Final answer:
The statement is true; a current Form FSA-2040 should be on file for a borrower with a loan secured by chattels, as it details the use of loan proceeds and the collateral involved.
Step-by-step explanation:
The statement that there must always be a current Form FSA-2040, Agreement for use of Proceeds and Security, in the file of a borrower with a loan secured by chattels is generally true. Form FSA-2040 is used by the Farm Service Agency (FSA) within the United States Department of Agriculture (USDA) to document how a borrower agrees to use the proceeds from a loan and what chattel property is being used as security for that loan. This agreement is crucial to protect the interests of both the lender and the borrower. Having a current form ensures that all parties have a clear understanding of the terms and usage of the funds, and it clarifies the assets held as collateral for the loan. In the case where the loan is still active and the chattels are still securing the loan, keeping a current form on file is a standard practice.