C.F.R. » Title 7 » CHAPTER XVIII—RURAL HOUSING SERVICE, RURAL BUSINESS-COOPERATIVE SERVICE, AND RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE › SUBCHAPTER H—PROGRAM REGULATIONS › PART 1962—PERSONAL PROPERTY › Subpart A—Servicing and Liquidation of Chattel Security

7 C.F.R. § 1962.18

Unapproved disposition of chattel security

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(a) General. When the County Supervisor learns that a borrower has made a disposition of chattel security in a manner not provided for on the applicable Agency form or becomes aware of the misuse of proceeds by a borrower, corrective action must be taken to protect the Government's interest.

(b) Notice to borrowers. When a borrower has not properly accounted for the use of proceeds from the sale of chattel security, the County Supervisor must request restitution by use of a letter similar to Guide Letter 1962-A-5.

(1) If the borrower makes restitution or provides sufficient information to enable the County Supervisor to post-approve the transaction on the applicable Agency form, no further action will be taken against the borrower. Post-approval can only be given under the conditions set out in 1962.17(b) of this subpart. Only one such transgression can be allowed in any period covered by the RD 431-2, or other similar plan of operation acceptable to Rural Development, between annual security inspections, whichever is appropriate, and this must be made clear to the borrower.

(2) If the borrower does not make restitution, if the County Supervisor cannot post-approve the transaction, or if the borrower makes a second unauthorized disposition of security or a misuse of proceeds after settling the first offense as provided in paragraphs (a) and (b) of this section, the County Supervisor will proceed in accordance with § 1962.49 of this subpart.

[54 FR 14791, Apr. 13, 1989]
Notes of Decisions
Cited in 8 cases, 1985–1991 · leading case: United States v. Gary A. Edgmon & Jimmy W. Edgmon, 952 F.2d 1206 (10th Cir. 1991).
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United States v. Gary A. Edgmon & Jimmy W. Edgmon, 952 F.2d 1206 (10th Cir. 1991). “7 C.F.R. § 1962.18 (b). The notice should also inform the borrower that if restitution is *1212 not made, the matter will be referred for criminal prosecution.”
United States v. Walter Dunlap & Sons, Inc., in 85-1671. United States of Am. v. New Holland Sales Stables, Inc., in 85-1673, 800 F.2d 1232 (3rd Cir. 1986). “Kimbell’s holding is in effect a finding that in the area of federal lending programs regulations such as 7 C.F.R. § 1962.18 (b) (1985), enacted under a general enabling provision, do not constitute the sort of explicit “congressional directive” that will displace the…”
United States v. Sec. State Bank, 686 F. Supp. 733 (N.D. Iowa 1988). · cites it 3× “*737 Finally, defendant relies upon 7 CFR § 1962.18 (b) (1985) and 7 CFR § 1962.”
Ayers v. Philadelphia Hous. Auth., 908 F.2d 1184 (3rd Cir. 1990). “In Walter Dunlap the defendants were commission brokers who sold, at auction, livestock that had been pledged as collateral to the FmHA.”
Missouri Farmers Assn., Inc. v. United States, 475 U.S. 1053 (1986). “The regulation on which the Eighth Circuit relied is 7 CFR § 1962.18 (b) (1985), which at the time the case was decided provided in relevant part: “When borrowers [from the FmHA] sell security, the sale will be made subject to the FmHA lien.”
United States v. Missouri Farmers Ass'n, 764 F.2d 488 (8th Cir. 1985). “7 C.F.R. § 1962.18 (b) (1985) provides: * * * when borrowers sell security, the sale will be made subject to the FmHA lien.”
United States v. Missouri Farmers Ass'n, Inc., 800 F.2d 185 (8th Cir. 1986). · cites it 5× “The district court also correctly identified 7 C.F.R. § 1962.18 (b) (1982) 2 as the regulation which sets out the method for release of a lien on property and proceeds defined as normal income security.”
United States v. Mikolaitis, 682 F. Supp. 798 (M.D. Penn. 1988). “The court further stated: Kimbell’s holding is in effect a finding that in the area of federal lending programs regulations such as 7 C.F.R. § 1962.18 (b) (1985), enacted under a general enabling provision, do not constitute the sort of explicit “congressional directive” that…”
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