§155-11  Security for loans; mortgages. (a)  Loans made under this chapter may be secured by duly recorded firstmortgages upon the following property within the State:

(1)  Fee simple land;

(2)  Leaseholds of land where the lease has anunexpired 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 departmentof agriculture to require and accept as security for any loan:

(1)  A junior mortgage; or

(2)  Written agreements such as an assignment ofincome.

(c)  For purposes of class "A" loans,no loan shall exceed eighty-five per cent of the value of the securityoffered.  For purposes of class "B" and class "E" facilityloans, no loan shall exceed eighty-five per cent of the value of the securityoffered.  For purposes of class "C" loans and class "E"operating loans, the ratio of loan to the value of the security offered shallbe discretionary with the department.  For purposes of class "D"loans, the department, with the approval of the governor, may modify or waiveany or all security requirements or any limitation with respect thereto.

(d)  All security instruments for purposes ofdirect loans under section 155-8 shall be executed to and by the department.For purposes of insured loans under section 155-5, all security instrumentsshall be executed to and by the private lender; for purposes of participatingloans under section 155-6 to and by the department and the private lenderjointly.

(e)  In case of the sale or transfer of themortgaged land or goods in which the department has a security interest, asthat term is defined in section 490:1-201, the department may permit themortgage or encumbrance to be assumed by the purchaser.  In case of the deathof the borrower, the borrower's heir or heirs, or the borrower's legalrepresentative or representatives, shall have the option within six months ofthe death to assume the mortgage of the deceased.  The department or itsagents, pending the exercise of the option and pending possession being takenby the heirs or representatives, may take possession of all mortgaged propertyand carry on the operation connected therewith, and the expense of the sameshall be added to the principal due upon the mortgage to bear interest at theapplicable rate.

(f)  If a loan is granted, the department shallcause the title to real property to be examined and a mortgage drawn andrecorded.  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 L2004, c 162, §2]