Non-Performing Loans Chapter
Non-performing loans include any CROP loan which is delinquent, or for which payment is not expected due to bankruptcy, foreclosure, voluntary liquidation, or death of the Farmer.
Under no circumstance will the Lender assign, dispose of, or waive any interest in the CROP loan security which would jeopardize future collection of the loan without written consent from WHEDA.
If any of the Non-performing loan procedures are not followed, the Lender risks losing the guarantee.
A delinquent loan is any loan for which the established payment schedule is not current. Collection procedures for delinquent loans include:
Lender must notify the Farmer using the Lender's standard delinquency notice. The notification of delinquency will follow the Lender's usual timetable for sending such notices, but in no event will the notice be sent later than the 15th day following the date the CROP loan became delinquent. The Lender must follow the procedure until the CROP loan payments are current.
A separate notice must be sent to each person who signed the CROP loan Note and any security agreements or instruments; and, when the Farmer is married, to the Farmer's spouse.
The notice to the Farmer must be sent to the Farmer's primary residence.
WHEDA does not require the Lender to report delinquent payments during the CROP year. However, if the Lender needs to request a guarantee payment in the future, WHEDA may request documentation of all collection efforts.
Lender will pursue to the fullest extent possible any and all reasonable alternatives for collecting each delinquent CROP loan. This includes, but is not limited to, filing suit against the Farmer for collection and foreclosure of the Lender's security, and filing a lien against all the Farmer's assets for collection of any deficiency judgment.
For more information about the collection options available to the Lender, consult your legal counsel.
NOTE: |
When pursuing legal action against a Farmer, any financial liability incurred by the Lender remains the sole responsibility of the Lender. WHEDA is not responsible for legal expenses incurred by the Lender. |
Any proceeds obtained as a result of the sale of the collateral securing the CROP loan will be applied toward reducing the outstanding balance of the CROP loan. This will be done prior to applying such proceeds against the outstanding balance of any other debt the Farmer may owe the Lender.
If there is an outstanding balance on the CROP loan after the collateral is sold, it is the Lender's responsibility to determine whether or not the balance can be collected. If full payment is not expected, the Lender must notify WHEDA in writing using a Request for Guarantee Payment (CROP Form 7) no later than June 30 following the year of origination of the CROP loan.
Once the principal on the Guaranteed Loan becomes ninety (90) days or more past due, the loan must be placed on non-accrual, with all future payments applied to the principal balance. The Lender must notify WHEDA if there are reasons why the loan should not be placed on non-accrual or if it should be removed from non-accrual status.
The Lender is entitled to apply proceeds from the sale of the collateral toward satisfying up to ninety (90) days of accrued interest due from the Farmer.
