[Title 7 CFR 1902.10]
[Code of Federal Regulations (annual edition) - January 1, 2002 Edition]
[Title 7 - AGRICULTURE]
[Subtitle B - Regulations of the Department of Agriculture--Continued]
[Chapter Xviii - RURAL HOUSING SERVICE, RURAL BUSINESS-COOPERATIVE]
[Subchapter H - PROGRAM REGULATIONS]
[Part 1902 - SUPERVISED BANK ACCOUNTS]
[Subpart A - Disbursement of Loan, Grant, and Other Funds]
[Sec. 1902.10 - Withdrawals.]
[From the U.S. Government Printing Office]
7AGRICULTURE122002-01-012002-01-01falseWithdrawals.1902.10Sec. 1902.10AGRICULTURERegulations of the Department of Agriculture--ContinuedRURAL HOUSING SERVICE, RURAL BUSINESS-COOPERATIVEPROGRAM REGULATIONSSUPERVISED BANK ACCOUNTSDisbursement of Loan, Grant, and Other Funds
Sec. 1902.10 Withdrawals.
(a) The District Director or County Supervisor will not countersign
checks on the supervised bank account for the use of funds unless the
funds deposited by the borrower from other sources were cash deposits,
or checks which the District Director or County Supervisor knows to be
good, or until the deposit checks have cleared.
(b) Withdrawals of funds deposited under the applicable deposit
agreement are permitted only by order of the borrower and
countersignature of authorized FmHA or its successor agency under Public
Law 103-354 personnel, or upon written demand on the financial
institution by the State Director.
(c) Upon withdrawal or maturity of interest-bearing accounts
established through the use of an Interest-Bearing Deposit Agreement,
such funds will be credited to the supervised bank account established
through the use of Form FmHA or its successor agency under Public Law
103-354 402-1.
(d) The issuance of checks on the supervised bank account will be
kept to the minimum possible without defeating the purpose of such
accounts. When major items of capital goods are being purchased, or a
limited number of relatively costly items of operating expenses are
being paid, or when debts are being refinanced, the checks will be drawn
to the vendors or creditors. If minor capital items are being purchased
or numerous items of operating and family living expenses are involved
as in connection with a monthly budget, a check may be drawn to the
borrower to provide the funds to meet such costs.
(1) A check will be issued payable to the appropriate payee but will
never be issued to ``cash.'' The purpose of the expenditure will be
clearly shown on Form FmHA or its successor agency under Public Law 103-
354 402-2 and indicated on the fact of the check. When checks are drawn
in favor of the borrower to cover items too numerous to identify, the
expenditure will be identified on the check, as ``miscellaneous.''
(2) Normally, OL and EM loan funds will not be withdrawn from the
supervised bank account until the lien search has been made and a
determination reached that the required security has been obtained. This
applies also to withdrawal of funds in secured individual loan cases.
However, in those instances when the applicant is unable to pay for the
lien search and filing fees from personal funds, a check for this
purpose may be drawn on the supervised bank account to meet these loan
making requirements.
(3) Ordinarily, a check will be countersigned before it is delivered
to the payee. However, in justifiable circumstances such as when
excessive travel on the part of the borrower, District Director of
County Supervisor would be involved, or purchase would be prevented, and
the borrower can be relied upon to select goods and services in
accordance with the plans, a check may be delivered to the payee by the
borrower before being countersigned.
(i) When a check is to be delivered to the payee before being
countersigned, the District Director or County Supervisor must make it
clear to the borrower and to the payee, if possible, that the check will
be countersigned only if the quantity and quality of items purchased are
in accordance with approved plans.
(ii) Checks delivered to the payee before countersignature will bear
the following legend in addition to the legend for countersignature:
``Valid only upon countersignature of Farmers Home Administration or its
successor agency under Public Law 103-354.''
(iii) The check must be presented by the payee or a representative
to the District or County Office of the FmHA
[[Page 66]]
or its successor agency under Public Law 103-354 servicing the account
for the required countersignature.
(iv) Such check must be accompanied by a bill of sale, invoice, or
receipt signed by the borrower identifying the nature and cost of goods
or services purchased or similar information must be indicated on the
check.
(4) For real estate loans or grants, whether the check is delivered
to the payee before or after countersignature, the number, and date of
the check will be inserted on all bills of sale, invoices, receipts, and
itemized statements for materials, equipment, and services.
(5) Bills of sale, and so forth, may be returned to the borrower
with the canceled check for the payment of the bill.
(6) Checks to be drawn on a supervised bank account will bear the
legend:
Countersigned, not as co-maker or endorser.
_______________________________________________________________________
(Title)
_______________________________________________________________________
Farmers Home Administration or its successor agency under Public Law
103-354
[46 FR 36106, July 14, 1981, as amended at 54 FR 47959, Nov. 20, 1989]