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B-210291 1 (1983-04-13)

handle is hein.gao/gaobadkzo0001 and id is 1 raw text is: THE COMPTROLLER GENERAL DECISION O - oF THE UNITED STATES AJZ WASHI~lNGTON. 0..C. 20548 FILE: B-210291 DATE: April 13, 1983 MATTER OF:Rural Electrification Administration Guaranteed Loans--Payment of Servicing Costs DIGEST:Rural Electrification Administration (REA) may not use funds either from its annual appropriation or REA's Revolving Fund to pay, on a non-reimbursable basis, for the cost of servicing REA guaranteed loans made by the Federal Financing Bank (FFB). Definition of a guaranteed loan under 7 U.S.C. § 936 as one which is initially made, held, and serviced by a legally organized lender agency, together with other provisions in REA's and FFB's legis- lation, indicate that since FFB acts as the lender, REA can only perform servicing function as FFB's agent on a reimbursable basis. This decision is in response to a request from the Administrator of the Rural Electrification Administration (REA) for our opinion concerning the payment of costs incur-- red in connection with the servicing of REA guaranteed loans made by the Federal Financing Bank (FFB). The Administra- tor's specific question is whether he has authority to use funds appropriated under the RE Act or in the Rural Electri- fication and Telephone Revolving Fund for the purpose of servicing FFB obligations, repayment of which is guaranteed$ pursuant to § 306 of the RE Act, on an unreimbursable basis where there have been no defaults on the obligations?1/ For the reasons set forth hereafter, we do not believe the Administrator of REA has such authority. 1/ The Administrator's letter contained a second question as to whether FFB was required to provide for the servicing of REA-guaranteed loans assuming REA does not undertake such servicing? Subsequently, we were informed by an REA official that it was withdrawing its second question. Therefore, our decision does not formally respond to that question. However, since the two questions were not unrelated, our answer to the remaining question mav have some bearing on the question that was withdrawn as well. ~77)

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