(a) Establishment of program
The Secretary shall establish and carry out in accordance with this section an interest rate reduction program for loans guaranteed under this chapter.
(b) Contracts with lenders
Under such program, the Secretary shall enter into a contract with, and make payments to, a legally organized institution to reduce during the term of such contract the interest rate paid by a borrower on a guaranteed loan made by such institution if—
(1) the borrower—
(A) is unable to obtain sufficient credit elsewhere to finance the actual needs of the borrower at reasonable rates and terms, taking into consideration private and cooperative rates and terms for a loan for a similar purpose and period of time in the community in or near which the borrower resides;
(B) is otherwise unable to make payments on such loan in a timely manner; and
(C) has a total estimated cash income during the 24-month period beginning on the date such contract is entered into (including all farm and nonfarm income) that will equal or exceed the total estimated cash expenses to be incurred by the borrower during such period (including all farm and nonfarm expenses); and
(2) the lender reduces during the term of such contract the annual rate of interest payable on such loan by a minimum percentage specified in such contract.
(c) Payments to lenders
In return for a contract entered into by a lender under subsection (b) for the reduction of the interest rate paid on a loan, the Secretary shall make payments to the lender in an amount equal to not more than 100 percent of the cost of reducing the annual rate of interest payable on such loan, except that such payments may not exceed the cost of reducing such rate by more than 4 percent.
(d) Duration of contracts
The term of a contract entered into under this section to reduce the interest rate on a guaranteed loan may not exceed the outstanding term of such loan.
(e) Agricultural Credit Insurance Fund use limitation
(1) Notwithstanding any other provision of this chapter, the Agricultural Credit Insurance Fund established under section 1929 of this title may be used by the Secretary to carry out this section.
(2)
(A)
(B)
(i)
(ii)
(f) List of lender participants in guaranteed loan program
The Secretary shall make available to farmers, on request, a list of lenders in the area that participate in guaranteed farm loan programs and other lenders in the area that express a desire to participate in such programs and that request inclusion in the list.
(g) Foreclosure action provision in farm loan guarantees
Notwithstanding any other provision of law, each contract of guarantee on a farm loan entered into under this chapter after January 6, 1988, shall contain a condition that the lender of the guaranteed loan may not initiate foreclosure action on the loan until 60 days after a determination is made with respect to the eligibility of the borrower thereof to participate in the program under this section.
References in Text
This chapter, referred to in subsecs. (a)(1), (e)(1), and (g), was in the original "this title", meaning title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, known as the Consolidated Farm and Rural Development Act, which is classified principally to this chapter. For complete classification of title III to the Code, see Short Title note set out under section 1921 of this title and Tables.
Amendments
2018—Subsec. (e)(2)(B). Pub. L. 115–334, §12306(d)(1), inserted "and veteran" after "Beginning" in heading.
Subsec. (e)(2)(B)(i). Pub. L. 115–334, §12306(d)(2), inserted before period at end "or veteran farmers and ranchers (as defined in section 2279(a) of this title)".
Subsec. (e)(2)(B)(ii). Pub. L. 115–334, §12306(d)(3), struck out "beginning" before "farmers or ranchers".
2002—Subsec. (a). Pub. L. 107–171, §5313(1), struck out par. (1) designation and heading and struck out heading and text of par. (2). Text read as follows: "The authority provided by this subsection shall terminate on September 30, 2002."
Subsec. (e)(2). Pub. L. 107–171, §5313(2), added par. (2) and struck out former par. (2) which read as follows: "The total amount of funds used by the Secretary to carry out this section may not exceed $490,000,000."
1996—Subsec. (a). Pub. L. 104–105 inserted heading, designated existing provisions as par. (1) and inserted heading, and added par. (2).
Subsec. (f). Pub. L. 104–127, §643(a)(1), substituted "The Secretary" for "Each Farmers Home Administration county supervisor" and "list of lenders" for "list of approved lenders" and struck out "the Farmers Home Administration" before "guaranteed farm loan programs".
Subsec. (h). Pub. L. 104–127, §643(a)(2), struck out subsec. (h) which established a demonstration project during 4-year period beginning Jan. 6, 1988, for purchase of Farm Credit System land.
1990—Subsec. (c). Pub. L. 101–508, §1202(b)(1)(A), substituted "100 percent" for "50 percent" and "4 percent" for "2 percent".
Subsec. (d). Pub. L. 101–508, §1202(b)(1)(B), struck out ", or 3 years, whichever is less" after "term of such loan".
Subsec. (h)(1). Pub. L. 101–508, §1202(c), substituted "4-year" for "3-year".
1988—Subsec. (b)(1)(C). Pub. L. 100–233, §613(b)(1), substituted "24-month" for "12-month".
Subsecs. (f), (g). Pub. L. 100–233, §613(b)(2), added subsecs. (f) and (g).
Subsec. (h). Pub. L. 100–233, §613(c), added subsec. (h).
Effective Date of 1990 Amendment
Amendment by Pub. L. 101–508 effective Nov. 29, 1990, see section 1301 of Pub. L. 101–508, set out as an Effective Date note under section 1994 of this title.
Effective and Termination Dates
That part of section 1320 of Pub. L. 99–198, as amended by Pub. L. 100–233, title VI, §613(a), Jan. 6, 1988, 101 Stat. 1674; Pub. L. 101–508, title I, §1202(b)(2), Nov. 5, 1990, 104 Stat. 1388–11, which provided that this section was effective only for the period beginning Dec. 23, 1985, and ending Sept. 30, 1995, was repealed by Pub. L. 104–127, title VI, §643(b), Apr. 4, 1996, 110 Stat. 1103.
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