HAR §4-8-13. Collateral

(a) Adequacy of collateral shall be determined by the department. For purposes of land purchase and improvements, the department shall require a real estate mortgage recordable at the bureau of conveyances or the land court of the State of Hawaii. A non-farm recordable real estate mortgage with adequate value may be substituted, at the department's discretion. Chattels, using a security agreement and a financing 8-9 statement, shall be used as primary collateral for farm operating loans. (b) Where it is determined by the department that there is adequate collateral but questionable repayment history, limited life on security such as crops and livestock, or where the borrower has outstanding loan from several sources, a third or fourth mortgage may be taken as additional collateral to secure the loan. But in no event shall a third or fourth mortgage be the primary collateral. (c) The department may require an appraisal for real estate and improvements. Whenever practicable, an independent appraiser shall be utilized. The applicant shall be responsible for hiring an independent appraiser at the applicant's own expense, and the applicant shall pay for all costs incurred in the appraisal. (d) Appraisals made by bank, farmers home administration, and other mortgage lenders may be accepted. (e) Loan officers may appraise chattels, crops, and other assets. (f) In the event of a dispute, a second appraisal shall be required. [Eff 1/31/85; comp 9/20/86] (Auth: HRS §155-4 (Imp: HRS §§155-10, 155-11)