12 U.S.C. § 2202 — Reconsideration of actions

Page 1334 TITLE 12—BANKS AND BANKING § 2201 1707; amended Pub. L. 100–233, title I, § 104, Jan. 6, 1988, 101 Stat. 1579.) Editorial Notes AMENDMENTS 1988—Pub. L. 100–233 substituted ‘‘qualified lenders’’ for ‘‘System institutions’’ and inserted ‘‘and copies of each appraisal of the borrower’s assets made or used by the qualified lender’’ before period at end. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as an Effective Date of 1985 Amendment note under section 2001 of this title. § 2201. Notice of action on application (a) Loan applications Each qualified lender to which a person has applied for a loan shall provide the person with prompt written notice of— (1) the action on the application; (2) if the loan applied for is reduced or de- nied, the reasons for such action; and (3) the applicant’s right to review under sec- tion 2202 of this title. (b) Distressed loans Each qualified lender that has a distressed loan outstanding that is subject to restructuring requirements under this chapter shall provide, in accordance with regulations prescribed by the Farm Credit Administration, the borrower with prompt written notice of— (1) any action taken with respect to restruc- turing the loan under section 2202a of this title; (2) if restructuring is denied, the reasons for such action; and (3) the borrower’s right to review under sec- tion 2202 of this title. (Pub. L. 92–181, title IV, § 4.13B, formerly § 4.13, Dec. 10, 1971, 85 Stat. 613, renumbered § 4.13B and amended Pub. L. 99–205, title III, §§ 301(a), 302, Dec. 23, 1985, 99 Stat. 1707, 1708; Pub. L. 100–233, title I, § 105, Jan. 6, 1988, 101 Stat. 1579.) Editorial Notes AMENDMENTS 1988—Pub. L. 100–233 amended section generally. Prior to amendment, section read as follows: ‘‘Every appli- cant for a loan from an institution of the System shall be entitled to prompt written notice of action on his application, and, if the loan applied for is reduced or denied, the reason for such action, and of the appli- cant’s right to review under section 2202 of this title.’’ 1985—Pub. L. 99–205, § 302, provided for a ‘‘written’’ no- tice and for the applicant’s right to review under sec- tion 2202 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1985 AMENDMENT Amendment by Pub. L. 99–205 effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as a note under section 2001 of this title. § 2202. Reconsideration of actions (a) Credit review committees (1) In general The board of directors of each qualified lend- er shall establish one or more credit review committees, which shall include farmer board representation. (2) Membership In no case shall a loan officer involved in the initial decision on a loan serve on the credit review committee when the committee re- views such loan. (b) Review of decisions (1) Denials or reductions Any applicant for a loan from a qualified lender that has received a written notice issued under section 2201 of this title of a deci- sion to deny or reduce the loan applied for may submit a written request, not later than 30 days after receiving a notice denying or re- ducing the amount of the loan application, to obtain a review of the decision before the cred- it review committee. (2) Denials of restructuring A borrower of a loan from a qualified lender that has received notice, under section 2201 of this title, of a decision to deny loan restruc- turing with respect to a loan made to the bor- rower, if the borrower so requests in writing within 7 days after receiving such notice, may obtain a review of such decision in person be- fore the credit review committee. (c) Personal appearance An applicant for a loan or for restructuring, who is entitled to and has requested a review under this section, may appear in person before the credit review committee, and may be accom- panied by counsel or by any other representa- tive of such person’s choice, to seek a reversal of the decision on the application under review. (d) Independent appraisal (1) In general An appeal filed with a credit review com- mittee under this section may include, as a part of the request for a review of the decision filed under subsection (b)(1) or (2), a request for an independent appraisal, by an accredited appraiser, of any interests in property secur- ing the loan (other than the stock or partici- pation certificates of the qualified lender held by the borrower). (2) Arrangement and cost Within 30 days after a request for an ap- praisal under paragraph (1), the credit review committee shall present the borrower with a list of three appraisers approved by the appro- priate qualified lender from which the bor- rower shall select an appraiser to conduct the appraisal the cost of which shall be borne by the borrower, and shall consider the results of such appraisal in any final determination with respect to the loan. (3) Copy to borrower A copy of any appraisal made under this sub- section shall be provided to the borrower. Page 1335 TITLE 12—BANKS AND BANKING § 2202a (4) Additional collateral An independent appraisal shall be permitted if additional collateral for a loan is demanded by the qualified lender when determining whether to restructure the loan. (e) Notification of applicant Promptly after a review by the credit review committee, the committee shall notify the ap- plicant or borrower, as the case may be, in writ- ing of the decision of the committee and the rea- sons for the decision. (Pub. L. 92–181, title IV, § 4.14, Dec. 10, 1971, 85 Stat. 613; Pub. L. 99–205, title III, § 303, Dec. 23, 1985, 99 Stat. 1708; Pub. L. 100–233, title I, § 106, title VIII, § 805(s), Jan. 6, 1988, 101 Stat. 1580, 1716; Pub. L. 100–399, title I, § 103, title VII, § 702(b), Aug. 17, 1988, 102 Stat. 990, 1006.) Editorial Notes AMENDMENTS 1988—Pub. L. 100–233, § 805(s), which directed amend- ment of this section by substituting ‘‘committees’’ for ‘‘committee(s)’’, ‘‘2201’’ for ‘‘2199’’, and ‘‘review’’ for ‘‘reviews’’, was repealed by Pub. L. 100–399, § 702(b). See Construction of 1988 Amendment note below. Pub. L. 100–233, § 106, amended section generally. Prior to amendment, section read as follows: ‘‘The board of directors of each Farm Credit System institu- tion shall establish one or more credit review com- mittee(s), which shall include farmer board respresentation. [sic] Any loan applicant who has re- ceived written notice, under section 2199 of this title, of a decision to deny or reduce the loan applied for, if the applicant so requests in writing within thirty days after receiving such notice, may obtain a review of such decision in person before the credit review com- mittee. When a loan applicant requests review of an ad- verse credit decision, a majority of persons serving on such reviews committee must be persons who were not involved in making the adverse decision. Promptly after any such review, the applicant shall be notified in writing of the credit review committee’s decision and the reasons therefor.’’ Subsec. (b)(1). Pub. L. 100–399, § 103(a), substituted ‘‘before the’’ for ‘‘by a’’. Subsec. (d)(1). Pub. L. 100–399, § 103(b), inserted ‘‘or (2)’’. 1985—Pub. L. 99–205, in amending section generally, substituted provisions respecting reconsideration of ac- tion on loan application for prior reconsideration pro- visions which read as follows: ‘‘Any applicant who has reason to believe that the action on his application by an association failed to take into account facts perti- nent to his application, or has misinterpreted or failed to properly apply the applicable law or rules and regu- lations governing his application, may, if he so re- quests in writing within thirty days of the date of that notice, request an informal hearing on his application and the action of the association in reduction or denial thereof, or the reason for such action, in person before the loan committee or officer or employee thereof au- thorized to act on applications under section 2033(11) or 2093(18) of this title. Promptly after such a hearing, he shall be notified of the decision upon reconsideration and the reasons therefor.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective as if enacted immediately after enactment of Pub. L. 100–233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE OF 1985 AMENDMENT Amendment by Pub. L. 99–205 effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as a note under section 2001 of this title. CONSTRUCTION OF 1988 AMENDMENT Pub. L. 100–399, title VII, § 702(b), Aug. 17, 1988, 102 Stat. 1006, provided that section 805(s) of Pub. L. 100–233, cited as a credit to this section, is repealed and that this section shall be applied and administered as if such section had not been enacted. § 2202a. Restructuring distressed loans (a) Definitions As used in this part and section 2219a of this title: (1) Application for restructuring The term ‘‘application for restructuring’’ means a written request— (A) from a borrower for the restructuring of a distressed loan in accordance with a pre- liminary restructuring plan proposed by the borrower as a part of the application; (B) submitted on the appropriate forms prescribed by the qualified lender; and (C) accompanied by sufficient financial in- formation and repayment projections, where appropriate, as required by the qualified lender to support a sound credit decision. (2) Cost of foreclosure The term ‘‘cost of foreclosure’’ includes— (A) the difference between the outstanding balance due on a loan made by a qualified lender and the liquidation value of the loan, taking into consideration the borrower’s re- payment capacity and the liquidation value of the collateral used to secure the loan; (B) the estimated cost of maintaining a loan as a nonperforming asset; (C) the estimated cost of administrative and legal actions necessary to foreclose a loan and dispose of property acquired as the result of the foreclosure, including attor- neys’ fees and court costs; (D) the estimated cost of changes in the value of collateral used to secure a loan dur- ing the period beginning on the date of the initiation of an action to foreclose or liq- uidate the loan and ending on the date of the disposition of the collateral; and (E) all other costs incurred as the result of the foreclosure or liquidation of a loan. (3) Distressed loan The term ‘‘distressed loan’’ means a loan that the borrower does not have the financial capacity to pay according to its terms and that exhibits one or more of the following characteristics: (A) The borrower is demonstrating adverse financial and repayment trends. (B) The loan is delinquent or past due under the terms of the loan contract. (C) One or both of the factors listed in sub- paragraphs (A) and (B), together with inad- equate collateralization, present a high probability of loss to the lender. (4) Foreclosure proceeding The term ‘‘foreclosure proceeding’’ means—