Subordination of Direct Loan Basic Security To Secure a Guaranteed Line of Credit

This rule revises Farm Service Agency (FSA) regulations regarding loan security servicing in two ways that are intended to increase the use of subordinations to move direct farm loan program borrowers to the private sector. First, the Agency will allow subordinations of direct loan basic chattel and real estate security if necessary to secure a guaranteed operating line of credit. Second, this rule revises FSA farm loan regulations to allow subordination of Agency loan security so another lender may refinance a borrower's debt. This change is needed because recent legislation places restrictions on the uses of direct loans for refinancing.