Wyo. Code R. 060-0003-7
Loan and Investment Board
Chapter 7: Farm Loans
Effective Date: 06/21/1993 to 05/12/1998
Rule Type: Superceded Rules & Regulations
Reference Number: 060.0003.7.06211993
Date Filed 06/21/93
Expr Date
Supr Date
Repeal Date
Document Type RULES
FARM LOAN BOARD
Section 1. Authority. This chapter is adopted pursuant to W.S. 11-34-101 et seq.
Section 2. Definitions. As used in this chapter:
(a) "Acquired lands" means lands to which the Board has acquired legal or equitable title.
(b) "Agricultural products" means crops produced from the cultivation and management of the soil, including products of floriculture, horticulture, and silviculture.
(c) "Board" means the Wyoming Farm Loan Board.
(d) "Director" means the Director of the State Land and Farm Loan Office.
(e) "Livestock" means horses, cattle, buffalo, sheep, and swine.
(f) "Office" means the State Land and Farm Loan Office.
(g) "Security lands" means lands mortgaged to the Board to secure repayment of a loan.
(h) "Single agricultural enterprise" means an agricultural operation with one set of improvements, equipment, machinery, and bank accounts.
Section 3. General Policy. The board shall extend farm loans to foster and encourage agriculture, dairying, and livestock raising in the State of Wyoming, and the development and improvement of farm lands. Farm loans shall be made in such a manner and to such parties as shall, in the judgment of the Board, inure to the greatest benefit of the state and represent a wise investment of state funds.
Section 4. Eligible Applicants.
(a) Individuals, to be eligible applicants, must be able to demonstrate that:
(i) They are citizens of the United States.
(ii) They have reached the age of majority.
(iii) They are actually and physically bona fide residents in Wyoming, or reside on a single agricultural enterprise that straddles the Wyoming state border and are registered to vote in Wyoming.
(b) Corporations, to be eligible applicants, must be able to demonstrate that a majority of the corporation's outstanding shares are owned by individuals who meet the qualifications listed in subsection (a) of this section.
(c) General partnerships and limited partnerships, to be eligible applicants, must be able to demonstrate that a majority of the interest in the partnership is owned by individuals who meet the qualifications listed in subsection (a) of this section.
(d) Trusts shall not be eligible applicants.
(e) Single loans or a combination of loans made to an individual, partnership, or corporation shall not exceed an outstanding principal balance of $400,000, provided that single loans or a combination of loans made to a single agricultural enterprise shall not exceed an outstanding principal balance of $400,000, regardless of the identity of the applicants.
Section 5. Eligible Purposes. Loans may be made only for the following purposes:
(a) To purchase lands used principally for raising agricultural products, for raising livestock, or for dairying.
(b) To purchase livestock, fertilizers, and equipment calculated to maintain or increase the earning capacity of the borrower's agricultural operation.
(c) To purchase, construct, or install improvements calculated to maintain or increase the earning capacity of the borrower's agricultural operation.
(d) To liquidate debts of the borrower incurred in the furtherance of the borrower's agricultural operation.
Section 6. Application Procedure.
(a) Applications.
(i) Each prospective borrower shall submit a written loan application, on the form furnished by the office.
(ii) Incomplete applications shall not be submitted to the Board for consideration.
(iii) Any false or misleading statements made by the applicant in an application shall be grounds for summary rejection of the application.
(iv) A deposit of One Hundred Dollars ($100) shall accompany all applications, which shall be returned if the application is withdrawn prior to a field appraisal being made. The deposit shall be retained by the Board if a field appraisal has been made.
(v) Applications, financial statements, appraisals, and all other information pertaining to an application which has not been submitted to the Board shall be held as confidential information. Upon consideration by the Board, the application and all information with respect thereto in the Board's files are public records available for inspection and reproduction as provided by law.
(b) Consideration (i) The Board's staff shall conduct a preliminary review of all applications received. If the staff identifies problems with the application which would result in a negative staff recommendation to the Board, the staff shall notify the applicant of the problem and the applicant shall have the opportunity to withdraw the application from further consideration.
(ii) All applications, not withdrawn under paragraph (i) of this subsection, shall be presented to the Board for its consideration.
(iii) The Board shall take the following into account, when considering applications
(A) The applicant's net worth.
(B) The applicant's ability to repay the loan based on viable, continuous income from any source.
(C) The applicant's credit history.
(iv) The Board shall take action on applications only once. The Board shall not reconsider an application that is substantially the same as an application previously acted upon. Applicants may submit a substantially different application, provided that it complies with all the requirements for filing a new application.
(a) Interest rate. The interest rate charged shall reflect the risk taken by the Board. Rates shall be:
(i) 8% per annum for loans given for up to 50% of the appraised value of the security land and improvements.
(ii) 9% per annum for loans given for over 50% to 60% of the appraised value of the security land and improvements.
(b) Length. The term of each loan shall be set by the Board with due regard given to repayment ability and the security offered, but in no event shall the term exceed 30 years.
(c) Repayment. Loans shall be payable in equal, annual installments.
(a) Every loan shall be evidenced by a promissory note for the principal sum of the loan.
(b) Every loan shall be secured by a first mortgage upon farm or ranch land within Wyoming of sufficient value to secure the loan. Proof of merchantable title must be provided by the borrower in the form of title insurance naming the Board as beneficiary.
(c) An appraisal by a qualified Board appraiser, with the advice of two residents of the immediate locality, shall be prepared for the Board. Appraisals shall reflect the current agricultural market value of the land to be mortgaged.
(d) The Board shall take a UCC security agreement on all irrigation equipment located on the security lands.
(e) The Board shall take security interests in secure leaseholds, reservoir company stock, and grazing association stock whenever necessary to protect the value of the security lands as an agricultural operation.
(a) The proceeds of a farm loan shall not be disbursed to the borrower until such time as the borrower can show a mature obligation, the satisfaction or partial satisfaction of which will result from the application of the loan proceeds. The borrower shall use the proceeds of any farm loan exclusively for the purpose or purposes set out in the application, and shall furnish evidence satisfactory to the Board to that effect.
(b) The Board's staff shall inspect and verify any reports and records required by the Board and submitted by the borrower before proceeds shall be released for payment.
(c) Loan proceeds shall be disbursed at a closing when all loan documents shall be executed by the borrower. Documents executed on behalf of corporations shall be executed by persons authorized by the corporation to borrow money and mortgage corporation property.
(d) The borrower shall pay the costs of recording all lien documents.
Section 10. Assumptions. When a borrower conveys legal or equitable title to property securing a farm loan, the purchaser may assume the repayment obligation to the Board if qualified under W.S. 11-34-110 and Section 4 of this chapter and the Board approves an assumption. If the loan is not assumed by the purchaser, the loan shall be paid off in full at the time of the conveyance.
Section 11. Partial Releases. A borrower may request a partial release of land from the mortgage given to the Board. Such requests shall be directed to the office, and may be approved by the Board if the borrower demonstrates a prompt payment history, a sound financial statement, and the release of land would be in the best interest of the Board.
Section 12. Deferred Payment of Principal. Pursuant to W.S. 11-34-113, repayment of principal, but not interest, on farm loans may be deferred in cases of emergency, subject to the following standards and procedures:
(a) For purposes of this section only, 'emergency' means loss of crops or livestock caused by any natural disaster, including, but not limited to, flood, drought, hail, wind, or freeze.
(b) The period for which repayment of principal may be deferred shall be set by the Board on a case-by-case basis, provided however that such period shall not exceed five years.
(c) To apply for a deferment of principal repayment, the borrower shall submit the following to the office.
(i) A letter requesting a deferment and explaining the reasons for the request;
(ii) Cash flow and financial statements on forms supplied by the office; and
(iii) An affidavit from someone, other than the borrower, with personal knowledge of the loss and its cause.
(d) The Board shall approve the application for deferment of principal repayment only if, in the sole judgment of the Board, the following criteria are met:
(i) Deferment of principal repayment will substantially enhance the ability of the borrower to repay the farm loan in full; and
(ii) Default on the loan would be reasonably likely if repayment of principal is not deferred.
(a) Pursuant to W.S. 11-34-113, farm loan borrowers may apply to the Board, during periods of economic emergency caused by depressed agricultural prices, for a deferral of a portion of the annual interest payment on their loans.
(b) For purposes of this section, 'economic emergency caused by depressed agricultural prices' means a period of time during which an unfavorable relationship exists between production costs and prices received for agricultural commodities that has resulted in a widespread need among farmers and ranchers for temporary credit.
(c) The Board may grant partial interest payment deferrals, on qualified loans, in an amount equal to a loan interest rate reduction of up to 3% per annum, for a period not exceeding 10 years.
(d) A farm loan is qualified for partial interest payment deferral if:
(i) The loan is in default or imminent default is likely if a partial interest payment deferral is not granted;
(ii) Loan principal will likely be lost should foreclosure take place; and
(iii) The borrower submits an acceptable plan that demonstrates that a partial interest payment deferral would result in:
(A) A positive cash flow for the borrower's operation, and
(B) An ability to pay the balloon payment required by paragraph (f) of this section, and
(C) The prevention or correction of default on the loan.
(e) Applications for partial interest payment deferral shall consist of:
(i) A letter requesting partial interest payment deferral, specifying the amount of annual interest payment to be deferred and the number of years of deferral being requested.
(ii) A current financial statement of the borrower.
(iii) A production and sales statement for the previous two years.
(iv) A cash flow projection for the current production year.
(v) The plan required by paragraph (d)(iii) of this section.
(f) Interest amounts deferred under this section shall be paid in a balloon payment at the end of the deferral period, along with 6% per annum interest on the amount of interest deferred.
(g) Any delinquent interest and penalty interest that may have accrued on the loan must be paid off before a partial interest payment deferral under this section can be granted.
(h) The borrower shall pay a fee equal to the amount of interest that would have accrued on the loan at the rate of 1% per annum during the period that partial interest payments are deferred. The fee shall be added to the principal balance of the loan after the partial interest payment deferral period ends, and amortized over the remaining term of the loan. This fee shall be paid into the loss reserve account created under W.S. 11-34-202(e).
(i) This section expires automatically on July 1, 1992.
(a) If an annual payment which is due December 1st, is not received by March 1st of the following year, the office shall immediately notify the borrower by certified mail of the default. The borrower shall have until the following May 1st to submit a repayment plan to the Board. Repayment plans shall include the following:
(i) The amounts and dates of payments that the borrower can make against the loan.
(b) If the borrower does not submit a repayment plan to the Board by May 1st, the Board shall immediately initiate foreclosure on the defaulted loan.
(c) The Director shall review all repayment plans and make recommendations to the Board regarding their acceptance or rejection no later than the following August Board meeting.
(d) If the Board accepts a repayment plan, the Board shall allow the borrower to make payments in accordance with the accepted plan. If the borrower then fails to make the payments called for in the accepted plan, the Board shall immediately initiate foreclosure on the defaulted loan.
(e) If the Board rejects a repayment plan, the Board shall immediately initiate foreclosure on the defaulted loan.
(a) Leasing procedure. The Board shall receive applications to lease acquired land for a period of twenty (20) days after public notice is given of its intent to lease any property. Persons desiring to lease acquired lands shall submit to the office a completed application in a sealed envelope, as provided by the office. A check or money order for the $15.00 application fee shall be attached. Applications offering cash rental shall be accompanied by a certified check or money order in the amount of the offer.
(b) Board's decision. The Board shall consider all aspects of the offers received and award the lease to the applicant whose offer would be most advantageous to the Board. The Board may reject any or all applications. Monies tendered by unsuccessful applicants for their rental offer shall be returned after the Board has awarded the lease or rejected all applications.
(c) Term. The term of the lease shall be set by the Board on a case-by-case basis, except that the term of a lease of land which is subject to a right of redemption shall not exceed the expiration of the redemption periods created by W.S. 1-18-103 and W.S. 1-18-104. If the redemption period will expire at an inopportune time during the growing season, the Board may extend the lease term until a more convenient time in the growing season.
(d) Transfers. No lease granted under this section may be assigned or subleased without the approval of the Board.
(e) Reservation prohibited. A lease of acquired lands shall not contain a reservation of public hunting and fishing privileges.
(a) Decision to sell. The Board shall sell acquired lands upon determination by the Board that the sale of the property would be the best means of restoring those loan funds used to acquire the property. This determination shall be based on the expected income from leasing the property, the probability of future appreciation in the market value of the property, and the current market value of the property. The Board may sell acquired lands on its own initiative or in response to an application to purchase filed under subsection (b) of this section.
(b) Applications. Any person may petition the Board to sell specific acquired lands by submitting a written application on the form provided by the office. Separate checks or money orders for a $15.00 application fee and a $50.00 advertising cost deposit shall be submitted with the application. If the application contains an offered price which is reasonable in light of the current appraised value of the property, the application shall be presented to the Board for consideration. If the offered price is unreasonably low, the applicant shall be so advised and shall be given the opportunity to amend the offered price on the application or to withdraw the application.
(c) Finder's Fee. The Board shall pay, out of the sale proceeds, a real estate broker, associate broker, or salesman (hereinafter: realtor) a finder's fee in the amount of one-half of one percent of the purchase price if the realtor represents the successful bidder at the auction.
(d) Advertisement. All sales of acquired lands shall be advertised once per week, for four consecutive weeks, in both a newspaper in the county in which the property is located and a newspaper of statewide circulation. The purchaser of the property shall pay the cost of advertising.
(e) Auctions. All sales shall be by public auction, conducted by the Director or his representative, at the front door of the county courthouse of the county in which the property is located. If the sale is being held pursuant to an application to purchase, the minimum bid shall be the offered price. If the sale is being held on the Board's own initiative, the minimum bid shall be as set by the Board. The Board reserves the right to reject any and all bids. The successful bidder must tender at least 30% of the purchase price, in the form of a cashier's check, certified check, or letter of credit, at the auction. Within 10 days of the auction, the purchaser shall either pay the balance of the purchase price or if eligible enter into an amortized sales contract pursuant to subsection (f) of this section.
(i) Eligibility. Any individual, corporation, or partnership that was the mortgagor when the land was acquired by the Board shall not be eligible to enter into an amortized sales contract in the purchase of that acquired land.
(ii) Terms. Eligible purchasers may pay the balance of the purchase price pursuant to an amortized sales contract with the following terms:
(A) The length of the contract shall not exceed 30 years.
(B) The contract interest rate shall be:
(I) Eight percent for amounts up to 50% of the purchase price.
(II) Nine percent for amounts over 50%, but not more than 60% of the purchase price.
(III) Ten percent for amounts over 60%, but not more than 70% of the purchase price.
Section 17. Sale of Acquired Personal Property. The Board hereby delegates to the Director the authority to sell, by public auction, sealed bid, or private sale, any personal property acquired through foreclosure, repossession, or surrender. The Director shall report all sales of personal property to the Board at its next regular meeting.