(b) The poster shall be at least 11 by 14 inches in size, and shall bear the logotype and legend set forth in § 613.3160 (b), and the following text:

We do business in accordance with the Federal "Fair Housing Law".

It is illegal, because of race, color, religion, or national origin, to:

Deny a loan for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling, or

Discriminate in fixing the amount, interest rate, duration, application procedures, or other terms or conditions of such a loan.

If you believe you have been discriminated against you may discuss the matter with the management of this institution. You may also send a complaint to:

Assistant Secretary for Equal Opportunity, Department of Housing and Urban Development, Washington, D.C. 20410.

or call your local HUD office. [37 F.R. 16933, Aug. 23, 1972]

Delegation.

Intent of delegation.

Policies for delegation of authority.

614.4040 Bank guideline responsibilities. 614.4050 Bank supervision of associations. Federal land bank and Federal intermediate credit bank credit review.

614.4060 Association responsibilities.

Subpart B-Chartered Territories

614.4070 Loans outside the established territory-Federal land banks, Federal land bank associations, and production credit associations. 614.4080 Loans outside of bank's territorybanks for cooperatives.

614.4330

Interest rate limitation for Federal intermediate credit banks. Production credit associations. Interest rate programs.

Subpart I-Loan Participations

General.

Utilization of the discount privilege.

614.4590 Direct loans to other financing

614.4600 614.4610

institutions.

General collateral.

Filing and recording assignments

of security instruments. 614.4620 Suspension of right to borrow and discount.

614.4630 Credit to other financing institutions in special circumstances. 614.4631 Alternate method.

614.4632

Limitation on alternate method. 614.4640 Insolvency of other financing institutions.

614.4660 General discount agreement.

AUTHORITY: The provisions of this Part 614 issued under secs. 5.9, 5.18, 5.26, 85 Stat. 619, 621, 624; 12 U.S.C. 2243, 2252, 2001 nt.

SOURCE: The provisions of this Part 614 appear at 37 F.R. 11424, June 7, 1972, unless otherwise noted.

Subpart A-General

§ 614.4000 Basic responsibilities.

The Act (sections 1.1(b), 5.18(5) and 5.19) vests certain responsibilities with the Farm Credit System and the Farm Credit Administration which pertain to the development of a credit system responsive to the credit needs of all types of eligible applicants having a basis for credit.

§ 614.4010 Supervision by the Farm Credit Administration.

The Farm Credit Administration is empowered to exercise general supervision over the administration of credit; to coordinate the activities of the banks in making studies of lending standards, including appraisal and credit standards; approve national and district standards and procedures; and to supplement the work of the districts under the foregoing where necessary to accomplish the purposes of the Act. § 614.4020

Delegation.

The Act authorizes and directs the delegation and redelegation of such of

the duties, powers, and authority of the Farm Credit Administration as may be determined to be in the interest of effective administration.

§ 614.4030 Intent of delegation.

The banks shall provide for the exercise of loan making authority by the associations commensurate with their demonstrated ability to extend and administer credit soundly on condition that adequate control and supervisory measures are developed and exercised.

§ 614.4031 Policies for delegation of authority.

It shall be the responsibility of each bank board to adopt a policy authorizing the bank to delegate loan making authority to bank personnel and associations. Such policy shall require the bank to define authorities to be delegated, provide for documented evaluation of the capability and responsibility of individuals or associations where authority is delegated, provide for reporting of actions taken under delegated authority, provide procedures for periodic review and enforcement of accountability for actions taken under delegated authority, and for withdrawal of authority where appropriate. Where associations are authorized to redelegate loan making authority to employees, bank procedure shall provide for associations to utilize similar control measures.

[37 F.R. 28492, Dec. 27, 1972]

§ 614.4040 Bank guideline responsibili ties.

Under policies of its board, each bank shall conduct studies and make and adopt standards for lending and develop and issue adequate credit manuals, operating procedures, and control mechanisms for guidance in the extension and administration of sound and constructive credit. The definition of a sound loan, and the five specific credit factors, along with the total provisions of these regulations on loan policies and operations shall constitute the guidelines under which district policies and procedures shall be constructed. The credit manuals setting forth policies and procedures shall prescribe the forms to be used, including a loan application and an adequate credit file; the minimum supporting credit information and verification required in relation to loan size, complexity and risk exposure; the format and procedures to be followed in loan

Where credit decisions are vested in associations by law or through delegated authority, district policies, and procedures shall be designed to regulate, control, and review the extension of credit District policies and procedures shall include guidelines with respect to particular enterprise financing, and limitations with respect to lending in specialized or hazardous areas. The banks shall supervise the credit operations, monitor association performance and take corrective action when deficiencies occur. District banks shall also assist and supervise associations in the credit training of employees and loan committees. § 614.4051

Federal land bank and Federal intermediate credit bank credit review.

(a) It shall be the duty of the supervising bank to adequately review and evaluate annually the credit quality of loans and related loan assets and the quality of credit administration in each land bank association and each production credit association. Each bank board shall adopt a policy prescribing credit review criteria and providing for the issuance of a report to the association board. The adequacy and reliability of bank reviews and the completeness of reporting will be major considerations by Farm Credit Administration examiners in determining the scope of their audit and examination of associations and banks. Bank policies shall be subject to approval by the Farm Credit Administration and need to include at least the following criteria:

(1) Evaluation and reporting shall at all times be under the supervision of a bank credit officer, properly trained and with proven capability in analyzing loans, credit administration, and personnel performance.

(2) A credit review program shall be prepared annually which will designate the scope of review to be made in each association. The extent of review may range from a minimum sampling in strong associations to a full review in weaker associations. All associations

shall be subject to a comprehensive review at intervals of no more than 3 years.

(i) Scope of review-production credit associations. The scope of review shall include a review of loans, acquired property, sales contracts, liquidating assets, and the total area of credit administration which will be predicated primarily upon the capability and responsibility of the association as reflected in the bank's rating of associations for the purpose of delegation of authority and general supervision, and a report from the association board at year end as to the number and amount of losses estimated in their loan portfolio.

(ii) Scope of review-Federal land bank associations. The scope of review shall include new loans made, partial release and subordination functions, forbearance cases, overall loan servicing, the total area of credit administration including appraisal accuracy which will be predicated primarily upon the capability and responsibility of the association as reflected in the bank's rating of associations for the purpose of delegation of authority and general supervision, and a report from the association board at year end as to the number and amount of losses estimated in their loan portfolio.

(3) An annual written report shall be prepared on each land bank association and production credit association detailing:

(i) The quality of credit,

(ii) The quality of credit administration, and

(iii) An evaluation of management and compliance with law, regulations and association and bank policies.

(4) Loans shall be classified in accordance with the following systemwide loan classification standards:

(1) Acceptable loans. Loans of highest quality, ranging down to and including those having significant credit weaknesses.

(ii) Problem loans. Loans having serious credit weaknesses requiring more than normal supervision but believed to be collectible in full.

(iii) Vulnerable loans. High risk loans still considered collectible but involving probability of loss in the event repayment from available sources does not materialize.

(iv) Loss loans. Loans on which all or any portion is deemed uncollectible.

(5) Statistical reporting shall comply with minimum uniformity requirements prescribed by Farm Credit Administration.

(6) Credit review procedures will be issued to bank personnel to facilitate the making of credit reviews and the issuance of reports. Where the bank and/ or association have adopted special lending programs (i.e., specialized enterprise financing, young farmer programs, etc.) bank procedures will provide that such loans be classified in accordance with standards prescribed in paragraph (a) (4) of this section but that the reports also contain a specific and separate analysis of each special lending program. Such analysis should cover the reasons for the program, the selectivity of borrowers included, the quality of service and control exercised over the loan, relative progress being made by individual borrowers, and the success or failure in meeting the objectives of the program.

(b) Each Federal intermediate credit bank policy shall provide for a credit review of other financing institutions borrowing or discounting paper. The bank's credit review program shall prescribe a scope of review for such institutions commensurate with the capability and responsibility of the institution and the ratio of peak debt to capital and collateral pledged. Frequency of review, and loan classification and reporting standards, will be generally the same as for production credit associations, recognizing that supervisory responsibility is not a factor.

[37 FR 28492, Dec. 27, 1972, as amended at 39 FR 29584, Aug. 16, 1974]

§ 614.4060 Association responsibilities.

Associations shall conduct their credit operations within their vested or delegated authority in compliance with the guidelines of these regulations and procedures of the district bank. Demonstrated capability in extending sound credit, including the extent to which association boards have established policies and procedures with adequate controls and accountability, shall be weighed heavily by the bank in delegating authority and exercising its supervisory responsibility over association credit operations.

Subpart B-Chartered Territories

§ 614.4070 Loans outside the established territory-Federal land banks, Federal land bank associations, and production credit associations.

(a) A loan to finance operations wholly within the territory of a bank or association may be made regardless of the residence of the applicant.

(b) A loan to finance operations which are partially within and partially without the territory of an association may be made if such operations are regarded by the association and the bank as one farming or livestock unit. Concurrence of the supervising banks in whose territories the operation is located shall be obtained.

(c) A loan to finance operations wholly outside the chartered territory of an association may be made, provided such loans are authorized under policies established by the bank board and approved by the Farm Credit Administration. If a loan is made to an eligible borrower whose operation is wholly outside the chartered territory of the lending association, concurrence of like associations and the supervising bank in whose territory the operation is located shall be obtained.

§ 614.4080 Loans outside of bank's territory-banks for cooperatives.

(a) A bank is authorized to make loans to cooperatives headquartered in the district served by the bank.

(b) Cooperatives operating in more than one district shall apply for loans to the bank in the district in which the headquarters office of the cooperative is located.

(c) A bank may make loans to an eligible cooperative headquartered in another district provided the following conditions are met.

(1) The interests of the borrowing cooperative would best be served.

(2) The bank in the district in which the cooperative is headquartered gives its consent.

(3) The Farm Credit Administration approves.

Subpart C-Lending Authorities

§ 614.4090 Federal land banks.

(a) The banks are authorized to make and participate with other Federal land banks in long-term real estate mortgage

loans in rural areas for a term of not less than 5 years nor more than 40 years. Subject to limitations applicable to making long-term real estate mortgage loans, the banks are authorized to make continuing commitments to lend and to extend financial assistance of a similar nature. Policies as prescribed by the bank's board shall be used in making loans, continuing commitments for loans, and in extending other financial assistance. Borrowers shall be permitted to make advance payments on their loans or, under agreement with the banks, make advance conditional payments to be applied on future maturities or to be available for return to the borrower for purposes for which the bank would increase their existing loans.

(a) The banks are authorized to make loans and extend other similar financial assistance to and discount for, or purchase from, production credit associations, with their endorsement or guaranty, any note, draft, and other obligation presented by such association. In addition, the banks may participate with such association(s) and one or more other intermediate credit banks in making loans to eligible borrowers.

(b) The banks are authorized to discount for, or purchase from commercial banks and other other financial institutions, with their endorsement or guaranty, notes and other obligations for loans which have been made for agricultural purposes in accordance with regulations contained in § 614.4540.

(c) All of the foregoing shall be subject to policies prescribed by the bank board.

§ 614.4110 Production credit associations.

Each production credit association, under policies established by the bank board and procedures prescribed by the bank, may make, guarantee, or participate with other lenders in short- and intermediate-term loans and other similar financial assistance to eligible borrowers for a term not exceeding 7 years.

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