§1999. Interest rate reduction program
(a) Establishment and execution
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) of this section 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) The total amount of funds used by the Secretary to carry out this section may not exceed $490,000,000.
(f) List of approved lender participants in guaranteed loan program
Each Farmers Home Administration county supervisor shall make available to farmers, on request, a list of approved lenders in the area that participate in the Farmers Home Administration 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.
(h) Demonstration project for purchase of System land
(1) During the 4-year period beginning on January 6, 1988, the Secretary shall establish and carry out a demonstration project in accordance with this subsection under which the Secretary may issue certificates of eligibility to Farmers Home Administration eligible borrowers to reduce the interest rate paid by the borrowers on loans obtained from legally organized lending institutions and Farm Credit System institutions to purchase acquired properties owned by institutions of the Farm Credit System certified to issue preferred stock under section 2278b 7 of title 12.
(2) To be eligible to participate in the project, a borrower must-
(A) meet the requirements of subsection (b)(1) of this section;
(B) provide a down payment to purchase the land, using personal funds of the borrower, equal to at least 15 percent of the purchase price of the land; and
(C) meet all conservation requirements for the land that are imposed on borrowers of guaranteed farm ownership loans under this chapter.
(3) A certificate of eligibility issued under this subsection may be used to reduce the interest rate payable by an eligible borrower on a guaranteed loan by not more than 4 percent.
(4) A certificate of eligibility issued under this subsection shall reduce the interest rate on a guaranteed loan for a term equal to the outstanding term of such loan, or 5 years, whichever is less.
(5) Notwithstanding any other provision of law, if the lender of a guaranteed loan assisted under this subsection reduces the interest rate payable on the loan by at least 1 full percentage point, the Secretary may guarantee the repayment of 95 percent of the principal and interest due on the loan.
(6) In carrying out this subsection, the Secretary may-
(A) certify the eligibility of borrowers to participate in the demonstration project;
(B) process applications for participation in the project;
(C) provide certificate of eligibility to eligible borrowers on a timely basis consistent with the availability of acquired property owned by institutions of the Farm Credit System certified to issue preferred stock under section 2278b 7 of this title; and
(D) set aside the largest practicable portion of funds made available to guarantee farm ownership loans under this chapter (including unobligated funds) to carry out this subsection.
(7) To carry out this subsection, the Secretary may transfer such amounts as may be necessary from farm operating guaranteed loans to farm ownership guaranteed loans.
(8) In carrying out this subsection, Farm Credit System institutions shall-
(A) sell land to eligible borrowers under this subsection at fair market value;
(B) to the extent practicable, set aside each fiscal year land acquired or owned by such institutions of the Farm Credit System in an aggregate amount not to exceed $250,000,000 at fair market value, for purchase by eligible borrowers in accordance with this subsection; and
(C) if necessary, subdivide tracts of land made available under this subsection into parcels that permit eligible borrowers to purchase the parcels consistent with limits placed on the size of loans made, insured, or guaranteed under this chapter.
(9) Not later than 60 days after January 6, 1988, the Secretary and the Farm Credit Administration shall develop a joint memorandum of understanding governing the implementation of this subsection.
(Pub. L. 87 128, title III, §351, as added Pub. L. 99 198, title XIII, §1320, Dec. 23, 1985,
Termination of Section
For termination of section by section 1320 of Pub. L. 99 198, see Effective and Termination Dates note below.
References in Text
For definition of "this chapter", referred to in subsecs. (a), (e)(1), (g), and (h)(2)(C), (6)(D), (8)(C), see note set out under section 1921 of this title.
Amendments
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 a note under section 511r of this title.
Effective and Termination Dates
Section 1320 of Pub. L. 99 198, as amended by Pub. L. 100 233, title VI, §613(a), Jan. 6, 1988,
Section Referred to in Other Sections
This section is referred to in sections 1948, 1983a, 1991, 1994 of this title.