RD Instruction 1927-B
§ 1927.55(f)(3) (Con.)
(i) If, with the advice of OGC, the State Office determines that the exceptions will not adversely affect the title to the property or its suitability, security value, or successful operation, the State Office will advise the approval official. The approval official will then arrange for closing.
(ii) If the State Office, with the advice of OGC, finds that these exceptions will adversely affect the title to the property, its suitability, security value, or successful operation, the State Office may waive them conditionally and instruct the approval official as to how the conditions may be met, or instruct the approval official that the loan cannot be closed because of the defect.
§ 1927.56 Scheduling loan closing.
The approval official may arrange a closing when he or she determines that exceptions shown in the preliminary title opinion or title insurance binder (if any) will not adversely affect the suitability, security value, or successful operation of the property and all other agency conditions to closing have been satisfied.
(a) The approval official will make sure that all requirements of subpart I of part 1940 of this chapter have been met before the loan is closed.
(b) In arranging for loan closing, the approval official will send Form RD 1927-15, "Loan Closing Instructions and Loan Closing Statement," or Form RD 3550-25, “Loan Closing Instructions and Loan Closing Statement” to the closing agent. When a title insurance commitment is involved, the "loan closing instructions" will include any corrections required by the commitment. Therefore, the title insurance commitment must be received before the final closing instructions are transmitted. At the same time, send written notification of loan closing to the applicant. (Revised 08-18-04, PN 378.)
§ 1927.57 Preparation of closing documents.
(a) Preparation of deeds. The closing agent, unless prohibited by law, will prepare, complete, or approve documents, including deeds, necessary for title clearance and closing of the transaction and provide the agency with the policy of title insurance or final title opinion providing the lien priority required by the agency and subject only to exceptions approved by the agency. Form RD 1927-11, “Warranty Deed
( )” (State), or Form RD 1927-12, “Warranty Deed” (State), will be used when required by this part.
(04-22-96) SPECIAL PN
RD Instruction 1927-B
§ 1927.57(a) (Con.)
(1) Types of estates for married borrowers. If the borrowers are married, the agency prefers, but will not require, that title to the real estate will be held in such a way that, upon the death of a borrower, it will pass to the surviving spouse by law to prevent the real estate from being tied up in probate proceedings. Title may be held in any manner that permits obtaining the required mortgage.
(2) Deeds will be prepared as follows. Conveyances of title to borrowers by parties other than the agency will be by the form of deed in use in the state where the property is located that the entity providing title clearance determines will vest in the borrower a good and marketable title of record. All conveyances by the agency will be by quitclaim deed.
(b) Preparation of mortgages. The closing agent will insure that all mortgages are properly prepared, completed, executed, and filed for record. Where applicable, the mortgages should recite that it is a purchase money mortgage. The following requirements will be observed in preparing agency mortgages:
(1) Real estate mortgage forms. Agency mortgage forms will be used. Form RD 1927-1 (State), "Real Estate Mortgage or Deed of Trust For ________," will be used for all direct loans except where Form RD 1927-7 (State), is used for all RH loans. These forms will be prepared and distributed in accordance with State Supplements. When a loan is made to a homestead entryman or to a contract purchaser of a farm unit from the Bureau of Reclamation, a rider to Form RD 1927-1 (State), will be used per State Supplement.
(2) Number of copies.
(i) The original recorded mortgage is to be retained in the borrower's case file unless the original mortgage is retained by the recorder, and a conformed copy will be provided to the borrower.
RD Instruction 1927-B
§ 1927.57(b)(2) (Con.)
(ii) When the original is to be retained by the recorder, an original and two conformed copies will be prepared. One conformed copy will be retained in the borrower's case file and one conformed copy will be provided to the borrower.
(iii) Extra copies of mortgages may be needed in individual cases in some participation loans, loans on reclamation projects, when security is taken on trust or restricted property involving loans to Native American, and other similar situations.
(iv) The closing agent will distribute copies to appropriate parties at loan closing or as soon as possible thereafter.
(3) Persons required to execute mortgage. The mortgage will be executed by all persons and entities the title insurance company or attorney providing the title opinion determines necessary (including, for example, any spouse with a right of dower or curtesy) for the title insurance policy or final title opinion to provide that the agency has the required lien priority so that, in the event of default, the mortgage will be enforced by the agency against all such interests.
(4) Date of execution. The mortgage will be dated and executed on the date the title insurance company or attorney providing the final title opinion determines is necessary to provide the agency with a title insurance policy or final title opinion showing the agency has required lien priority and is subject to exceptions approved by the agency.
(5) Title exceptions. The mortgage will generally or specifically describe all exceptions it will be subject to, depending on what is customary under local practice or required by State law or State Supplement.
(6) Releasing or retaining existing mortgages in refinancing cases. When there is an outstanding agency real estate mortgage against the property and the loan secured by the mortgage is being refinanced with the current loan, the mortgage for the outstanding loan will be superseded and will be released at the time of loan closing, unless it is necessary under State law to keep the existing mortgage in effect to retain a valid lien of the same priority for the obligation being refinanced.