References in Text
For statutory changes to section 1926(a)(1) of this title by the Rural Development Act of 1972, referred to in subsec. (a), see 1972 Amendment note for [section 104 of Pub. L. 92–419], set out under section 1926 of this title. For complete classification of the Rural Development Act of 1972 to the Code, see Short Title of 1972 Amendment note set out under section 1921 of this title and Tables.
This chapter, referred to in subsecs. (b), (d), (e), (f), and (g)(5), (7), 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.
Codification
[Pub. L. 99–591] is a corrected version of [Pub. L. 99–500].
In subsec. (d), “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
2018—Subsec. (b). [Pub. L. 115–334] struck out “and section 1928 of this title” after “provisions of this section”.
1996—Subsec. (a). [Pub. L. 104–127, § 741(b)], struck out “, 1926(a)(14),” after “1926(a)(1)”.
[Pub. L. 104–127, § 661(c)(1)], substituted “1926(a)(1), 1926(a)(14), and 1932 of this title” for “1924(b), 1926(a)(1), 1926(a)(14), 1932, and 1942(b) of this title”.
Subsec. (b). [Pub. L. 104–127, § 661(c)(2)], which directed amendment of the first sentence of subsection (b) by striking “and section 1928 of this title”, could not be executed because “and section 1928 of this title” did not appear in such sentence. Corrected amendment was made by [Pub. L. 115–334], effective as if included in [Pub. L. 104–127]. See 2018 Amendment note above and Effective Date of 2018 Amendment note below.
Subsec. (g). [Pub. L. 104–127, § 745], redesignated pars. (2) to (8) as (1) to (7), respectively, and struck out former par. (1) which read as follows: “to make rural development loans which could be insured under this chapter whenever he has a reasonable assurance that they can be sold without undue delay, and he may sell and insure such loans;”.
1986—Subsec. (e). [Pub. L. 99–500], [Pub. L. 99–509], and [Pub. L. 99–591] amended second sentence of subsec. (e) identically, substituting “Notes and other obligations” for “Notes” and substituting “, including sale on a nonrecourse basis. The Secretary and any subsequent purchaser of such notes or other obligations sold by the Secretary on a nonrecourse basis shall be relieved of any responsibilities that might have been imposed had the borrower remained indebted to the Secretary.” for period at end.
Subsec. (h). [Pub. L. 99–514] substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”, which for purposes of codification was translated as “title 26” thus requiring no change in text.
1978—Subsec. (a). [Pub. L. 95–334, § 107(b)], inserted reference to section 1926(a)(14) of this title.
Subsec. (g)(8). [Pub. L. 95–334, § 110], substituted provisions relating to payment of costs of administration necessary to insure loans under subsec. (a) of this section, make grants under sections 1926(a) and 1932 of this title, and otherwise carry out such programs for provisions relating to payment of costs of administration of the rural loan development program.
1977—Subsec. (g)(3). [Pub. L. 95–113] substituted “any deferred or defaulted installment” for “any defaulted installment”.
Statutory Notes and Related Subsidiaries
Effective Date of 2018 Amendment
[Pub. L. 115–334, title VI, § 6701(b)(2)], Dec. 20, 2018, [132 Stat. 4778], provided that: “The amendment made by this subsection [amending this section] shall take effect as if included in the enactment of section 661(c)(2) of the Federal Agricultural Improvement and Reform Act of 1996 ([Public Law 104–127]).”
Effective Date of 1977 Amendment
Amendment by [Pub. L. 95–113] effective Oct. 1, 1977, see [section 1901 of Pub. L. 95–113], set out as a note under section 1307 of this title.
Disaster Assistance for Rural Business Enterprises
[Pub. L. 101–82, title IV, § 401], Aug. 14, 1989, [103 Stat. 583], as amended by [Pub. L. 101–220, § 9(d)], Dec. 12, 1989, [103 Stat. 1882], provided that:“(a)
Loan Guarantees.—
The Secretary of Agriculture shall guarantee loans made in rural areas to—
“(1)
public, private, or cooperative organizations, to Indian tribes on Federal and State reservations or other federally recognized Indian tribal groups, or to any other business entities to assist such organizations, tribes, or entities in alleviating the distress caused to such organizations, tribes, or entities, directly or indirectly, by the drought, freeze, storm, excessive moisture, earthquake, or related condition in 1988 or 1989; and
“(2)
such organizations, tribes, or entities that refinance or restructure debt as a result of losses incurred, directly or indirectly, because of such natural disasters in 1988 or 1989.
“(b)
Eligible Loans.—
“(1)
In general.—
Loans guaranteed under this section shall be loans made by any Federal or State chartered bank, savings and loan association, cooperative lending agency, insurance company, or other legally organized lending agency.
“(2)
Production agriculture.—
No application for a loan guarantee under this section shall be denied on the basis that such organization, tribe, or entity engages in whole or in part in production agriculture.
“(c)
Loan Guarantee Limits.—
“(1)
Percentage of principal and interest.—
No guarantee under this section shall exceed 90 percent of the principal and interest amount of the loan or $2,500,000, whichever is the lesser amount.
“(2)
Total amount.—
The total amount of loan guarantee under this section shall not exceed $300,000,000.
“(d)
Use of the Rural Development Insurance Fund.—
The Secretary shall use the Rural Development Insurance Fund established under section 309A of the Consolidated Farm and Rural Development Act (
7 U.S.C. 1929a) for the purposes of discharging the obligations of the Secretary under this section.”
Similar provisions were contained in the following prior act:
[Pub. L. 100–387, title III, § 331], Aug. 11, 1988, [102 Stat. 951].
Sale of Rural Development Notes and Other Obligations
[Pub. L. 99–509, title I, § 1001], Oct. 21, 1986, [100 Stat. 1874], as amended by [Pub. L. 100–233, title VIII, § 803], Jan. 6, 1988, [101 Stat. 1714]; [Pub. L. 101–220, § 12], Dec. 12, 1989, [103 Stat. 1883], provided that:“(a)
Sales Required.—
The Secretary of Agriculture, under such terms as the Secretary may prescribe, shall sell notes and other obligations held in the Rural Development Insurance Fund established under section 309A of the Consolidated Farm and Rural Development Act [
7 U.S.C. 1929a] in such amounts as to realize net proceeds to the Government of not less than—
“(1)
$1,000,000,000 from such sales during fiscal year 1987,
“(2)
$552,000,000 from such sales during fiscal year 1988, and
“(3)
$547,000,000 from such sales during fiscal year 1989.
“(b)
[Amended subsec. (e) of this section]
“(c)
Contract Provisions.—
Consistent with section 309A(e) of the Consolidated Farm and Rural Development Act [
7 U.S.C. 1929a(e)], as amended by subsection (b), any sale of notes or other obligations, as described in subsection (a), shall not alter the terms specified in the note or other obligation, except that, on sale, a note or other obligation shall not be subject to the provisions of section 333(c) of the Consolidated Farm and Rural Development Act [
7 U.S.C. 1983(c)].
“(d)
Eligibility to Purchase Notes.—
Notwithstanding any other provision of law, each institution of the Farm Credit System shall be eligible to purchase notes and other obligations held in the Rural Development Insurance Fund and to service (including the extension of additional credit and all other actions necessary to preserve, conserve, or protect the institution’s interest in the purchased notes or other obligations), collect, and dispose of such notes and other obligations, subject only to such terms and conditions as may be agreed to by the Secretary of Agriculture and the purchasing institution and as may be approved by the Farm Credit Administration.
“(e)
Loan Servicing.—
Prior to selling any note or other obligation, as described in subsection (a), the Secretary of Agriculture shall require persons offering to purchase the note or other obligation to demonstrate—
“(1)
an ability or resources to provide such servicing, with respect to the loans represented by the note or other obligation, that the Secretary deems necessary to ensure the continued performance on the loan; and
“(2)
the ability to generate capital to provide the borrowers of the loans such additional credit as may be necessary in proper servicing of the loans.
“(f)
Right of First Refusal.—
“(1)
In general.—
Before conducting a sale of a portfolio of notes or other obligations under this section, the Secretary of Agriculture shall—
“(A)
determine whether the issuer of any unsold note or other obligation desires to purchase the note or other obligation; and
“(B)
if so, hold open for 30 days, an offer to sell the note or other obligation to the issuer at a price to be determined under paragraph (2).
“(2)
Determination of offering price.—
“(A)
Authority.—
The Secretary of Agriculture shall determine, in accordance with subparagraph (B), the price at which a note or other obligation shall be offered for sale under this subsection.
“(B)
Price.—
Such price shall be determined by discounting the payment stream of such note or other obligation at the yield on the then most recent sale of the portfolio, adjusted for changes in market interest rates, servicing and sales expenses, and the maturity and interest rate of such note.
“(3)
Prohibitions.—
“(A)
Purchase of obligation not tied to purchase of other obligations.—
The Secretary of Agriculture shall not require the issuer of any unsold note or other obligation to be offered for sale under this subsection to purchase any other such note or other obligation as a condition of the sale of any such note or other obligation to the issuer.
“(B)
Offer to be made without regard to financing.—
The Secretary shall offer notes or other obligations for sale to the issuers thereof under this subsection without regard to the manner in which such issuers intend to finance the purchase of such notes or other obligations. However, the price of sale to any issuer using tax exempt financing shall be determined using a yield reflective of the Schedule of Certified Interest Rates as published monthly by the Secretary of the Treasury.
“(g)
Applicability of Prohibition on Curtailment or Limitation of Service.—
Section 306(b) of the Consolidated Farm and Rural Development Act (
7 U.S.C. 1926(b)) shall be applicable to all notes or other obligations sold or intended to be sold under this section.
“(h)
(1)
Notwithstanding the provisions of section 633 of the Rural Development, Agriculture, and Related Agencies Appropriations Act, 1989 ([Public Law 100–460]) [title VI, Oct. 1, 1988, [102 Stat. 2263]], the Secretary of Agriculture shall offer to the issuer of any unsold note or other obligation described in paragraph (2)(A) for which such issuer made the good faith deposit described in paragraph (2)(A) the opportunity to purchase such note or other obligation consistent with the provisions of this subsection and subsections (f)(2) and (f)(3).
“(2)
The provisions of this subsection shall apply only to those issuers who:
“(A)
on or before March 9, 1989, made a good faith deposit under this section for fiscal year 1989 with the Secretary to purchase a note or other obligation held in the Rural Development Insurance Fund; and
“(B)
otherwise meet all eligibility criteria, as such criteria existed immediately prior to May 9, 1989, at the time the purchase occurs under this subsection.
“(3)
The opportunity to purchase any such note or other obligation shall be held open, under the policies and procedures in effect under subsections (f)(2) and (f)(3) immediately prior to May 9, 1989, for 150 days after the date of enactment of this subsection [Dec. 12, 1989]. The Secretary shall not require any further good faith deposit from issuers who qualify under this subsection. The Secretary shall notify eligible issuers of the opportunity afforded under this subsection within 30 days after the date of enactment of this subsection and may require such issuers to express an intention to purchase their note or other obligation by a date certain.”
[Pub. L. 99–500, title III, § 381], Oct. 18, 1986, [100 Stat. 1783–369], and [Pub. L. 99–591, title III, § 381], Oct. 30, 1986, [100 Stat. 3341–372], provided that:“(a)
In General.—
The Secretary of Agriculture shall, under such terms as the Secretary may prescribe, sell notes and other obligations held in the Rural Development Insurance Fund established under section 309A of the Consolidated Farm and Rural Development Act (
7 U.S.C. 1929a) in such amounts as to realize net proceeds of not less than—
“(1)
$25,000,000 from such sales during fiscal year 1987;
“(2)
$36,000,000 from such sales during fiscal year 1988; and
“(3)
$37,000,000 from such sales during fiscal year 1989.
“(b)
[Amended subsec. (e) of this section]
“(c)
Farm Credit System Institutions.—
Notwithstanding any other provision of law, institutions of the Farm Credit System operating under the Farm Credit Act of 1971 (
12 U.S.C. 2001) shall be eligible to purchase notes and other obligations held in the Rural Development Insurance Fund and to service (including the extension of additional credit and all other actions necessary to preserve, conserve, or protect the institutions’ interests in such notes and other obligations), collect, and dispose of such notes and other obligations, subject only to such terms and conditions as may be agreed to by the Secretary of Agriculture and such purchasing institutions and as are approved by the Farm Credit Administration.”