Loans to State and Local Development Companies; Seller Financing by Regulated Lenders

Résumé

This rule provides an exception to the requirement that third party financing for a certified development company project derived from the seller of the property being financed must be subordinate to the financing provided by the development company. It provides that if a regulated financial institution is providing the third party financing and is also the seller of the real estate being financed the requirement for such subordination may be waived at SBA's option. A condition for such waiver is that the real estate being sold was previously acquired by the institution as ``other real estate owned'' (OREO) as defined by the Financial institutions Reform Recovery and Enforcement Act (FIRREA) and the Federal Deposit Insurance Corporation Improvement Act (FDICIA). Also, as a condition of such waiver, an independent appraisal of the value of the property prepared by or under the control of the SBA or the participating Certified Development Company (CDC) is required, in order to insure that no conflict of interest will arise. This rule will grant small businesses receiving assistance under the SBA's certified development company program an opportunity to purchase OREO which is being ma