Title 12, Banks and BankingRelease 119-110

§2202d Protection of Borrowers Who Meet All Loan Obligations

Title 12 › CHAPTER 23 — FARM CREDIT SYSTEM › SUBCHAPTER IV — PROVISIONS APPLICABLE TO TWO OR MORE CLASSES OF INSTITUTIONS OF THE SYSTEM › Part C — Rights of Borrowers; Loan Restructuring › § 2202d

Last updated Sep 22, 2026|Official source

Summary

Qualified lenders cannot foreclose on a loan just because the borrower did not post extra collateral if the borrower has paid all accrued principal, interest, and penalties. Lenders also cannot force a borrower to cut the loan principal more than the regular scheduled payment unless the borrower sells the collateral or both sides agree in writing. If a borrower has made all accrued payments, the lender must not speed up the loan’s repayment because of one or more late payments. If a lender puts a loan into nonaccrual status, the lender must document that change and quickly tell the borrower in writing why. If the borrower was current on payments when that happened and the borrower asks to return the loan to accrual status but is denied, the borrower can ask the appropriate credit review committee for a review. This rule applies only when placing the loan in nonaccrual leads to a negative action against the borrower.

Full Legal Text

Title 12, §2202d

Banks and Banking, Source: USLM XML via OLRC

(a)Foreclosure prohibited

A qualified lender may not foreclose on any loan because of the failure of the borrower thereof to post additional collateral, if the borrower has made all accrued payments of principal, interest, and penalties with respect to the loan.

(b)Prohibition against required principal reduction

A qualified lender may not require any borrower to reduce the outstanding principal balance of any loan made to the borrower by any amount that exceeds the regularly scheduled principal installment payment (when due and payable), unless—

(1)the borrower sells or otherwise disposes of part or all of the collateral; or

(2)the parties agree otherwise in a written agreement entered into by the parties.

(c)Nonenforcement

After a borrower has made all accrued payments of principal, interest, and penalties with respect to a loan made by a qualified lender, the lender shall not enforce acceleration of the borrower’s repayment schedule due to the borrower having not timely made one or more principal or interest payments.

(d)Placing loans in nonaccrual status

(1)Notification

If a qualified lender places any loan in nonaccrual status, the lender shall document such change of status and promptly notify the borrower thereof in writing of such action and the reasons therefor.

(2)Review of denial

If the borrower was not delinquent in any principal or interest payment under the loan at the time of such action and the borrower’s request to have the loan placed back into accrual status is denied, the borrower may obtain a review of such denial before the appropriate credit review committee under section 2202 of this title.

(3)Application

This subsection shall only apply if a loan being placed in nonaccrual status results in an adverse action being taken against the borrower.

Reference

Citations & Metadata

Citation

12 U.S.C. § 2202d

Title 12, Banks and Banking

Last Updated

Sep 22, 2026

Release point: 119-110