(a) Approval. When a debt settlement application is approved, the State Director will:

1. (1) Send the original approved Form RD 1956-1 to the Finance Office.
2. (2) Notify debtors in writing of settlement approval, including the specific amount and terms of the offer that were accepted, for compromise and adjustment offers under § 1956.124 and cancellations with application under § 1956.130(a) of this subpart.
3. (3) Not be required to notify debtors of settlement approval when debts are cancelled without application under § 1956.130(b) or charged off under § 1956.136 of this subpart.

(c) Rejection. When a debt settlement application is rejected, the State Director will:

1. (1) Insert the reasons for rejection on the Form FmHA or its successor agency under Public Law 103-354 1956-1.
2. (2) Retain the original Form RD 1956-1 in the State Office and return case files and copies of Form RD 1956-1 to the servicing official.
3. (3) Request the Finance Office to return any adjustment or compromise payment held by the Finance Office to the borrower, in care of the servicing official.
4. (4) Return any adjustment or compromise payment held by the State Office to the borrower, in care of the servicing official.
5. (5) Notify the debtor in writing of the reasons for the rejection for compromise and adjustment offers under § 1956.124 and cancellations with application under § 1956.130(a) of this subpart.