§1988. Appropriations

(a) Authorization

There is authorized to be appropriated to the Secretary such sums as the Congress may from time to time determine to be necessary to enable the Secretary to carry out the purposes of this chapter and for the administration of assets transferred to the Farmers Home Administration or the Rural Development Administration.

(b) Notes; form and denominations; maturities; terms and conditions; interest rate; purchase by Treasury; public debt transaction

When authorized by Congress, the Secretary is authorized to make and issue notes to the Secretary of the Treasury for the purpose of obtaining funds in such amounts as the Congress may approve annually in appropriation Acts for making direct loans under this chapter. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be prescribed by the Secretary with the approval of the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yields of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Secretary under this chapter. The Secretary of the Treasury is authorized and directed to purchase any notes of the Secretary issued hereunder, and for that purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which such securities may be issued under such chapter are extended to include the purchase of notes issued by the Secretary. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States.

(c) Farmers Home Administration direct loan account; deposits; liabilities; obligations; expenditures; net expenditure basis of budgeting

The appropriations for loans made under the authority of subsection (a) of this section and funds obtained in accordance with subsection (b) of this section, and the unexpended balances of any funds made available for loans under the item "Farmers Home Administration" in the Department of Agriculture Appropriation Acts current on August 8, 1961, shall be merged into a single account known as the "Farmers Home Administration direct loan account", hereafter in this section called the "direct loan account". All claims, notes, mortgages, property, including those now held by the Secretary on behalf of the Secretary of the Treasury, and all collections therefrom, made or held under the direct loan provisions of (1) titles I, II, and IV of the Bankhead-Jones Farm Tenant Act, as amended; (2) the Farmers Home Administration Act of 1946, as amended, except the assets of the rural rehabilitation corporations; (3) the Act of August 28, 1937 (50 Stat. 869), as amended; (4) the item "Loans to Farmers-1948 Flood Damage" in the Act of June 25, 1948 (62 Stat. 1038); (5) the item "Loans to Farmers (Property Damage)" in the Act of May 24, 1949 (63 Stat. 82); (6) the Act of September 6, 1950 (64 Stat. 769); (7) the Act of July 11, 1956 (70 Stat. 525); (8) section 8 of the Watershed Protection and Flood Prevention Act, as amended [16 U.S.C. 1006a]; (9) section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended [7 U.S.C. 1011(e)]; and (10) under this chapter shall be held for and deposited in said account.

The notes of the Secretary issued to the Secretary of the Treasury under said Acts or under this chapter and all other liabilities against the appropriations or assets in the direct loan account shall be liabilities of said account, and all other obligations against such appropriations or assets shall be obligations of said account. Moneys in the direct loan account shall also be available for interest and principal repayments on notes issued by the Secretary to the Secretary of the Treasury. Otherwise, the balances in said account shall remain available to the Secretary for direct loans under subchapters I or II of this chapter, section 8 of the Watershed Protection and Flood Prevention Act, as amended [16 U.S.C. 1006a], and section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended [7 U.S.C. 1011(e)], and for advances in connection therewith, not to exceed any existing appropriation or authorization limitations and in such further amounts as the Congress from time to time determines in appropriation Acts. The amounts so authorized for loans and advances shall remain available until expended. Subject to the foregoing limitations, the use of collections deposited in the account may be authorized by the Congress in lieu or partially in lieu of authorizing the issuing of additional notes by the Secretary to the Secretary of the Treasury, and the account shall be budgeted on a net expenditure basis.

(d) Sale of notes and mortgages

The Secretary may sell and assign any notes and mortgages in the direct loan account with the consent of the borrower or without such consent when the borrower has failed to comply with his agreement to refinance the indebtedness at the request of the Secretary. Such loans may be sold at the balance due thereon or on such other basis as the Secretary may determine from time to time.

(e) Distribution of real estate loans among States

At least 25 per centum of the sums authorized in any fiscal year for direct loans to individuals to be made by the Secretary under subchapter I of this chapter shall be allocated equitably among the several States and territories on the basis of farm population and the prevalence of tenancy, as determined by the Secretary.

(f) Sale by lender and any holder of guaranteed portion of loan pursuant to regulations governing such sales; limitations; issuance of pool certificates representing ownership of guaranteed portion of guaranteed loan; terms and conditions, etc.; reporting requirements

(1)(A) The guaranteed portion of any loan made under this chapter may be sold by the lender, and by any subsequent holder, in accordance with regulations governing such sales as the Secretary shall establish, subject to the following limitations:

(i) All fees due the Secretary with respect to a guaranteed loan are to be paid in full before any sale.

(ii) The loan is to have been fully disbursed to the borrower before the sale.

(B) After a loan is sold in the secondary market, the lender shall remain obligated under its guarantee agreement with the Secretary, and shall continue to service the loan in accordance with the terms and conditions of such agreement.

(C) The Secretary shall develop such procedures as are necessary for the facilitation, administration, and promotion of secondary market operations, and for determining the increase of farmers' access to capital at reasonable rates and terms as a result of secondary market operations.

(D) This subsection shall not be interpreted to impede or extinguish the right of the borrower or the successor in interest to such borrower to prepay (in whole or in part) any loan made under this chapter, or to impede or extinguish the rights of any party under any provision of this chapter.

(2)(A) The Secretary may, directly or through a market maker approved by the Secretary, issue pool certificates representing ownership of part or all of the guaranteed portion of any loan guaranteed by the Secretary under this chapter. Such certificates shall be based on and backed by a pool established or approved by the Secretary and composed solely of the entire guaranteed portion of such loans.

(B) The Secretary may, on such terms and conditions as the Secretary deems appropriate, guarantee the timely payment of the principal and interest on pool certificates issued on behalf of the Secretary by approved market makers for purposes of this subsection. Such guarantee shall be limited to the extent of principal and interest on the guaranteed portions of loans that compose the pool. If a loan in such pool is prepaid, either voluntarily or by reason of default, the guarantee of timely payment of principal and interest on the pool certificates shall be reduced in proportion to the amount of principal and interest such prepaid loan represents in the pool. Interest on prepaid or defaulted loans shall accrue and be guaranteed by the Secretary only through the date of payment on the guarantee. During the term of the pool certificate, the certificate may be called for redemption due to prepayment or default of all loans constituting the pool.

(C) The full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guarantee of such pool certificates issued by approved market makers under this subsection. The Secretary may expend amounts in the Agricultural Credit Insurance Fund to make payments on such guarantees.

(D) The Secretary shall not collect any fee for any guarantee under this subsection. The preceding sentence shall not preclude the Secretary from collecting a fee for the functions described in paragraph (3).

(E) Within 30 days after a borrower of a guaranteed loan is in default of any principal or interest payment due for 60 days or more, the Secretary shall-

(i) purchase the pool certificates representing ownership of the guaranteed portion of the loan; and

(ii) pay the registered holder of the certificates an amount equal to the guaranteed portion of the loan represented by the certificate.

(F)(i) If the Secretary pays a claim under a guarantee issued under this subsection, the claim shall be subrogated fully to the rights satisfied by such payment, as may be provided by the Secretary.

(ii) No State or local law, and no Federal law, shall preclude or limit the exercise by the Secretary of the Secretary's ownership rights in the portions of loans constituting the pool against which the certificates are issued.

(3) On the adoption of final rules and regulations, the Secretary shall do the following:

(A) Provide for the central collection of registration information from all participating market makers for all loans and pool certificates sold under paragraphs (1) and (2). Such information shall include, with respect to each original sale and any subsequent sale, identification of the interest rate paid by the borrower to the lender, the lender's servicing fee, whether interest on the loan is at a fixed or variable rate, identification of each purchaser of a pool certificate, the interest rate paid on the certificate, and such other information as the Secretary deems appropriate.

(B) Before any sale, require the seller to disclose to each prospective purchaser of the portion of a loan guaranteed under this chapter and to each prospective purchaser of a pool certificate issued under paragraph (2), information on the terms, conditions, and yield of such instrument. As used in this subparagraph, if the instrument being sold is a loan, the term "seller" does not include (i) the person who made the loan or (ii) any person who sells three or fewer guaranteed loans per year.

(C) Provide for adequate custody of any pooled guaranteed loans.

(D) Take such actions as are necessary, in restructuring pools of the guaranteed portion of loans, to minimize the estimated costs of paying claims under guarantees issued under this subsection.

(E) Require each market maker-

(i) to service all pools formed, and participations sold, by the market maker; and

(ii) to provide the Secretary with information relating to the collection and disbursement of all periodic payments, prepayments, and default funds from lenders, to or from the reserve fund that the Secretary shall establish to enable the timely payment guarantee to be self-funding, and from all beneficial holders.

(F) Regulate market makers in pool certificates sold under this subsection.

(4)(A) Not later than March 31 of each year, the Secretary shall transmit to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives a report on the secondary market operations under this subsection during the preceding calendar year.

(B) Each report under subparagraph (A) shall include-

(i) the number and the total dollar amount of loans sold in the secondary market and the distribution of such loans by size of loan, size of lender, geographic location of lender, interest rate, maturity, lender servicing fees, whether the interest rate is fixed or variable, and premium paid;

(ii) the number and dollar amount of loans resold in the secondary market and the distribution of such loans by size of loan, interest rate, and premiums;

(iii) the number and total dollar amount of pools formed;

(iv) the number and total dollar amount of loans in each pool;

(v) the dollar amount, interest rate, and terms on each loan in each pool, and whether the interest rate is fixed or variable;

(vi) the number, face value, interest rate, and terms of the pool certificates issued for each pool;

(vii) to the maximum extent possible, the use by the lender of the proceeds of sales of loans in the secondary market for additional lending to farmers; and

(viii) an analysis of the information reported in clauses (i) through (vii) to assess farmers' access to capital at reasonable rates and terms as a result of secondary market operations.

(5) The Secretary may contract for goods and services to be used for the purposes of this subsection without regard to the provisions of titles 5, 40, and 41, and any regulations issued thereunder.

(Pub. L. 87 128, title III, §338, Aug. 8, 1961, 75 Stat. 316; Pub. L. 89 429, §5, May 24, 1966, 80 Stat. 167; Pub. L. 100 233, title VII, §711(a), Jan. 6, 1988, 101 Stat. 1707; Pub. L. 100 399, title VI, §605, Aug. 17, 1988, 102 Stat. 1006; Pub. L. 101 624, title XXIII, §2303(d), Nov. 28, 1990, 104 Stat. 3981.)

References in Text

For definition of "this chapter", referred to in subsecs. (a), (b), (c), (e), and (f), see note set out under section 1921 of this title.

Titles I, II, and IV of the Bankhead-Jones Farm Tenant Act, as amended, referred to in subsec. (c)(1), refer to titles I, II, and IV of act July 22, 1937, ch. 517, 50 Stat. 522 , as amended, which were formerly classified to sections 1001 to 1005, 1005a to 1005d, 1006, 1006c to 1006e, 1007, 1008, 1009; and 1014 to 1025, 1026, 1027 to 1029 of this title, respectively, were repealed by section 341(a) of Pub. L. 87 128, and are covered by this chapter.

The Farmers Home Administration Act of 1946, as amended, referred to in subsec. (c)(2), refers to act Aug. 14, 1946, ch. 964, 60 Stat. 1062 , as amended, which was classified to sections 1001 to 1005, 1005a to 1005d, 1007, 1008, 1009, 1015 to 1029, 1030, and 1031 of this title; section 371 of Title 12, Banks and Banking; and section 82h of Title 31, Money and Finance, and in so far as it amended provisions of titles I, II, and IV of the Bankhead-Jones Farm Tenant Act, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

Act of August 28, 1937 (50 Stat. 869), as amended, referred to in subsec. (c)(3), was formerly classified to sections 590r to 590x 4 of Title 16, Conservation, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

Act of June 25, 1948 (62 Stat. 1038), referred to in subsec. (c)(4), refers to a provision of the Second Deficiency Appropriation Act, 1948 (act June 25, 1948, ch. 658, 62 Stat. 1027 ), which provision was not classified to the Code.

Act of May 24, 1949 (63 Stat. 82), referred to in subsec. (c)(5), refers to a provision of the First Deficiency Appropriation Act, 1949 (act May 24, 1949, ch. 138, 63 Stat. 76 ), which provision was not classified to the Code.

Act of September 6, 1950 (64 Stat. 769), referred to in subsec. (c)(6), is classified to sections 1033, 1033 note, 1034, 1035, 1036, and 1037 to 1039 of this title.

Act of July 11, 1956 (70 Stat. 525), referred to in subsec. (c)(7), refers to a provision transferring certain responsibilities of the Secretary of the Interior to the Secretary of Agriculture, among other provisions (act July 11, 1956, ch. 565, 70 Stat. 525 ), which provision was not classified to the Code.

Codification

In subsec. (b), "chapter 31 of title 31" and "such chapter" substituted for "the Second Liberty Bond Act, as amended" and "such Act, as amended," respectively, on authority of Pub. L. 97 258, §4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance.

Amendments

1990-Subsec. (a). Pub. L. 101 624 inserted "or the Rural Development Administration" after "Farmers Home Administration".

1988-Subsec. (f)(5). Pub. L. 100 399 added par. (5).

Subsec. (f). Pub. L. 100 233 added subsec. (f).

1966-Subsec. (c). Pub. L. 89 429 inserted references to section 8 of the Watershed Protection and Flood Prevention Act, as amended, and section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended.

Effective Date of 1988 Amendment

Amendment by Pub. L. 100 399 effective as if enacted immediately after enactment of Pub. L. 100 233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100 399, set out as a note under section 2002 of Title 12, Banks and Banking.

Regulations

Section 711(b) of Pub. L. 100 233 provided that: "Within 180 days after the date of the enactment of this Act [Jan. 6, 1988], the Secretary shall develop and promulgate final regulations to implement this section and the amendment made by this section [amending this section and enacting provisions set out below]."

Pool Certificates Not To Be Issued Until Final Regulations Take Effect

Section 711(c) of Pub. L. 100 233 provided that: "The Secretary of Agriculture shall not implement paragraph (2) of section 338(f) of the Consolidated Farm and Rural Development Act [7 U.S.C. 1988(f)], as added by subsection (a), until the final regulations governing the administration of such paragraph take effect."

Abolition of Farmers Home Administration Direct Loan Account

The Farmers Home Administration direct loan account, created by subsec. (c) of this section, was abolished and its assets and liabilities transferred to the Agricultural Credit Insurance Fund by section 1929 of this title.

Loans to Indians

Authority of the Secretary of Agriculture to make loans to Indian tribes and tribal corporations to acquire land within reservations, see sections 488 to 492 of Title 25, Indians.

Section Referred to in Other Sections

This section is referred to in sections 1929, 1991 of this title; title 25 section 488.