Page:United States Statutes at Large Volume 101 Part 3.djvu/382

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PUBLIC LAW 100-000—MMMM. DD, 1987

101 STAT. 1680 a«y.

PUBLIC LAW 100-233—JAN. 6, 1988 value and the fair market value of the property securing the loan on the date of such agreement.

, "(d) PRINCIPAL AND INTEREST WRITE-DOWN.— ,;, "(1) IN GENERAL.—

).,.

"(A) PRIORITY CONSIDERATION.—In

^ selecting

the

restructuring alternatives to be used in the case of a borc rower who has requested restructuring under this section, the Secretary shall give priority consideration to the use of principal and interest write-down, except that this procedure shall not be given first priority in the case of a borrower unless other creditors of such borrower (other than those creditors who are fully collateralized) representing a substantial portion of the total debt of the borrower held by such creditors, agree to participate in the development of the restructuring plan or agree to participate in a State mediation program. "(B) FAILURE OF CREDITORS TO AGREE.—Failure of creditors to agree to participate in the restructuring plan or mediation program shall not preclude the use of principal and interest write-down by the Secretary if the Secretary determines that this restructuring alternative results in the least cost to the Secretary. "(2) PARTICIPATION OF CREDITORS.—Before eliminating the option to use debt write-down in the case of a borrower, the

  • Secretary shall make a reasonable effort to contact the creditors

of such borrower, either directly or through the borrower, and encourage such creditors to participate with the Secretary in the development of a restructuring plan for the borrower. "(e) SHARED APPRECIATION ARRANGEMENTS.—

"(1) IN GENERAL.—As a condition of restructuring a loan in accordance with this section, the borrower of the loan may be required to enter into a shared appreciation arrangement that requires the repayment of amounts written off or set aside.

  • (2) TERMS.—Shared appreciation agreements shall have a

term not to exceed 10 years, and shall provide for recapture based on the difference between the appraised values of the real security property at the time of restructuring and at the time of recapture. "(3) PERCENTAGE OF RECAPTURE.—The amount of the apprecia-

tion to be recaptured by the Secretary shall be 75 percent of the appreciation in the value of such real security property if the recapture occurs within 4 years of the restructuring, and 50 percent if the recapture occurs during the remainder of the term of the agreement. "(4) TIME OF RECAPTURE.—Recapture shall take place at the end of the term of the agreement, or sooner— "(A) on the conveyance of the real security property; "(B) on the repayment of the loans; or "(C) if the borrower ceases farming operations. "(5) TRANSFER OF TITLE.—Transfer of title to the spouse of a borrower on the death of such borrower shall not be treated as a conveyance for the purpose of paragraph (4). "(f) DETERMINATION TO RESTRUCTURE.—If the appeal process results in a determination that a loan is eligible for restructuring, the Secretary shall restructure the loan in the manner consistent with this section, taking into consideration the restructuring recommendations, if any, of the appeals officer. >.ii:-ii. t:ts >