is rejected, either the lender or the applicant may petition for administration reconsideration by the RFA. The petition must be in writing and must be sent within 30 days of the date of the RFA notice. The petition must state the grounds for the appeal, and may include additional relevant information. Within 15 working days of receiving the petition, the executive director shall send a written response to the petitioner upholding or reversing the original decision and giving the reasons for the decision.

Subp. 5. Formal appeal.

After administrative appeal, a petitioner may appeal the executive director's decision directly to the RFA board by written notice to the director within 15 days of receiving the director's reconsideration decision. The decision of the board is final.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1655.0080 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0081 Loan Closing, Purchase of Participation, and Loan Management

Subpart 1. Closing.

Upon receiving notification of RFA acceptance, the lender shall close the mortgage loan. The lender must record security documents relating to the loan. The lender must notify the RFA that the loan is closed and recorded by completing the lender certification section and returning the original RFA application, a copy of the note and loan agreement, and copies of the recorded documents and final title opinion to the RFA.

Subp. 2. Payment.

Within ten business days of receipt of written notice under subpart 1 that the mortgage loan is closed and recorded and receipt of all required documents, the RFA shall initiate payment to the lender for the RFA's participation interest in the loan.

Subp. 3. Participation certificate.

Within five working days after the receipt of finally collected funds, the lender shall complete and return a participation certificate as provided by the RFA witnessing the RFA's undivided pro rata interest in the livestock expansion mortgage loan.

Subp. 4. Loan management.

The lender shall manage the loan, including the RFA participation interest, with the degree of care and diligence usually maintained by agricultural real estate lenders. The lender shall have custody and control of all loan documents except the original application, which must be kept by the RFA. The lender shall manage, administer, and enforce the loan documents in its own name and also on behalf of itself and the RFA, including, without limitation, the right to accelerate a mortgage loan on default and to foreclose or otherwise enforce remedies against the borrower.

Subp. 5. Lender notification.

The lender shall promptly notify the RFA of occurrences that substantially affect the security, collection, or enforcement of any mortgage loan.

Subp. 6. Prior written consent.

The lender shall obtain the prior written consent of the borrower and the RFA before:

A. making or consenting to a release, substitution, or exchange of collateral that reduces the aggregate value of the collateral;

B. waiving a claim against the borrower or a guarantor, surety, or obligor in connection with the indebtedness; or

C. modifying or waiving a term of the notes or related instruments evidencing or securing the first mortgage loan.

History

Statutory Authority: MS s 41B.07; 41C.13
History: 20 SR 2427; 30 SR 372

Minn. R. 1655.0090 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0091 Participation Repurchase

A lender is under no obligation to repurchase an RFA participation interest in a livestock expansion mortgage loan except as provided in this part. A lender may, at its option and upon written approval by the RFA, repurchase an RFA participation interest at any time. A lender must repurchase the RFA participation interest whenever the first mortgage loan is paid in full or refinanced. A lender must repurchase the RFA participation interest if the lender:

A. has made misrepresentations or is aware that the applicant has made them or fails to perform its obligations under the participation agreement;

B. has received written notice from the RFA; and

C. has not corrected the representation or performance under the notice. A repurchase under this part must be for the outstanding and unpaid principal balance of the RFA participation plus accrued interest and any penalties or costs incurred by the RFA to secure repurchase.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Minn. R. 1655.0100 [Repealed, 19 SR 340; 20 SR 2427]

[Repealed, 19 SR 340; 20 SR 2427]

Minn. R. 1655.0101 Review of Loan and Collateral

Subpart 1. Inspection.

At any time during the term of a livestock expansion mortgage loan, the RFA or the state legislative auditor may inspect the books, records, documents, and accounting practices of the lender relative to the loan to determine compliance with the terms and conditions of the loan and the participation agreement. Inspections must be during the lender's normal business hours. The lender must allow the RFA to copy any documents relating to the mortgage loan and the RFA participation.

Subp. 2. Collateral.

The lender and the RFA may physically inspect the collateral securing the mortgage loan upon notice to the borrower. Inspections must be conducted at reasonable times.

History

Statutory Authority: MS s 41B.07
History: 20 SR 2427

Chapter 1656 VALUE-ADDED LOANS

Minn. R. 1656.0010 [Repealed, 20 SR 2290(NO. 43)]

[Repealed, 20 SR 2290(NO. 43)]

Minn. R. 1656.0011 Applicability and Purpose

Subpart 1. Applicability.

This chapter establishes the criteria and procedures to be used by the RFA in the administration of the value-added agricultural product loan program authorized by Minnesota Statutes, section 41B.046.

Subp. 2. Purpose.

The purpose of the value-added agricultural product loan program is to foster and maintain a diverse agricultural industry that is economically profitable by providing affordable credit to help farmers finance the purchase of stock in a cooperative proposing to directly or indirectly build or purchase and operate an agricultural product processing facility, located in Minnesota.

History

Statutory Authority: MS s 41B.046; 41B.07; 41C.13
History: 20 SR 2290(NO. 43); 30 SR 372

Minn. R. 1656.0020 [Repealed, 20 SR 2290(NO. 43)]

[Repealed, 20 SR 2290(NO. 43)]

Minn. R. 1656.0021 Definitions

Subpart 1. Scope.

The definitions in this part apply to this chapter.

Subp. 2. Agricultural commodity.

"Agricultural commodity" has the meaning given in Minnesota Statutes, section 17.90.

Subp. 3. Agricultural energy resources.

"Agricultural energy resources" has the meaning given in Minnesota Statutes, section 41B.046, subdivision 1.

Subp. 4. Agricultural product processing facility.

"Agricultural product processing facility" has the meaning given in Minnesota Statutes, section 41B.046, subdivision 1.

Subp. 5. Applicant.

"Applicant" means a potential borrower who submits an application to the RFA through an eligible lender.

Subp. 6. Application.

"Application" means the application for a stock loan in the form provided by the RFA.

Subp. 7. Assets.

Subp. 8. Borrower.

"Borrower" means the person or persons liable on a stock loan made under this program.

Subp. 9. Executive director.

"Executive director" means the executive director of the RFA or any other officer authorized to act on behalf of the RFA board or its executive director.

Subp. 10. Farm-generated wind energy production facility.

"Farm-generated wind energy production facility" has the meaning given in Minnesota Statutes, section 41B.046, subdivision 1.

Subp. 11. Liabilities.

"Liabilities" means the debts or other obligations for which an applicant is responsible including accounts payable, notes or other indebtedness owed to any source, taxes, rent, amount owed on real estate contracts or mortgages, judgments, and accrued interest payable.

Subp. 12. Net worth.

"Net worth" means the total value of an applicant's assets and the assets of the applicant's spouse and dependents, less the liabilities of the same parties.

Subp. 13. Note and loan agreement.

"Note and loan agreement" means the form provided by the RFA that is signed by a borrower evidencing the terms of the stock loan and the borrower's obligation to repay the loan.

Subp. 14. Participation agreement.

"Participation agreement" means the document entered into between the RFA and an approved lender that establishes the relationship between the parties and the terms and conditions of stock loans to be offered to the RFA for participation under the value-added stock loan participation program.

Subp. 15. RFA.

"RFA" means the Rural Finance Authority established by Minnesota Statutes, sections 41B.01 to 41B.23.

Subp. 16. RFA participation.

"RFA participation" means the RFA's undivided interest in the principal of a stock loan, all rights and interests in the loan documents, all payments arising under the loan, the stock securing the loan, and any other collateral pledged to secure the loan.

Subp. 17. Stock loan or loan.

"Stock loan" or "loan" means a loan secured by the stock purchased, a personal note executed by the borrower, and whatever other security is required by the lender or the RFA, made by an eligible lender to an eligible borrower, offered to the RFA for participation, and in which the RFA has purchased a participation.

Subp. 18.

[Repealed, 30 SR 372]

Subp. 19. Value-added agricultural product.

"Value-added agricultural product" has the meaning given in Minnesota Statutes, section 41B.046, subdivision 1.

Subp. 20. Value-added stock loan participation program; value-added agricultural product loan program; or program.

"Value-added stock loan participation program," "value-added agricultural product loan program," or "program" means the program authorized and created by Minnesota Statutes, section 41B.046.

History

Statutory Authority: MS s 41B.046; 41B.07; 41C.13
History: 20 SR 2290(NO. 43); 30 SR 372

Minn. R. 1656.0030 [Repealed, 20 SR 2290(NO. 43)]

[Repealed, 20 SR 2290(NO. 43)]

Minn. R. 1656.0031 Borrower Eligibility

To be eligible for assistance through a loan participation under the value-added stock loan participation program, an applicant must meet the requirements of Minnesota Statutes, section 41B.046, subdivision 4, and have a total net worth not to exceed the total net worth established for the basic beginning farmer participation program, which is available by calling the RFA office for a current quote.

History

Statutory Authority: MS s 41B.046; 41B.07; 41C.13
History: 20 SR 2290(NO. 43); 30 SR 372

Minn. R. 1656.0040 [Repealed, 20 SR 2290(NO. 43)]

[Repealed, 20 SR 2290(NO. 43)]

Minn. R. 1656.0041 Lender Eligibility

Subpart 1. Statutory eligibility.

Subp. 2. Approval.

Upon a lender's demonstration of its ability to originate and service agricultural loans, the RFA shall designate it as an approved lender for purposes of RFA programs.

Subp. 3. Participation agreement.

Before offering stock loans to the RFA for participation, each approved lender must enter into an RFA master participation agreement. The agreement shall specify the relationship between the parties and the terms and conditions of stock loans to be made by the lender under the value-added stock loan participation program and offered to the RFA for participation.

History

Statutory Authority: MS s 41B.046; 41B.07
History: 20 SR 2290(NO. 43)

Minn. R. 1656.0050 [Repealed, 20 SR 2290(NO. 43)]

[Repealed, 20 SR 2290(NO. 43)]

Minn. R. 1656.0051 Application Process and Offer of Participation

Subpart 1. Request for a value-added stock loan participation.

Subp. 2. Lender determination.

Subp. 3. Offer.

The lender, as the originator of the stock loan, shall present the application and loan documents to the RFA. Presentation of the documents constitutes an offer to sell a participation interest in the loan.

Subp. 4. Loan participation.

The maximum RFA participation is defined in Minnesota Statutes, section 41B.046, subdivision 5, paragraph (a). The interest rate on the loan participation must be 4.0 percent or one-half of the lender's effective rate (APR), rounded down to the nearest one-tenth of one percent, at the time of loan closing, whichever rate is lower. This rate shall remain the fixed rate for the duration of the loan participation.

Subp. 5. Terms of loan.

The maximum term of the loan is eight years. Loan payments of interest only are permitted for up to two years, with a amortized repayment schedule of interest and principal calculated for the remaining years. The lender may, for its portion of the loan, use a variable interest rate correlated to a specific index.

Subp. 6. Misrepresentation in application.

History

Statutory Authority: MS s 41B.046; 41B.07; 41C.13
History: 20 SR 2290(NO. 43); 30 SR 372

Minn. R. 1656.0060 [Repealed, 20 SR 2290(NO. 43)]

[Repealed, 20 SR 2290(NO. 43)]

Minn. R. 1656.0061 Rfa Review, Notice, and Appeal

Subpart 1. RFA review.

The RFA shall accept or reject an application within 30 business days after its receipt. If the documentation is not sufficient to make a determination, the RFA may request additional information to establish creditworthiness and eligibility of the applicant.

Subp. 2. RFA acceptance.

The RFA shall accept an application if:

A. the applicant meets all eligibility criteria of this chapter and Minnesota Statutes, section 41B.046, subdivision 4;

B. the applicant demonstrates an ability to repay the stock loan and other obligations based on the financial information submitted with the application;

C. the loan is for the purchase of stock in an agricultural product processing facility as defined in Minnesota Statutes, section 41B.046, subdivision 1;

D. no more than 95 percent of the purchase price of the stock purchased will be financed under this program; and

E. the RFA has sufficient funds available to purchase a participation in the loan.

Subp. 3. RFA notice.

The RFA shall promptly notify the lender in writing whether or not an application is accepted. If the application is not accepted, the notice must state the reasons.

Subp. 4. Administrative appeal.

If an application is rejected, either the lender or the applicant may petition for administration reconsideration. The petition must be in writing and must be sent within 30 days of the date of the RFA notice. The petition must state the grounds for the appeal, and may include additional relevant information. Within 15 working days of receiving the petition, the executive director shall send a written response to the petitioner upholding or reversing the original decision and giving the reasons for the decision.

Subp. 5. Formal appeal.

History

Statutory Authority: MS s 41B.046; 41B.07; 41C.13
History: 20 SR 2290(NO. 43); 30 SR 372

Minn. R. 1656.0070 [Repealed, 20 SR 2290(NO. 43)]

[Repealed, 20 SR 2290(NO. 43)]

Minn. R. 1656.0071 Loan Closing, Purchase of Participation, and Loan Management

Subpart 1. Closing.

Upon receiving notification of RFA acceptance, the lender shall close the stock loan. The lender must record needed security instruments relating to the loan. The lender must notify the RFA that the loan is closed and the required security instruments are recorded by completing the lender certification section and returning the original RFA application and copies of the recorded documents and note and loan agreement to the RFA.

Subp. 2. Payment.

Within ten business days of receipt of written notice under subpart 1 that the stock loan is closed and recorded, the RFA shall initiate payment to the lender for the RFA's participation interest in the loan.

Subp. 3. Participation certificate.

Within five working days after the receipt of RFA funds and participation certificate, the lender shall complete and return the certificate as provided by the RFA witnessing the RFA's undivided pro rata interest in the stock loan.

Subp. 4. Loan management.

The lender shall manage the loan, including the RFA participation interest, with the degree of care and diligence usually maintained by agricultural lenders. The lender shall have custody and control of all loan documents, except the original application which shall be retained by the RFA. The lender shall manage, administer, and enforce the loan documents in its own name and also on behalf of itself and the RFA, including, without limitation, the right to accelerate a stock loan on default and to foreclose or otherwise enforce remedies against the borrower.

Subp. 5. Lender notification.

The lender shall promptly notify the RFA of occurrences that substantially affect the security, collection, or enforcement of any stock loan.

Subp. 6. Prior written consent.

The lender shall obtain the prior written consent of the borrower and the RFA before:

A. making or consenting to a release, substitution, or exchange of collateral that reduces the aggregate value of the collateral;

B. waiving a claim against the borrower or a guarantor, surety, or obligor in connection with the indebtedness; or

C. modifying or waiving a term of the notes or related instruments evidencing or securing the stock loan.

History

Statutory Authority: MS s 41B.046; 41B.07; 41C.13
History: 20 SR 2290(NO. 43); 30 SR 372

Minn. R. 1656.0080 [Repealed, 20 SR 2290(NO. 43)]

[Repealed, 20 SR 2290(NO. 43)]

Minn. R. 1656.0081 Participation Repurchase

A. A lender is under no obligation to repurchase any RFA participation interest in a stock loan except as provided in this part.

B. A lender may, at its option and upon written approval by the RFA, repurchase an RFA participation interest at any time.

C. A lender must repurchase the RFA participation interest whenever the stock loan is paid in full or refinanced.

E. A repurchase must be for the outstanding and unpaid principal balance of the RFA participation plus accrued interest and any penalties or costs incurred by the RFA to secure repurchase.

History

Statutory Authority: MS s 41B.046; 41B.07
History: 20 SR 2290(NO. 43)

Minn. R. 1656.0090 Review of Loan and Collateral

Subpart 1. Inspection.

At any time during the term of a stock loan, the RFA or the state legislative auditor may inspect the books, records, documents, and accounting practices of the lender relative to the loan to determine compliance with the terms and conditions of the loan and the participation agreement. Inspections must be during the lender's normal business hours. The lender must allow the RFA to copy any documents relating to the stock loan and the RFA participation.

Subp. 2. Collateral.

The lender and the RFA may physically inspect the collateral securing the stock loan upon notice to the borrower. Inspections must be conducted at a reasonable time.

History

Statutory Authority: MS s 41B.07
History: 19 SR 883

Minn. R. 1656.0091 [Repealed, 30 SR 372]

[Repealed, 30 SR 372]

Minn. R. 1656.0095 Stock in Certain Livestock Processing Facilities Eligible

To be eligible for a loan participation under this part, an applicant must meet the criteria of this chapter and Minnesota Statutes, section 41B.046, subdivision 4a.

History

Statutory Authority: MS s 41B.046; 41B.07; 41C.13
History: 20 SR 2290(NO. 43); 30 SR 372

Minn. R. 1656.0100 Stock in Farm-Generated Wind Energy Production Facilities Eligible

To be eligible for a loan participation under this part, an applicant must meet the criteria of this chapter and Minnesota Statutes, section 41B.046, subdivision 4b.

History

Statutory Authority: MS s 41B.046; 41B.07; 41C.13
History: 20 SR 2290(NO. 43); 30 SR 372