Loan Agreement (Labor Housing Loan to Individual)

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FORM APPROVED
OMB NO. 0575-0189
Exp. Date: MM/DD/YY

Form RD 3560-40
(02-05)

LOAN AGREEMENT
(Labor Housing Loan to Individual)
1 Parties and Terms Defined. This agreement dated
Undersigned
herein called ''Borrower'' whether one or more, whose post office address is

of the

with the United States of America acting through Rural Development, United Stated Department of
Agriculture, herein called ''the Government,'' is made in consideration of a loan, herein called ''the loan,'' to
Borrower in the amount of $
made, or to be made by the
Government pursuant to title V of the Housing Act of 1949 to provide housing and related facilities for
domestic farm labor Such housing and related facilities, together with the site, may be referred to herein as
''the housing.'' The indebtedness and other obligations of Borrower under the note evidencing the loan, the
related security instrument, and any related agreement are herein called the ''loan obligations.''

,

2 Equal Opportunity and Nondiscrimination Provisions. The borrower will comply with (a) any
undertakings and agreements required by the Government pursuant to Executive Order 11063 regarding
nondiscrimination in the use and occupancy of housing, (b) Form RD 400-1 entitled ''Equal Opportunity
Agreement,'' including an ''Equal Opportunity Clause'' to be incorporated in or attached as a rider to each
construction contract the amount of which exceeds $ 1 0,000 and any part of which is paid with funds from
the loan, (c) Form RD 400-4, entitled ''Assurance Agreement (Under Title VI, Civil Rights Act of 1964),'' a
copy of which is attached hereto and made a part hereof, and any other undertakings and agreements required
by the Government pursuant to lawful authority.
to be
3 Supervised Bank Account. The proceeds of the note and the amount of $
contributed by the borrower from its own funds and used for eligible loan purposes shall be deposited in a
supervised bank account'' as required by the Government. Amounts in the supervised bank account
exceeding $100,000 shall be secured by the financial institution in advance in accordance with U.S. Treasury
Department regulations, 31 CFR part 202. As provided therein the funds shall, until duly expended,
collaterally secure the loan obligations. Withdrawals from the supervised bank account by the Borrower
shall be made only on checks signed by the
of the Borrower and countersigned by a
representative of Rural Development, and only for the specific loan purposes approved in writing by the
Government. The Borrower's share of any liquidated damages or other monies paid by defaulting
contractors or their sureties shall be deposited in the supervised bank account to assure completion of the
project. When all approved items eligible for payment with loan funds are paid in full, any balance
remaining in the supervised bank account shall be applied on the note as an extra payment'' as defined in the
regulations of Rural Development, and the supervised bank account shall be closed.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply
with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid
OMB Control Number. The OMB Control Number for this information collection is 0575-0189. Public reporting for this collection of information is
estimated to be approximately 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, completing and reviewing the collection of information. All responses to this collection of information are voluntary.
However, in order to obtain or retain a benefit, the information in this form is required under Section 515 Rural Rental Housing, which includes Congregate
Housing, Group Homes, and Rural Cooperative Housing. Rural Development has no plans to publish information collected under the provisions of this
program. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden
to: Information Collection Clearance Officer, Rural Development Innovation Center, Regulations Management Division at [email protected]

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4 Accounts for Housing Operations and Loan Servicing. Borrower shall establish the following accounts,
which shall be maintained so long as the loan obligations remain unsatisfied: A General Fund Account, an
operation and Maintenance Account, a Debt Service Account, and a Reserve Account. Funds in said
accounts shall be deposited in a bank or banks insured by the Federal Deposit Insurance Corporation, except
for any portion invested in readily marketable obligations of the United States as authorized by section 8 (a).
5 General Fund Account. By the time the loan is closed Borrower shall from Borrower's own funds
. All income and
deposit in the General Fund Account the amount of $
revenue from the housing shall upon receipt be immediately deposited in the General Fund Account.
Borrower may also in its discretion at any time deposit therein other funds, not otherwise provided for by
this agreement, to be used for any of the purposes authorized in section 6, 7, or 8. Funds in the General Fund
Account shall be used only as authorized in said sections and, until so used, shall be held by Borrower in
trust for the Government as security for the loan obligations.
6 Operation and Maintenance Account. Not later than the 15th of each month sufficient amounts from the
General Fund Account shall be transferred to the Operation and Maintenance Account to enable Borrower to
pay from the Operation and Maintenance Account the actual, reasonable, and necessary current expenses, for
the current montli and the ensuing month, of operating and maintaining the housing not otherwise provided
for. Current expenses may include, in addition to expenses occurring or becoming due monthly, monthly
accumulations o I'proportionate amounts for the payment of items which may become due either annually or
at irregular intervals, such as taxes, insurance, and normal repair and replacement of furnishings and
equipment reasonably necessary for operation of the housing. Current expenses may also include initial
purchase and installation of such furnishings and equipment with any funds deposited in and transferred
from the General Fund Account which are not proceeds of the loan or income or revenue from the housing.
7 Debt Service Account. Each month, immediately after the transfer to the Operation and Maintenance
Account provided for in section 6, or after it is determined. that no such transfer is called for, any balance
remaining in the General Fund Account, or so much thereof as may be necessary, shall be transferred to the
Debt Service Account until the amount in the Debt Service Account equals the amount of the next
installment due on the loan. Funds in the Debt Service Account shall be used only for payments on the loan
obligations and, until I so used, shall be held by Borrower in trust for the Government as security therefor.

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8 Reserve Account.
(a) immediately after each transfer to the Debt Service Account as provided in section 7, any
balance in the General Fund Account shall be transferred to the Reserve Account. Funds in the
Reserve Account may be used only as authorized in this agreement and until so used shall be held by
the Borrower in trust as security for the loan obligations. Transfers at a rate not less than
annually shall be made to the Reserve Account until the amount in the Reserve
$
Account reaches the sum of $
and shall be resumed at any time when necessary,
because of disbursements from the Reserve Account, to restore it to said sum. Of such sum, at least
50 percent shall be maintained on a cash basis, referred to herein as the ''cash reserve.'' After the
cash reserve reaches the required 50 percent of said sum, all or any portion of the balance of said
sum may, at the option of Borrower, consist of an amount, referred to as the ''prepayment reserve,''
by which Borrower is ''ahead of schedule'' as defined in the regulations of Rural Development.
Funds in the cash reserve shall be deposited in a separate bank account or accounts insured by the
Federal Deposit Insurance Corporation or invested in readily marketable obligations of the United
States, the earnings on which shall accrue to the Reserve Account.
(b) With the prior consent of the Government, funds in the Reserve Account may be used by
Borrower:
(1) To meet payments due on the loan obligations in the event the amount in the Debt
Service Account is not sufficient for the purpose.
(2) To pay costs of repairs or replacements to the housing caused by catastrophe or longrange depreciation which are not current expenses under section 6.
(3) To make improvements or extensions to the housing.
(4) For other purposes desired by Borrower which in the judgment of the Government
likely will promote the loan purposes without jeopardizing collectibility of the loan or
impairing the adequacy of the security, or will strengthen the security, or will facilitate,
improve, or maintain the orderly collectibility of the loan.
(5) For any purpose desired by Borrower, provided Borrower determines that after such
disbursement (a) the amount in the Reserve Account will be not less than that required by
section 8 (a) to be accumulated by that time, and (b) during the next 12 months the
amount in the Reserve Account will likely not fall below that required to be accumulated by
the end of such period.

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(c) Any amount in the Reserve Account which exceeds the aggregate sum specified in section
8 (a) and is not agreed between the borrower and the Government to be used for purposes authorized
in sect] oil 8 (a) shall be applied promptly on the loan obligations.
9 Regulatory Covenants. So long as the loan obligations remain unsatisfied, Borrower shall:
(a) Impose and collect such fees, assessments, rents, and charges that the income will be sufficient at
all times for operation and maintenance of the housing, payments on the loan obligations, and
maintenance of the accounts herein provided for.
(b) Maintain complete books and records relating to Borrower's financial affairs, cause such books
and records to be audited at the end of each fiscal year, promptly furnish the Government without
request a copy of each audit report, and permit the Government to inspect such books and records at
all reasonable times.
(c) If required by the Government, revise the accounts herein provided for, or establish new
accounts, to cover handling and disposition of income from and payment of expenses attributable to
the housing or to any other property securing the loan obligations, and submit regular and special
reports concerning the housing or Borrower's financial affairs..
(d) Not charge rents to domestic farm labor that exceed the rents approved by the Agency after
considering the income of the occupants, Agency and non-Agency rental assistance available and the
necessary costs of operation, debt service, and adequate maintenance of the housing.
(e) Maintain the housing at all times in a safe and sanitary condition in accordance with standards
prescribed by state and local law, and Agency requirements.
(f) When making occupancy decisions, ensure that domestic farm labor applicants will always
receive priority.
(g) Unless the Government gives prior consent:
( 1) Not use the housing for any purpose other than as labor housing and related facilities for
domestic farm laborers.
(2) Not enter into any contract or agreement for improvements or extensions to the housing
or other property securing the loan obligations.
(3) Not cause or permit the transfer or encumbrance of title to the housing or any part
thereof or interest therein, by sale, mortgage, lease, or otherwise.
(h) Submit the following to the Government for prior review and approval not less than
days before the effective dates.

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(1) Annual budgets and operating plans, including proposed rents and charges and other
terms of rental agreements for occupancy and compensation to employees chargeable as
operating expenses of the housing.
(2) Statements of management policy and practice, including eligibility criteria and
implementing rules for occupancy of the housing.
(i) If required by the Government, modify and adjust any matters covered by section 9 (e).
(j) Do other things as may be required by the Government in connection with the operation of the
housing or with any of Borrower's operations or affairs which may affect the housing, the loan
obligations, or the security.
10 Refinancing of Loan. If at any time it appears to the Government that Borrower is able to obtain a loan
upon reasonable terms and conditions to refinance the loan obligations then outstanding, upon request from
the Government, Borrower will apply for, take all necessary actions to obtain, and accept such refinancing
loan and will use the proceeds for said purpose.
11 General Provisions.
(a) It is understood and agreed by Borrower that any loan made or insured will be administered
subject to the limitations of the authorizing act of Congress and related regulations, and that any
rights granted to the Government herein or elsewhere may be exercised by it in its sole discretion to
carry out the purposes of the loan, enforce such limitations, and protect the Government's financial
interest in the loan and the security.
(b) Borrower shall also comply with all covenants and agreements set forth in the note, security
instrument, and any related agreements executed by Borrower in connection with the loan.
(c) The provisions of this agreement are representations to the Government to induce the
Government to make a loan to Borrower as aforesaid. If Borrower should fail to comply
with or perform any provision of this agreement or any requirement made by the Government
pursuant hereto, such failure shall constitute default as fully as default in payment of amounts due on
the loan. In the event of such failure, the Government at its option may declare the entire amount of
the loan obligations immediately due and payable and, if such entire amount is not paid forthwith,
may take possession of and operate the housing and proceed to foreclose its security and enforce all
other available remedies.
(d) Upon request by the Government the Borrower will permit representatives of the Government to
inspect and make copies of any of the records of the Borrower pertaining to this loan. Such
inspection and copying may be made during regular office hours of the Borrower, or any other time
the Borrower and the Government find convenient.

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(e) Any provisions of this agreement may be waived by the Government, or changed by agreement
between the Government and Borrower to any extent such provisions could legally have been
foregone, or agreed to in any amended form, by the Government initially. Any notice, consent,
approval, waiver, or agreement must be in writing.
(f) This agreement may be cited in the security instrument and other instruments or agreements as
the ''Loan Agreement of
, 20
."
(date of agreement)

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Borrower (Signature)

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Borrower (Signature)

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