Is an estate entitled to Borrower Rights under the Farm Credit Act? The easy answer is NO. Borrower Rights are only available to the borrower. If the borrower dies, then Borrower Rights no longer apply and the estate of the borrower cannot exercise such rights to restructure a distressed loan.
If a distressed loan restructuring (or DLR) notice was sent to the borrower prior to his or her death, the association is not required to send a new DLR notice to the estate of a deceased borrower if the borrower died before making an application for a distressed loan restructuring.
However, an Association should send the Executor or Executrix a letter explaining that:
- Borrower was sent a notice that the loan was distressed
- Borrower had the opportunity to submit a restructuring application
- No restructuring application was timely received from the borrower
- Borrower Rights process has concluded