How loans can be secured and what happens if the property changes hands

(a) Loans made under this chapter may be secured by duly recorded first mortgages upon the following property within the State: (1) Fee simple land; (2) Leaseholds of land where the lease has an unexpired term at least two years longer than the term of the loan; (3) Crops, livestock, and equipment; and (4) Other chattels. (b) It also shall be lawful for the department of agriculture and biosecurity to require and accept as security for any loan: (1) A junior mortgage; or (2) Written agreements such as an assignment of income. (c) For purposes of class "A" loans, no loan shall exceed eighty-five per cent of the value of the security offered. For purposes of class "B" and class "E" facility loans, no loan shall exceed eighty-five per cent of the value of the security offered. For purposes of class "C" loans and class "E" operating loans, the ratio of loan to the value of the security offered shall be discretionary with the department. For purposes of class "D" loans, the department, with the approval of the governor, may modify or waive any or all security requirements or any limitation with respect thereto. (d) All security instruments for purposes of direct loans under section 155-8 shall be executed to and by the department. For purposes of insured loans under section 155-5, all security instruments shall be executed to and by the private lender; for purposes of participating loans under section 155-6 to and by the department and the private lender jointly. (e) In case of the sale or transfer of the mortgaged land or goods in which the department has a security interest, as that term is defined in section 490:1-201, the department may permit the mortgage or encumbrance to be assumed by the purchaser. In case of the death of the borrower, the borrower's heir or heirs, or the borrower's legal representative or representatives, shall have the option within six months of the death to assume the mortgage of the deceased. The department or its agents, pending the exercise of the option and pending possession being taken by the heirs or representatives, may take possession of all mortgaged property and carry on the operation connected therewith, and the expense of the same shall be added to the principal due upon the mortgage to bear interest at the applicable rate. (f) If a loan is granted, the department shall cause the title to real property to be examined and a mortgage drawn and recorded. The applicant shall pay the actual costs involved. No class "A" loans shall be made on unsurveyed lands.