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Witness: UNITED STATES OF AMERICA

Subparts A-M-[Reserved]
By:
Title:

Subpart N-Loans to Indian Tribes
Farmers Home Ad-
ministration or its

and Tribal Corporations
successor agency
under Public Law

SOURCE: 39 FR 3662, Jan. 29, 1974, unless 103-354, U.S. De

otherwise noted.
partment of Agri-
culture.

$ 1823.401 General. (42 U.S.C. 1480; delegation of authority by the This subpart contains policies and Secretary of Agriculture, 7 CFR 2.23; delega procedures of the Farmers Home Adtion of authority by the Assistant Secretary ministration (FmHA)or its successor for Rural Development, 7 CFR 2.70)

agency under Public Law 103-354 appli(41 FR 47460, Oct. 29, 1976)

cable to making initial and subsequent

insured loans to Indian tribes or tribal PART 1823-ASSOCIATION LOANS corporations for the acquisition of land AND GRANTS-COMMUNITY FA

within tribal reservations and Alaskan CILITIES, DEVELOPMENT, CON

communities. Any processing or servic

ing activity conducted pursuant to this SERVATION, UTILIZATION

subpart involving authorized assist

ance to FmHA or its successor agency Subparts A-M-[Reserved)

under Public Law 103–354 employees,

members of their families, known close Subpart N-Loans to Indian Tribes and

relatives, or business or close personal Tribal Corporations

associates, is subject to the provisions

of subpart D of part 1900 of this chapSec.

ter. Applicants for this assistance are 1823.401 General.

required to identify any known rela1823.402 Definitions. 1823.403 Eligibility.

tionship or association with an FmHA 1823.404 Loan purposes.

or its successor agency under Public 1823.405 Ineligible loan purposes.

Law 103_354 employee. The Secretary of 1823.406 Rates and terms.

the Interior or authorized representa1823.407 Use of acquired land.

tive will determine whether lands lie

within a tribal reservation or commu1823.408 Special requirements. 1823.409 Security.

nity. 1823.410 Appraisals.

[39 FR 3662, Jan. 29, 1974, as amended at 51 1823.411 Land rights.

FR 6733, Feb. 26, 1986; 58 FR 224, Jan. 5, 1993) 1823.412 Loan docket. 1823.413 Loan approval.

$ 1823.402 Definitions. 1823.414 Title to security property.

The following definitions are applica1823.415 Supervision and servicing.

ble to the subsequent provisions of this 1823.416 Check request and loan closing.

subpart. 1823.417 Civil rights.

(a) Land. The term "land" includes 1823.418 State requirements.

any or all rights or interests therein. EXHIBIT A TO SUBPART N-LOAN DOCKET (b) Tribe. The term “tribe" means, an

ITEMS-LOANS TO INDIAN TRIBES AND Indian Tribe recognized by the SecTRIBAL CORPORATIONS

retary of the Interior or a tribal corEXHIBIT B TO SUBPART N-TRIBAL COUNCIL poration established pursuant to the RESOLUTION NO.

Indian Reorganization Act, and/or a EXHIBIT C TO SUBPART N-ASSIGNMENT OF community in Alaska incorporated by TRIBAL INCOME AND FUNDS

the Secretary of the Interior pursuant EXHIBIT D TO SUBPART N-SUBORDINATION

to the Indian Reorganization Act. AGREEMENT

(c) Tribal. The term “tribal" refers to AUTHORITY: 7 U.S.C. 1989, 5 U.S.C. 301, 7 an Indian tribe or Alaskan community CFR 2.23, 7 CFR 2.70.

described in paragraph (b) of this secSOURCE: 35 FR 15091, Sept. 29, 1970, unless

tion, and “tribal members” refers to otherwise noted.

the members of such a tribe or community.

(d) Reservation. The term "reserva- further explained in exhibit M of subtion" means the lands or interests part G of part 1940 of this chapter. therein within the tribe's reservation as determined by the Secretary of the

(53 FR 7332, Mar. 8, 1988) Interior, or within a community in

$ 1823.406 Rates and terms. Alaska incorporated by the Secretary of the Interior pursuant to the Indian

Each loan will be amortized over a Reorganization Act.

period not to exceed 40 years. Upon re(e) Mortgage. The term “mortgage" quest of the applicant, the interest rate includes deeds of trust and other liens charged by FmHA or its successor on land.

agency under Public Law 103-354 will

be the lower of the interest rates in ef$ 1823.403 Eligibility.

fect at the time of loan approval or To be eligible for a loan, the tribe

loan closing. If an applicant does not must:

indicate a choice, the loan will be (a) Be without adequate uncommit

closed at the interest rate in effect at ted funds to acquire needed land within

the time of loan approval. Interest the reservation.

rates are specified in exhibit B of (b) Be unable to obtain sufficient

FmHA or its successor agency under credit elsewhere at reasonable rates

Public Law 103-354 Instruction 440.1 and terms to finance the proposed land

(available in any FmHA or its succesacquisition.

sor agency under Public Law 103_354 of(c) Show reasonable prospects of re

fice) for the type assistance involved. paying the loan as determined by:

(39 FR 3662, Jan. 29, 1974, as amended at 51 (1) A feasible plan for the use of the FR 6733, Feb. 26, 1986) tribe's land. (2) Satisfactory evidence of financial

$ 1823.407 Use of acquired land. ability to develop and operate the land. The land acquired with the FmHA or

(3) A satisfactory management and its successor agency under Public Law repayment plan.

103_354 loan may be leased or sold to

tribal members for dwelling, farming, $ 1823.404 Loan purposes.

grazing, recreational, and other purLoan funds may be used by the tribe

poses approved by the National Office to:

as beneficial to the tribe or its mem(a) Acquire land within the reserva

bers. The plan for use of the land must tion for use of the tribe or its members.

have the approval of the tribal council The land acquisition may be made for

or other authorized governing body, purposes such as elimination of frac

and should be in accordance with the tional heirships and rounding out farm

recommendations of appropriate Buing and ranching units.

reau of Indian Affairs (BLA) officials. It (b) Pay costs incidental to land ac

should also be consistent with the land quisition, such as those for appraisals,

use in the area unless other uses are title clearance, legal services, land sur

justified. The plan should make maxiveys, and loan closing.

mum use of cost sharing and technical

assistance of Federal and State pro$ 1823.405 Ineligible loan purposes. grams. Loan funds may not be used for any

$ 1823.408 Special requirements. improvement or development purposes, acquisition or repair of buildings or

(a) Loan authorization. The tribe will personal property, payment of operat- take appropriate action to authorize ing costs, refinancing of debts, pay

obtaining and giving security for the ment of finder's fees, or similar costs. loan, using exhibit B of this subpart N, Loans also may not be made for any

Tribal Council Resolution, as a guide. purpose that will contribute to exces- (b) Right to mortgage. If a mortgage is sive erosion of highly erodible land or to be obtained on trust or restricted to the conversion of wetlands to property and the tribe's constitution or produce an agricultural commodity, as charter does not specifically authorize

a mortgage of such property, the mortgage must be authorized by tribal referendum.

(c) Waiver of immunity. The appropriate tribal official(s) will execute on behalf of the tribe and in favor of FmHA or its successor agency under Public Law 103_354 a waiver of any immunity from suit or liability which it possesses. The waiver will be approved by the Secretary of the Interior or his authorized representative.

(d) Mortgages or assignments to third parties. At the time of loan closing an agreement will be obtained form the tribe that as long as any indebtedness on the loan is outstanding it will not, without the written consent of FmHA or its successor agency under Public Law 103–354;

(1) Give assignments or pledges to other parties of income, revenue, or other property assigned or pledged to FmHA or its successor agency under Public Law 103–354.

(2) Mortgage, sell, or otherwise dispose of any land (except sales to tribal members for market value) regardless of whether it is or is not mortgaged to FmHA or its successor agency under Public Law 103–354.

(3) This agreement will be submitted to the Office of the General Counsel (OGC) for review as to content and validity. For trust lands, a copy will be forwarded to the BIA. For other than trust lands, it will be recorded in the land records if OGC advises that such recordation is legally necessary.

(e) Land acquisition, debt service, and reserve accounts. The following accounts will be established at the time of loan closing. A properly bonded official of the tribe will receive the monies for each account and issue receipts therefor. The bonded official will deposit all such monies in the appropriate trust or counter-signature accounts. As a basis for withdrawals, the deposit agreement for each account will require the signatures of appropriate tribal official(s) and the FmHA or its successor agency under Public Law 103-354 County Supervisor or a BIA official, depending on whether the account is a BIA trust account or an FmHA or its successor agency under Public Law 103–354 supervised account in a commercial bank.

(1) Land acquisition account. The loan funds will be deposited in this account which will be established as a “Supervised Bank Account.” If funds in this account exceed $100,000, it shall be secured by the financial institution in advance in accordance with U.S. Treas ury Department Circular No. 176.

(2) Debt service account. A debt service account will be established at the time of loan closing for deposit of income assigned to FmHA or its successor agency under Public Law 103–354 to be used in making repayments on the loan and payments to the reserve account.

(3) Reserve account. This account will be established for debt service reserve purposes. On or before the first installment due date, an amount equal to one-tenth (710) of the amount to be paid annually on the loan will be deposited in this reserve account. An equal amount will be deposited in the account during each succeeding year until a full annual payment is accumulated.

(i) Funds in the reserve account may be used to make repayments on the loan when the tribe cannot meet the installments from other sources as they fall due. Any funds used for that purpose will be replaced as soon as possible before the next installment due date.

(ii) The reserve fund may be invested in short-term investments that are issued, guaranteed, or insured by the Federal or a State Government and name FmHA or its successor agency under Public Law 103-354 as co-owner. (39 FR 3662, Jan. 29, 1974, as amended at 46 FR 36106, July 14, 1981)

$ 1823.409 Security.

All loans will be secured in a manner that will adequately protect the interests of FmHA or its successor agency under Public Law 103–354. Ordinarily, the security will include a lien on land acquired with loan funds plus assignment(s) of income. However, the security may consist only of assignments of income if the State Director determines that it will provide as good or better security than the land acquired with loan funds. Such security may be supplemented by security interests in personal property which is available and needed to protect the interests of $ 1823.411 Land rights.

Title to land acquired may, with the approval of the Secretary of the Interior or his designee, be in the name of the United States in trust for the tribe.

FmHA or its successor agency under Public Law 103–354.

(a) Land plus assignments of income. When land security is taken, it will be coupled with assignment(s) of uncommitted tribal, trust, or other income sufficient to cover loan repayments and payments to the reserve account.

(b) Assignments of income without land security. One or more assignments of income determined to be sufficient to cover the installment repayments plus reserve on the loan will be taken using exhibit C in this subpart N as a guide. The assignment may consist of one or more of the following:

(1) Assignment of uncommitted income. A general assignment of uncommitted tribal, trust, or other income, together with a BIA Subordination Agreement using exhibit D in this subpart N as a guide. A statement will be obtained from BIA on the amount of such income that will be available to cover repayments and payments to the reserve account.

(2) Assignment of land sale or lease income. An assignment of any net proceeds from the sale, lease, or other disposition of real estate, including minerals, timber, water, water rights, or other interests in real estate, if a real estate mortgage is not taken on such property.

(3) Assignment of other income. An assignment or pledge of other income or revenue.

(c) Recordation of assignments. Each assignment of income will be approved by BIA and recorded in the appropriate public records. $ 1823.410 Appraisals.

The amount of loan funds used to acquire property will not exceed its market value as determined by FmHA or its successor agency under Public Law 103-354. Market value will be based on an appraisal made by authorized FmHA or its successor agency under Public Law 103–354 personnel, BIA appraisers or appraisers approved by the State Director. The value of any existing buildings that pass with the land will be deducted from the market value. (43 FR 18161, Apr. 28, 1978)

8 1823.412 Loan docket.

The loan docket will consist of those items set forth in exhibit A. Forms and guides are available in all FmHA or its successor agency under Public Law 103 354 County Offices. Part of the docket will be prepared by the tribe with the assistance of BIA in accordance with exhibits A(1), B, C, and D of this subpart N. FmHA or its successor agency under Public Law 103-354 will provide items in exhibit A(2) of subpart N. 8 1823.413 Loan approval.

State Directors are authorized to approve all loans except those in excess of $500,000 which must first be authorized by the National Office. Information to be furnished the National Office will include the completed loan docket, proposed letter of conditions to be met by the applicant, any comments of OGC, and the State Director's recommendations. The State Director will forward an executed Form FmHA or its successor agency under Public Law 103 354 440-1, "Request for Obligations of Funds," to the Finance Office for each loan approved. If approval was authorized by the National Office, a copy of the memorandum authorizing approval will be attached to the Form FmHA or its successor agency under Public Law 103-354 440-3. An executed Form FmHA or its successor agency under Public Law 103-354 440-1 will be forwarded to the applicant on the same date the loan is approved, that is, on the same date it is forwarded to the Finance Office. (39 FR 3662, Jan. 29, 1974, as amended at 41 FR 7488, Feb. 19, 1976)

§ 1823.414 Title to security property.

The applicant will provide evidence of title satisfactory to the FmHA or its successor agency under Public Law 103– 354 for all property that will serve as security for the loan.

(a) Real estate security. (1) Trust property. The applicant will request BIA to furnish Title Status Reports to the County Supervisor. The County Supervisor will review the reports in accordance with subpart B of part 1927 of this chapter. Form FmHA or its successor agency under Public Law 103-354 192713, “Waiver of Encumbrances, Excep tions, and Reservations,” will be used as appropriate. The County Supervisor will ask the State Director for advice if necessary.

(i) If administrative closing requirements can be met, BLA will prepare the deeds and obtain the needed signatures. The County Supervisor will supply BIA with Forms 1927-1, “Real Estate Mortgage for (State)”, and FmHA or its successor agency under Public Law 103_354 440–22, “Promissory Note (Association or Organization)." BIA will insert the appropriate land descriptions.

(ii) The partly completed real estate mortgage and note will be returned to the County Supervisor. The loan check can then be ordered and the loan closed. The mortgage and note will be completed and signed, but no funds will be disbursed.

(iii) A conformed copy of the note with the original mortgage and two copies will be forwarded to BIA. They will insert a certification on the mortgage and return it to the County Supervisor. BIA will also indicate that the deeds have been recorded and the priority of the Government's lien in a continuation of the Title Status Report. However, the certification about the lien priority may be made on the old Status Report if BIA prefers this.

(iv) The certified original mortgage will then be recorded by the County Supervisor in the county where the land is located if OGC determines that such recordation is necessary. Funds can be disbursed as soon as the mortgage is recorded or the determination is made that recordation is not necessary.

(2) Nontrust land. Title clearance will be obtained in accordance with subpart B of part 1927 of this chapter.

(b) Rights of way. The applicant will be responsible for obtaining adequate, continuous, and valid rights-of-way for operation, and maintenance of its property. The following documentary evidence will be furnished FmHA or its successor agency under Public Law 103– 354.

(1) A copy of the form of right-of-way instrument to be used if it differs from Form FmHA or its successor agency under Public Law 103-354 442–20, “Right-of-Way Easement.” Rights-ofway with restrictive provisions should be accepted only in very unusual circumstances. Whenever the form of the instrument differs from Form FHA or its successor agency under Public Law 103–354 442–20 or contains special provisions that are required by either the applicant or the grantor, copies of such instruments will be submitted to the FHA or its successor agency under Public Law 103_354 for review prior to acceptance and recording. Either specific rights-of-way containing a legal property description of a centerline description of the rights-of-way or general rights-of-way containing only a description of the tract or parcel of land affected, may be used.

(2) A certificate by a duly authorized official of the applicant that it has obtained and presently holds adequate and sufficient legal title to all rightsof-way, permits and other authorizations deemed necessary by the applicant and its attorney for an uninterrupted right-of-way for the operation and maintenance of the property. Use Form FmHA or its successor agency under Public Law 103_354 442-21, "Right-of-Way Certificate."

(3) An opinion by the applicant's attorney relating to the adequacy and legality of the rights-of-way covered by the right-of-way certificate. Use Form FmHA or its successor agency under Public Law 103_354 442-22, “Opinion of Counsel Relative to Rights-of-Way," to the extent possible.

(c) Lien on water rights. When a mortgage or an assignment will be taken on water rights, the applicant's attorney will furnish a statement regarding the nature of the water rights owned such as convenance of title, appropriation and decree, application and permit, public notice of appropriation and use, and so forth.

(d) Lien on chattel property. When liens will be taken on chattel property, the following will be furnished:

(1) Description of the property for use in preparing security instruments.

(2) Form FmHA or its successor agency under Public Law 103-354 440-13,

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