7 USC 1935 - Down payment loan program

U.S Code last checked for updates: Nov 22, 2024

§ 1935.

Down payment loan program

(a)

In general

(1)

Establishment

(2)

Administration

(b)

Loan terms

(1)

Principal

Each loan made under this section shall be in an amount that does not exceed 45 percent of the least of—

(A)

the purchase price of the farm or ranch to be acquired;

(B)

the appraised value of the farm or ranch to be acquired; or

(C)

$667,000.

(2)

Interest rate

The interest rate on any loan made by the Secretary under this section shall be a rate equal to the greater of—

(A)

the difference obtained by subtracting 4 percent from the interest rate for farm ownership loans under this subchapter; or

(B)

1.5 percent.

(3)

Duration

(4)

Repayment

(5)

Nature of retained security interest

The Secretary shall retain an interest in each farm or ranch acquired with a loan made under this section that shall—

(A)

be secured by the farm or ranch;

(B)

be junior only to such interests in the farm or ranch as may be conveyed at the time of acquisition to the person (including a lender) from whom the borrower obtained a loan used to acquire the farm or ranch; and

(C)

require the borrower to obtain the permission of the Secretary before the borrower may grant an additional security interest in the farm or ranch.

(c)

Limitations

(1)

Borrowers required to make minimum down payment

(2)

Prohibited types of financing

The Secretary shall not make a loan under this section with respect to a farm or ranch if the farm or ranch is to be acquired with other financing that contains any of the following conditions:

(A)

The financing is to be amortized over a period of less than 30 years.

(B)

A balloon payment will be due on the financing during the 20-year period beginning on the date the loan is to be made by the Secretary.

(d)

Administration

In carrying out this section, the Secretary shall, to the maximum extent practicable—

(1)

facilitate the transfer of farms and ranches from retiring farmers and ranchers to persons eligible for insured loans under this subchapter;

(2)

make efforts to widely publicize the availability of loans under this section among—

(A)

potentially eligible farmers or ranchers;

(B)

retiring farmers and ranchers; and

(C)

applicants for farm ownership loans under this subchapter;

(3)

encourage retiring farmers and ranchers to assist in the sale of their farms and ranches to eligible farmers or ranchers by providing seller financing;

(4)

coordinate the loan program established by this section with State programs that provide farm ownership or operating loans for—

(A)

beginning farmers or ranchers;

(B)

socially disadvantaged farmers or ranchers, as defined in section 2003(e) of this title; or

(C)

veteran farmers or ranchers, as defined in section 2279(a) of this title; and; and 1

 So in original.

(5)

establish annual performance goals to promote the use of the down payment loan program and other joint financing arrangements as the preferred choice for direct real estate loans made by any lender to an eligible farmer or rancher.

(e)

Definition of eligible farmer or rancher

In this section, the term “eligible farmer or rancher” means—

(1)

a qualified beginning farmer or rancher;

(2)

a socially disadvantaged farmer or rancher, as defined in section 2003(e) of this title; and

(3)

a veteran farmer or rancher, as defined in section 2279(a) of this title.

(Pub. L. 87–128, title III, § 310E, as added Pub. L. 102–554, § 7(a), Oct. 28, 1992, 106 Stat. 4144; amended Pub. L. 107–171, title V, § 5005, May 13, 2002, 116 Stat. 342; Pub. L. 110–234, title V, § 5004, May 22, 2008, 122 Stat. 1144; Pub. L. 110–246, § 4(a), title V, § 5004, June 18, 2008, 122 Stat. 1664, 1905; Pub. L. 113–79, title V, § 5005, Feb. 7, 2014, 128 Stat. 834; Pub. L. 115–334, title XII, § 12306(c), Dec. 20, 2018, 132 Stat. 4969.)

cite as: 7 USC 1935