HAR §4-8-10. Restrictions on participating loans

(a) Except where there is an unusual danger of natural catastrophe or economic hardship, the State's share of a loan in participation with a private lender shall not exceed seventy-five per cent of the principal amount of the loan made to a qualified farmer. The State's share of a participating loan may be the legal maximum of ninety per cent when the loan applicant operates in a danger area (such as the Puna- rift zone) or when the major portion of the borrower's income is from a commodity affected by prolonged or severe economic difficulties such as depressed prices, disease, weather, or other circumstances of fairly wide impact on the commodity group. Ninety per cent participation shall be for class "C" and "D" loans only, since it is not the intent of the department to encourage permanent expansion in danger areas or uneconomic commodity groups. (b) Out of the interest collected, the department shall pay the participating private lender a service fee as follows: Private Lender's Share of Loan Allowable Service Fee 29% or less participation 1/2 of 1% on the State's unpaid principal balance. 8-8 30% to 39% participation 3/4 of 1% on the State's unpaid principal balance. 40% or more participation 1% on the State's unpaid principal balance. (c) Where all or any portion of a participating loan is to be used to refinance existing loans from participating lenders, the State's share of the amount to be refinanced shall not exceed fifty per cent. In a situation where it is in the best interest of the State as determined by the department, the chairperson may waive this restriction. [Eff 1/31/85; comp 9/20/86] (Auth: HRS §155-4) (Imp: HRS §§155-4, 155-6)