[Federal Register Volume 59, Number 68 (Friday, April 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8348]


  Federal Register / Vol. 59, No. 68 / Friday, April 8, 1994 /
  
[[Page Unknown]]

[Federal Register: April 8, 1994]




                                                    VOL. 59, NO. 68

                                              Friday, April 8, 1994

DEPARTMENT OF AGRICULTURE

Farmers Home Administration

7 CFR Parts 1941, 1943, and 1945

RIN 0575-AB72

 

Revisions to the Direct Emergency Loan Instructions To Implement 
Administrative Decisions Pertaining to the Applicant Loan Eligibility 
Calculation, Appraisals, and Crop Insurance

AGENCY: Farmers Home Administration, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Farmers Home Administration (FmHA) amends its emergency 
loan (EM) regulations to revise the applicant eligibility calculation 
and appraisal requirements and to require crop insurance. The Agency 
also amends its Operating (OL), Farm Ownership (FO) and Soil and Water 
(SW) regulations to revise appraisal requirements. This action is 
necessary to ease the EM eligibility requirements, to expedite EM, OL, 
FO, and SW application processing time, and to reduce losses to family-
size farmers and the Government. The intended effect is to provide 
assistance to a greater number of farmers affected by major disasters 
in a timely manner.

EFFECTIVE DATE: April 8, 1994.

FOR FURTHER INFORMATION CONTACT: David R. Smith, Senior Loan Officer, 
Farmer Programs Loan Making Division, Farmers Home Administration, 
USDA, room 5428, South Building, 14th Street and Independence Avenue 
SW., Washington, DC 20250, telephone (202) 720-5114.

SUPPLEMENTARY INFORMATION:

Classification

    We are issuing this final rule in conformance with Executive Order 
12866, and the Office of Management and Budget (OMB) has determined 
that it is a ``significant regulatory action.'' Based on information 
compiled by the Department, OMB has determined that this final rule: 
(1) Would alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or rights and obligations of recipients thereof; 
and (2) is a significant public policy issue as related to the 
direction of the EM loan program.

Intergovernmental Consultation

    1. For the reasons set forth in the final rule related to Notice, 7 
CFR part 3015, subpart V (48 FR 29115, June 24, 1983) and FmHA 
Instruction 1940-J, ``Intergovernmental Review of Farmers Home 
Administration Programs and Activities'' (December 23, 1983), Farm 
Ownership Loans, Farm Operating Loans, and Emergency Loans are excluded 
from the scope of Executive Order 12372, which requires 
intergovernmental consultation with State and local officials.
    2. The Soil and Water Loan Program is subject to the provisions of 
Executive Order 12372 and FmHA Instruction 1940-J.

Programs Affected

    These changes affect the following FmHA program as listed in the 
Catalog of Federal Domestic Assistance:

10.404--Emergency Loans
10.406--Farm Ownership Loans
10.407--Farm Ownership Loans
10.416--Soil and Water Loans

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' It is the determination of FmHA 
that the final action does not constitute a major Federal action 
significantly affecting the quality of the human environment, and in 
accordance with the National Environmental Policy Act of 1969, Public 
Law 91-190, an Environmental Impact Statement is not required.

Civil Justice Reform

    This document has been reviewed in accordance with Executive Order 
(E.O.) 12778. It is the determination of FmHA that this action does not 
unduly burden the Federal Court System in that it meets all applicable 
standards provided in section 2 of the E.O.

Paperwork Reduction Act

    The information collection requirements contained in these 
regulations have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB control numbers 0575-0141, 0575-0085, 0575-0083, and 0575-
0090, in accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
3507). This final rule does not revise or impose any new information 
collection or recordkeeping requirements from those approved by OMB.

Discussion of Comments and Final Rule

    The Agency published a proposed rule in the Federal Register (59 FR 
5737-40) on February 8, 1994, which provided for a 15-day comment 
period ending on February 23, 1994. At that time, EM loan regulations 
stated that all financial disaster assistance/compensation would be 
considered in determining the applicant's eligibility for EM assistance 
and again in calculating the maximum amount of loss loan entitlement. 
Once eligibility was established, then all single enterprises showing a 
production loss would be considered in the calculation to determine the 
maximum loss loan entitlement.
    The regulations also required two complete real estate appraisals 
to establish the two required asset values, the value on the day before 
the Governor's request and the value one year and one day before such a 
request. Section 324(d) of the Consolidated Farm and Rural Development 
Act (7 U.S.C. 1921 et. seq.) (CONACT) states in part, that farm 
security, including land, livestock, and equipment, for EM loans will 
be valued based on the higher of the value of the assets on the day 
before the Governor requests assistance and the value of the assets one 
year before such day. While the two values must be considered, the 
values do not have to be based on two complete appraisals.
    The February 8, 1994, proposed rule included a revision to the EM 
loan eligibility calculation to not consider disaster related 
assistance/compensation in the eligibility calculation. This change 
would allow the Agency to assist more family-size farmers. In addition, 
it was proposed to allow for the use of a second abbreviated appraisal 
when the first appraisal (to establish the asset value for one day 
before the Governor's request) reflected adequate security for the 
loan. The proposed rule also required, instead of encouraged, the 
applicant to carry multi-peril crop insurance on next year's crops as a 
condition of receiving an EM production loss loan.
    In response to the proposed rule, 6 comments were received. Four 
respondents made the following general comments. The timing of the 
final rule will come too late to help most borrowers, as deadlines for 
filing applications will expire before the regulations become 
effective. The Agency should immediately adopt the regulations on an 
interim basis. The period for filing applications should be extended. 
Applicants rejected under the prior eligibility calculation should be 
reconsidered under the revised calculation, and FmHA must widely 
publicize the proposed rule changes to reach farmers that did not 
apply, including non-FmHA borrowers.
    In response, the Agency agrees that the regulation changes would 
assist more applicants, had they been implemented at an earlier date. 
Interim regulations must go through the same clearance process as final 
regulations. Interim regulations, therefore, could not be published any 
sooner than this final rule, so the comment is not being adopted. The 
8-month timeframe from the date of the disaster designation for filing 
of EM applications is statutory; thus, any extension of this timeframe 
would require Congressional action. The Agency is making every effort 
to assist those applicants who would benefit from the new eligibility 
calculation. In the last several months, the Agency has worked closely 
with FmHA State offices in the flood and drought-affected States to 
assure that potential applicants are aware of the EM program. FmHA 
field offices have encouraged applicants to apply prior to the 8-month 
deadline and have held EM applications in abeyance, where 
administratively possible, until the revised EM calculation changes are 
implemented.
    Two respondents made further comments regarding the proposed 
revisions to the EM appraisal requirements, stating that the present 
appraisal process and proposed rule were confusing. The Agency agrees 
and has attempted to clarify the process in the final rule.
    Three respondents recommended that the EM collateral value be based 
on a current market value appraisal, that an abbreviated appraisal does 
not meet current appraisal standards under the Uniform Standards of 
Professional Appraisal Practices (USPAP), and that the first value to 
be established for chattels be the same as for real estate, one day 
before the Governor's disaster designation request. The Agency agrees 
in part with the current market value approach and adopts this in 
principle. A real estate appraisal reflecting the Recommended Market 
Value (RMV) and meeting USPAP standards will be used as a bench-mark in 
arriving at the two required asset values. The two statements of value 
established by the County Supervisor need not meet USPAP appraisal 
standards. The Agency has eliminated the reference to an abbreviated 
appraisal in the final rule. The Agency does not adopt the 
recommendation that the first value established for chattels represent 
the value one day before the Governor's request. With respect to 
chattels, generally, the value one year and one day before the 
Governor's request will be the higher value ultimately chosen and 
should be the first value established.
    One respondent recommended that the County Supervisor establish the 
two required values after receipt of a real estate appraisal. The 
Agency adopts this recommendation in the final rule.
    This final rule specifically amends Sec. 1941.25(a) of subpart A of 
part 1941, Sec. 1943.25(c) of subpart A of part 1943, and 
Sec. 1943.75(c) of subpart B of part 1943 to allow the use of 
appraisals completed by State-certified general appraisers, providing 
such appraisals meet the guidelines of the USPAP and have had an 
acceptable desk review completed by an FmHA designated review 
appraiser. If such an acceptable appraisal is provided by the borrower, 
FmHA will not need to perform one. References to contract appraiser 
qualifications have been updated accordingly to require the contractor/
appraiser to be State-certified general. These sections also are 
changed to not require a new real estate appraisal if the latest 
appraisal report is not over one year old, unless the approval official 
requests a new appraisal, or unless significant changes in the market 
value of the real estate have occurred in the area within the 1-year 
period. These changes are intended to result in a more flexible 
consistent, timely, and less costly loan making process. Emergency loan 
applicants often also request other types of Farmer Programs loans, so 
these changes will indirectly benefit disaster victims.
    The Agency also amends Sec. 1945.163, as proposed, to no longer 
consider disaster related assistance/compensation in determining 
eligibility for EM loans. The section has been further clarified to 
refer to existing provisions for considering costs not incurred in 
determining eligibility. Such costs will be subtracted from the amount 
of actual production losses.
    The Agency adopts as final the proposed changes to Sec. 1945.169 
requiring applicants to purchase multi-peril crop insurance when 
receiving EM loan assistance.
    The Agency also amends Sec. 1945.175 by revising the requirement 
for two complete real estate appraisals to establish the two required 
asset values. The County Supervisor will establish the two required 
values upon receipt of a real estate appraisal denoting the RMV. The 
RMV will be used by the County Supervisor as a bench-mark in arriving 
at a statement of value for each of the required dates. The use of 
appraisals completed by State Certified General Appraisers is allowed 
providing such appraisals meet the guidelines of the USPAP, and have 
had an acceptable desk review completed by an FmHA designated review 
appraiser. Changes proposed to Sec. 1945.175 concerning chattel 
appraisals are adopted without change.

List of Subjects

7 CFR Part 1941

    Crops, Livestock, Loan programs--agriculture, Rural areas, Youth.

7 CFR Part 1943

    Credit, Loan programs--agriculture, Recreation, Water resources.

7 CFR Part 1945

    Agriculture, Disaster assistance, Loan programs--agriculture.

    Therefore, chapter XVIII, title 7, Code of Federal Regulations, is 
amended as follows:

PART 1941--OPERATING LOANS

    1. The authority citation for part 1941 continues to read as 
follows:

    Authority: 7 U.S.C. 1989; 5 U.S.C. 301; 7 CFR 2.23 and 2.70.

Subpart A--Operating Loan Policies, Procedures, and Authorizations

    2. Section 1941.25 is amended by revising the introductory text of 
paragraph (a) and paragraph (b) and adding new paragraphs (a)(5) and 
(a)(6) to read as follows:


Sec. 1941.25   Appraisals.

    (a) Except as provided in paragraph (a)(5) of this section, real 
estate appraisals will be completed by an FmHA employee, or a 
contractor authorized to make farm appraisals. Chattel and real estate 
appraisals will be made on Forms FmHA 440-21, ``Appraisal of Chattel 
Property,'' FmHA 1922-1, ``Appraisal Report--Farm Tract,'' and FmHA 
1922-11, ``Appraisal for Mineral Rights,'' respectively, to determine 
market value and borrower equity in the following instances:
* * * * *
    (5) Other real estate appraisals completed by other State-certified 
general appraisers may be used providing such appraisals meet the 
ethics, competency, departure provisions, etc., and Sections I and II 
of the Uniform Standards of Professional Appraisal Practices, and 
contain a mineral rights appraisal as set out in paragraph (a) of this 
section. Prior to acceptance, the appraisal must have an acceptable 
desk review (technical) completed by an FmHA designated review 
appraiser.
    (6) A new real estate appraisal is not required if the latest 
appraisal report available is not over 1 year old, unless the approval 
official requests a new appraisal, or unless significant changes in the 
market value of real estate have occurred in the area within the 1-year 
period.
    (b) Real estate appraiser qualifications. The contractor, when he/
she is not the appraiser, is responsible for substantiating the 
appraiser's qualifications. The contractor will obtain FmHA's 
concurrence that the appraiser has the necessary qualifications and 
experience before the contractor will utilize the appraiser in any 
appraisal work. The contractor/appraiser completing the report must be 
State-certified general.

PART 1943--FARM OWNERSHIP, SOIL AND WATER AND RECREATION

    3. The authority citation for part 1943 continues to read as 
follows:

    Authority: 7 U.S.C. 1989; 5 U.S.C. 301; 7 CFR 2.23 and 2.70.

Subpart A--Direct Farm Ownership Loan Policies, Procedures, and 
Authorizations

    4. Section 1943.25 is amended by redesignating current paragraphs 
(c)(2) through (c)(4) as paragraphs (c)(4) through (c)(6) respectively, 
revising paragraph (c)(1) and newly redesignated paragraph (c)(4), and 
adding new paragraphs (c)(2) and (c)(3) to read as follows:


Sec. 1943.25   Options, planning and appraisals.

* * * * *
    (c) Appraisals. (1) Except as provided in paragraph (c)(2) of this 
section, real estate appraisals will be completed on Forms FmHA 1922-1 
or FmHA 1922-8, ``Uniform Residential Appraisal Report,'' for farm real 
estate or residential farm real estate, respectively, by a designated 
FmHA real property appraiser, or FmHA State-certified general contract 
real property appraiser. Appraisals are necessary when real estate is 
taken as primary security, as defined in Sec. 1943.4 of this subpart, 
and when loans are serviced in accordance with subpart S of part 1951 
of this chapter. Real estate appraisals are not required when real 
estate is taken as additional security, as defined in Sec. 1943.4 of 
this subpart. However, the County Supervisor will document in the 
running record the estimated market value of the additional security 
and the basis for the estimate.
    (2) Other real estate appraisals completed by other State-certified 
general appraisers may be used providing such appraisals meet the 
ethics, competency, departure provisions, etc., and sections I and II 
of the Uniform Standards of Professional Appraisal Practices, and 
contain a mineral rights appraisal as set out in paragraph (c)(4) of 
this section. Prior to acceptance, the appraisal must have an 
acceptable desk review (technical) completed by an FmHA designated 
review appraiser.
    (3) A new real estate appraisal is not required if the latest 
appraisal report available is not over 1 year old, unless the approval 
official requests a new appraisal, or unless significant changes in the 
market value of real estate have occurred in the area within the 1-year 
period.
    (4) Real estate appraisals will be completed as provided in subpart 
E of part 1922 of this chapter. The rights to mining products, gravel, 
oil, gas, coal, or other minerals will be considered a portion of the 
security for Farmer Programs loans and will be specifically included as 
a part of the appraised value of the real estate securing the loans 
using Form FmHA 1922-11, ``Appraisal for Mineral Rights.''
* * * * *

Subpart B--Direct Soil and Water Loan Policies, Procedures and 
Authorizations

    5. Section 1943.75 is amended by redesignating current paragraphs 
(c)(2) through (c)(4) as paragraphs (c)(4) through (c)(6) respectively, 
revising paragraphs (c)(1) and newly redesignated paragraph (c)(4), and 
adding new paragraphs (c)(2) and (c)(3) to read as follows:


Sec. 1943.75  Options, planning, and appraisals.

* * * * *
    (c) Appraisals. (1) Except as provided in paragraph (c)(2) of this 
section, real estate appraisals will be completed on Forms FmHA 1922-1 
or FmHA 1922-8, ``Uniform Residential Appraisal Report,'' for farm real 
estate or residential farm real estate, respectively, by a designated 
FmHA real property appraiser, or FmHA State-certified general contract 
real property appraiser. Appraisals are necessary when real estate is 
taken as primary security, as defined in Sec. 1943.4 of this subpart, 
and when loans are serviced in accordance with subpart S of part 1951 
of this chapter. Real estate appraisals are not required when real 
estate is taken as additional security, as defined in Sec. 1943.4 of 
this subpart. However, the County Supervisor will document in the 
running record the estimated market value of the additional security 
and the basis for the estimate.
    (2) Other real estate appraisals completed by other State-certified 
general appraisers may be used providing such appraisals meet the 
ethics, competency, departure provisions, etc., and sections I and II 
of the Uniform Standards of Professional Appraisal Practices, and 
contain a mineral rights appraisal as set out in paragraph (c)(4) of 
this section. Prior to acceptance, the appraisal must have an 
acceptable desk review (technical) completed by an FmHA designated 
review appraiser.
    (3) A new real estate appraisal is not required if the latest 
appraisal report available is not over 1 year old, unless the approval 
official requests a new appraisal, or unless significant changes in the 
market value of real estate have occurred in the area within the 1-year 
period.
    (4) Real estate appraisals will be completed as provided in subpart 
E of part 1922 of this chapter. The rights to mining products, gravel, 
oil, gas, coal, or other minerals will be considered a portion of the 
security for Farmer Programs loans and will be specifically included as 
a part of the appraised value of the real estate securing the loans 
using Form FmHA 1922-11, ``Appraisal for Mineral Rights.''
* * * * *

PART 1945--EMERGENCY

    6. The authority citation for part 1945 continues to read as 
follows:

    Authority: 7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR 
2.23 and 2.70.

Subpart D--Emergency Loan Policies, Procedures, and Authorizations

    7. Section 1945.163 is amended by revising paragraphs (a)(2)(v), 
(a)(2)(xx) and (d) to read as follows:


Sec. 1945.163  Determining qualifying losses, eligibility for EM 
loan(s) and the maximum amount of each.

* * * * *
    (a) * * *
    (2) * * *
    (v) In determining eligibility, the amount of actual production 
loss will be calculated for the single enterprise, which is a basic 
part of the farming operation (see Sec. 1945.154(a) of this subpart), 
by subtracting any costs not incurred as explained in paragraphs 
(a)(2)(xii) and (a)(2)(xiv) of this section from the gross dollar 
amount of production losses for that enterprise as determined in 
paragraph (a)(2)(iv) of this section.
* * * * *
    (xx) When an applicant's farming operation(s) is conducted in a 
designated county(ies) and nondesignated county(ies), eligibility will 
be established based on losses to a single enterprise as explained in 
paragraph (a)(2)(v) of this section, which constitutes a basic part of 
the total farming operation, without regard to whether the single 
enterprise is located in the designated county. The disaster year's 
actual yields, both in the designated and nondesignated county(ies) 
only, will be used to determine losses. Costs not incurred (if 
applicable) will be subtracted as explained in paragraphs (a)(2)(xii) 
and (a)(2)(xiv) of this section. The amount of the production loss 
loan, however, will be limited to the production loss sustained in the 
designated county(ies) only minus any compensatory payments received or 
to be received for that portion of the farming operation located in the 
designated county(ies).
* * * * *
    (d) Compensation for losses. All financial assistance provided 
through any disaster relief program and all compensation for disaster 
losses received from any source (i.e., crop insurance indemnity 
payments, ASCS disaster program payments, etc.) by an EM loan applicant 
will reduce the applicant's loss by the amount of such compensation. 
All such compensation will be considered in determining the maximum 
amount of loss loan entitlement. Disaster related assistance/
compensation will not be considered in the EM eligibility calculation. 
The amount of any disaster program benefits received from ASCS, 
including the Emergency Feed Assistance Program (EFAP), Emergency 
Conservation Program (ECP), and Disaster Program payments will be 
considered as compensation for losses. (ASCS Deficiency Payments are 
not to be considered as compensation).
* * * * *
    8. Section 1945.169 is amended by revising paragraph (j) to read as 
follows:


Sec. 1945.169  Security.

* * * * *
    (j) Crop insurance. All recipients of EM loans must agree, as a 
condition of the loan, to obtain multi-peril crop insurance under the 
Federal Crop Insurance Act for the coming year's crop. When one of the 
conditions of paragraph (j)(1) of this section exists, the approval 
official will document in the applicant's file the basis for not 
requiring crop insurance.
    (1) Applicants will not be required to obtain crop insurance when 
any one of the following conditions exists:
    (i) Crop insurance is not available for the crop, i.e., there is no 
open season and no opportunity to acquire crop insurance.
    (ii) The financial projections on which the loan approval is based 
indicate that the premium cost of the required insurance would prevent 
the applicant from projecting a feasible plan, and thus disqualify the 
applicant for loan assistance.
    (2) When crops are the primary source of repayment for EM loans, 
FmHA will require an ``Assignment of Indemnity'' on the borrower's crop 
insurance policy(ies).
    (3) When EM loans are based on physical losses only, crop insurance 
will only be required when loan funds will be used for annual 
production expenses. In such cases, the same conditions will apply as 
stated in paragraph (j)(1) of this section.
    (4) When the payment of crop insurance premiums is not required 
until after harvest, the premiums may be paid by releasing insured 
crop(s) sale proceeds, notwithstanding the limits of Secs. 1962.17 and 
1962.29(b) of subpart A of part 1962 of this chapter. If the borrower's 
crop losses are sufficient to warrant an indemnity payment, the premium 
due will be deducted by the insurance carrier from such payment. The 
FmHA County Office will maintain a record on Form FmHA 1905-12, 
``Monthly Expirations,'' of the dates which each borrower's crop 
insurance premium(s) is due. This is in accordance with FmHA 
Instruction 1905-A, a copy of which is available in any FmHA office.
    (5) When an applicant purchases the necessary crop insurance as a 
condition to receiving an EM loan and, after the EM loan is closed, 
allows the policy(ies) to lapse or be cancelled before completion of 
the production year, the borrower will become immediately liable for 
full repayment of all principal and interest outstanding on any EM loan 
made on the condition of obtaining crop insurance. The loan approval 
official will insert this requirement in item 44 of Form FmHA 1940-1, 
``Request for Obligation of Funds,'' which is signed by the applicant 
and the FmHA loan approval official.
* * * * *
    9. Section 1945.175 is amended by revising paragraph (c) to read as 
follows:


Sec. 1945.175  Options, planning and appraisals.

* * * * *
    (c) Appraisals. (1) Except as provided in paragraph (c)(1)(i) of 
this section, real estate appraisals will be completed on Forms FmHA 
1922-1 or FmHA 1922-8, ``Uniform Residential Appraisal Report,'' for 
farm real estate or residential farm real estate, respectively, by a 
designated FmHA real property appraiser, or FmHA State-certified 
general contract real property appraiser. Appraisals are necessary when 
real estate is taken as primary security, as defined in Sec. 1945.154 
(a) of this subpart, for the EM loan or when loans are serviced in 
accordance with subpart S of part 1951 of this chapter.
    (i) Other real estate appraisals completed by other State-certified 
general appraisers may be used providing such appraisals meet the 
ethics, competency, departure provisions, etc., and sections I and II 
of the Uniform Standards of Professional Appraisal Practices, and 
contain a mineral rights appraisal as set out in paragraph (c)(1)(ii) 
of this section. Prior to acceptance, the appraisal must have an 
acceptable desk review (technical) completed by an FmHA designated 
review appraiser.
    (ii) The rights to mining products, gravel, oil, gas, coal, or 
other minerals will be considered a portion of the security and will be 
specifically included as a part of the appraised value of the real 
estate securing the loans using Form FmHA 1922-11, ``Appraisal for 
Mineral Rights.''
    (iii) When FLB stock is to be used in establishing the recommended 
market value (RMV) of the real estate being appraised, see 
Sec. 1945.169 (n)(1) of this subpart.
    (iv) A new real estate appraisal is not required if the latest 
appraisal report available is not over 1 year old, unless the approval 
official requests a new appraisal, or unless significant changes in the 
market value of real estate have occurred in the area within the 1-year 
period.
    (v) Real estate appraisals are not required when real estate is 
taken as additional security, as defined in Sec. 1945.154 (a) of this 
subpart. However, the County Supervisor will document in the running 
record the estimated market value of the additional security and the 
basis for the estimate.
    (2) The value of assets that secure EM loans associated with a 
disaster having any portion of its incidence period occurring on or 
after May 31, 1983 must be based on the higher of two values, all of 
which must be part of the file. These values will show:
    (i) The asset value on the day before a State Governor's Indian 
Tribal Council's or an FmHA State Director's first EM designation 
request, which is associated with the naming of one or more counties in 
a State as a disaster area where eligible farmers may qualify for EM 
loans; or
    (ii) The asset value 1 year (365 days) before the date set in 
paragraph (c)(2)(i) of this section.
    (3) The County Supervisor will establish the two values as stated 
in paragraph (c)(2) of this section upon receipt of a real estate 
appraisal denoting the RMV on the day the property was visited and 
inspected for appraisal purposes, as follows:
    (i) A statement of value will be completed for each date, 
reflecting the basis for any variations from the RMV denoted in the 
real estate appraisal.
    (ii) Parts 2 and 3 of Form FmHA 1922-1 may be used as a guide to 
reflect any variation from the established RMV and any additional 
documentation necessary in arriving at the statement of value for each 
date.
    (iii) When the existing real estate appraisal is not over 1 year 
old, and reflects the value either 1 day before the Governor's request 
or 1 year and 1 day before the Governor's request, the County 
Supervisor can so document the applicable statement of value.
    (iv) The County Supervisor will sign and date the statement of 
values and file it directly on top of the real estate appraisal.
    (4) Chattel appraisals will be completed on Form FmHA 1945-15, 
``Value Determination Worksheet (EM loans only),'' when chattels are 
taken as security. The property which will serve as security will be 
described in sufficient detail so it can be identified. Sources such as 
livestock market reports and publications reflecting values of farm 
machinery and equipment will be used as appropriate. The value of 
assets that secure EM loans associated with a disaster having any 
portion of the incidence period occurring on or after May 31, 1983 must 
be based on the higher of two values, all of which must be made part of 
the file. These values will be based on the same time period contained 
in paragraphs (c)(2)(i) and (ii) of this section.
    (i) In those cases where the value 1 year and 1 day before the 
Governor's request reflects adequate security, the appraiser or County 
Supervisor will reasonably estimate the value 1 day before the 
Governor's request.
    (ii) Chattels owned by the applicant, and nonfarm chattel property 
offered as security (such as planes, house trailers, boats, etc.) will 
be appraised at the present market value only. Chattels that the 
applicant/borrower did not own on the dates set forth in paragraphs 
(c)(2) (i) and (ii) of this section will be appraised at the present 
market value only.

    Dated: March 31, 1994.
Bob J. Nash,
Under Secretary for Small Community and Rural Development.
[FR Doc. 94-8348 Filed 4-7-94; 8:45 am]
BILLING CODE 3410-07-U