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Legal Opinion Summary
Topic:Participations: May a Farm Credit System association buy participation interests and servicing rights in several loans that an agricultural producer made to local farmers through purchase money mortgages?
ID Number:00-03
Issue Date:03/09/2000


An association inquired whether it could buy participation interests and servicing rights in several loans that an agricultural producer made to local farmers through purchase money mortgages. OGC advised that it could.

Both 12 C.F.R section 614.4030(b)(1)(i) and the regulations in subpart H of part 614 allow an association to buy participations in mortgages made by non-Farm Credit System lenders. Because this association planned to buy the servicing rights as well as the participations, its participation interest could exceed 90 percent of the loan principal.

(March 9, 2000)