§155-11  Security for loans; mortgages. 
(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 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. [L 1959, c 278, pt of
§1; am L Sp 1959 2d, c 1, §25; am L 1961, c 104, §1(m), (q) and c 132, §2;
Supp, §102-11; HRS §155-11; am L 1969, c 49, §2; gen ch 1985; am L 1990, c 230,
§2; am L 1996, c 253, §2; am L 1997, c 161, §1; am L 2000, c 51, §12; am L
2004, c 162, §2]