Form FSA-2680 Land of Contract Letter of Interest

S

United States Department of Agriculture

Farm and Foreign Agricultural Services

Farm Service Agency

Anywhere State

FSA Office

Any Town, ST

XXXXX-XXXX

ee Page 4 for Privacy Act and Public Burden Statements

Form Approved – OMB No. 0560-XXXX

LAND CONTRACT LETTER OF INTEREST Position 3

Dear

     

:

Thank you for your interest in the Farm Service Agency's (FSA) Land Contract Guarantee Program. The program can be a viable alternative for facilitating land transfers to beginning and socially disadvantage farmers. If you have

additional questions about the program, please contact (a)			     
at (b)	     	.

The private seller, and each entity member in the case of an entity seller, must possess the legal capacity to enter into a legally binding agreement, must not have provided false or misleading documents or statements during past or present dealings with the Agency, must not be ineligible due to disqualification resulting from Federal Crop Insurance violation, according to 7 CFR part 718, and must not be suspended or debarred under 7 CFR part 3017.

Following is information which explains the Land Contract Guarantee Program. If you decide that you wish to apply for a guarantee, please complete parts 1, 2, 3, 8, and 9, initial and date the bottom of each page, sign and return this

letter to the FSA office at (c)

     

.

This letter will serve as your official application for guarantee under the Land Contract Guarantee Program. However, your application will not be complete until the Agency approves your choice of escrow or servicing agent and the prospective buyer submits all of the required documentation.

(d)

Part 1. Types of Guarantee

Seller must designate the type of guarantee in which they are interested.

1) Prompt Payment Guarantee

Participating sellers are provided a 10-year guarantee. In the event the buyer does not pay an annual installment due on the contract, or pays only part of an installment, FSA will provide the scheduled payment to the seller through an escrow agent. The guarantee is limited to the total monetary amount of three annual installments, plus up to three years’ unpaid real estate taxes and insurance, if the buyer fails to pay these obligations.

2) Standard Guarantee

Under the Standard Guarantee, participating sellers are provided a 10-year guarantee of an amount up to 90% of the outstanding principal. This guarantee does not cover interest.

The use of an Agency approved, third party servicing agent is required. This servicing agent must provide evidence of being a bonded commercial lending institution or similar entity, registered and authorized to provide escrow and collection services in the State in which the real estate is located.

Part 2. General Eligibility Information

Under both the Prompt Payment Guarantee and the Standard Guarantee, prospective buyers must meet certain eligibility criteria, some of which are:

• The buyer must be a beginning farmer or socially disadvantaged farmer (SDA) engaged primarily in farming after the guarantee is issued.

• The buyer must be the owner and operator of a family farm after the contract is completed.

• The buyer must have participated in the business operations of a farm for at least three out of the last 10 years.

• The buyer must have an acceptable credit history demonstrated by satisfactory debt repayment.

• The buyer must be unable to obtain sufficient credit elsewhere without a guarantee to finance actual needs at

reasonable rates and terms.

• The buyer must not have received debt forgiveness from the Agency.

Part 3.

Please provide the name, address and phone number of your chosen escrow or servicing agent and provide the buyer’s name, address and phone number. ­­­­­­­­­­­­­

Agent:	     
Buyer:	     

Part 4. Purchase Price, Loan Rates, Terms and Fees

The purchase price of the farm cannot exceed the lesser of $500,000 or the current market value of the property as determined by FSA. A guarantee will not be issued if the appraised value is greater than $500,000. The buyer must provide a minimum down payment of five percent of the purchase price.

The interest rate charged to the buyer for the 10-year term of the guarantee cannot exceed FSA’s direct farm ownership (FO) loan interest rate in effect at the time the guarantee is issued, plus three percentage points. The Agency’s direct loan interest rates may be obtained in any FSA office or by visiting the FSA website at: http://www.fsa/usda/gov/daflp.rates.htm. Following the expiration of the guarantee, the seller and the buyer may renegotiate the interest rate.

Contract payments must be amortized for a minimum of 20 years. Balloon payments are prohibited during the 10-year term of the guarantee, and payments on the contract must be of equal amounts during the term of the guarantee.

The seller and buyer will be responsible for payment of any fees necessary to process the land contract agreement.

Part 5. Issuing the Guarantee

After being determined eligible for the Land Contract Guarantee Program, the buyer and seller, along with the escrow or servicing agent and FSA, will execute either the Land Contract Agreement for Prompt Payment Guarantee

(FSA-2683) or the Land Contract Agreement for Standard Guarantee (FSA-2682). The agreements outline the terms of the guarantee and the responsibilities of each party. The guarantee becomes effective the date the agreement is executed by the parties involved.

Part 6. Terminating the Guarantee

The guarantee will terminate at the earliest of the following circumstances:

1. full payment of the land contract;

2. payment of three annual installments plus property taxes and insurance under the Prompt Payment Guarantee;

3. payment of a loss claim under the Standard Guarantee Plan;

4. sale of real estate without guarantee being properly assigned;

5. the seller terminates the land contract for reasons other than monetary default;

6. if for any reason the contract becomes null and void; or

7. 10 years from the effective date of the guarantee.

Part 7. Environmental Information

Seller answer the following:

		YES	NO
1. Floodplains: Does the property contain any existing structures (i.e. farm dwellings or service buildings) located within the 100-year floodplain as defined by FEMA floodplain maps, NRCS soil surveys, or other documentation?		 	 
2. Historical and Archaeological Sites: Does the property contain structures over 50 years old, structures with significant architectural features, or does the property have any historical significance which may make it eligible for the National Register of Historic Places?		 	 
3. Wetlands and Highly Erodible Land: Does the property contain Highly Erodible Land or Converted Wetlands; OR been used to drain, dredge, fill, or otherwise manipulate any land or reduce the flow, circulation, or reach of water?		 	 
4. Hazardous Substances: Does the property have underground storage tanks or any contamination from hazardous substances?		 	 
	5. Are there any environmental liens or judgments filed against the property as a result of not complying with Federal or State environmental laws?	 	 
	6. Is the property involved in any lawsuits regarding environmental compliance issues?	 	 

Part 8. Notifications and Certifications

	YES	NO
1. Did you receive any debt forgiveness by the Agency through write-down, write-off, compromise, adjustment, reduction, charge-off, payment of loss on a guarantee, or bankruptcy? If “YES”, provide details in Item 9.	 	 
2. Are you, or in the case of an entity, any member of the entity, an FSA employee or related to or closely associated with an FSA employee? If “YES”, provide details in Item 9.	 	 
3. Do you, as seller, have title to the subject land contract property? Loss claim will not be paid if seller does not have proper title to the property.	 	 

Part 9. Additional Information

Write the Item number to which each answer applies. If you need additional space, use sheet of paper the same size as this page and write the applicant’s name on each additional sheet.

A. ACKNOWLEDGMENT

     
B. SELLER'S NAME (please print)      	C. SELLER'S SOCIAL SECURITY NUMBER (if entity, provide Federal Tax ID Number)      
D. SELLER'S SIGNATURE	E. DATE (MM-DD-YYYY)      

NOTE:

The following statement is made in accordance with the Privacy Act of 1974 (5 U.S.C. 552a - as amended). The authority for requesting the information identified on this form is the Consolidated Farm and Rural Development Act, as amended (7 U.S.C. 1921 et. seq.). The information will be used to determine eligibility and feasibility for loans and loan guarantees, and servicing of loans and loan guarantees. The information collected on this form may be disclosed to other Federal, State, and local government agencies, Tribal agencies, and nongovernmental entities that have been authorized access to the information by statute or regulation and/or as described in the applicable Routine Uses identified in the System of Records Notice for USDA/FSA-14, Applicant/Borrower. Providing the requested information is voluntary. However, failure to furnish the requested information may result in a denial for loans and loan guarantees, and servicing of loans and loan guarantees. The provisions of criminal and civil fraud, privacy, and other statutes may be applicable to the information provided. According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is 0560-xxxx. The time required to complete this information collection is estimated to average 2 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. RETURN THIS COMPLETED FORM TO YOUR COUNTY FSA OFFICE.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination, write to USDA, Assistant Secretary for Civil Rights, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue, S.W., Stop 9410, Washington, DC  20250-9410, or call toll-free at (866) 632-9992 (English) or (800) 877-8339 (TDD) or (866) 377-8642 (English Federal-relay) or (800) 845-6136 (Spanish Federal-relay).  USDA is an equal opportunity provider and employer.

Initial ______ Date _____ FSA-2680 (proposal 5) Page 1 of 4

USDA is an Equal Opportunity Employer