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7 U.S.C. § 936a — Prepayment of loans

Federal law — U.S. Code and appendices · legal_authorities

7 U.S.C. § 936a — Prepayment of loans

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Source location: Title 7, Chapter 31, § 936a; chapter-031-rural-electrification-and-telephone-service.md

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**(a) Conditions for prepayment** Except as provided in subsection (c), a borrower of a loan made by the Federal Financing Bank and guaranteed under [section 936 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section936&num=0&edition=prelim) may prepay such loan (or any loan advance thereunder) by paying the outstanding principal balance due on the loan (or advance), if— (1) the loan is outstanding on July 2, 1986; (2) private capital, with the existing loan guarantee, is used to replace the loan; and (3) the borrower certifies that any savings from such prepayment will be passed on to its customers or used to improve the financial strength of the borrower in cases of financial hardship. **(b) Charges on prepayment prohibited** No sums in addition to the payment of the outstanding principal balance due on the loan may be charged as the result of such prepayment against the borrower, the fund, or the Secretary. **(c) Disqualification for prepayment on finding of adverse affect on Federal Financing Bank** (1) A borrower will not qualify for prepayment under this section if, in the opinion of the Secretary of the Treasury, to prepay in such borrower’s case would adversely affect the operation of the Federal Financing Bank. (2) Paragraph (1) shall be effective in fiscal year 1987 only for any loan the prepayment of the principal amount of which will cause the cumulative amount of net proceeds from all such prepayments made during such year to exceed $2,017,500,000. **(d) Amount of permissible prepayments; establishment of eligibility criteria** (1) The Secretary shall permit, subject to subsection (a), prepayments of principal on loans in fiscal year 1987 under this section or Public Law 99–349 in such amounts as to realize net proceeds from all such prepayments in fiscal year 1987 in an amount not less than $2,017,500,000. (2) The Secretary shall establish— (A) eligibility criteria to ensure that any loan prepayment activity required to be carried out under this subsection will be directed to those cooperative borrowers in greatest need of the benefits associated with prepayment, as determined by the Secretary; and (B) such other eligibility criteria as the Secretary determines are necessary to carry out this subsection. **(e) Assignability and transferability of guarantees of loans** Any guarantee of a loan prepaid under this section shall be fully assignable under the provisions of [section 936 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section936&num=0&edition=prelim) and transferable. However, the Secretary may require that any such guarantee, if transfered 11 So in original. Probably should be “transferred”. or assigned, be transferred or assigned to a loan or security that, if sold, will be grouped with nonguaranteed loans or securities and sold in a manner to ensure that such sale will not unreasonably compete with the marketing of obligations of the United States.

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Federal law — U.S. Code and appendices · legal_authorities

7 U.S.C. § 936 — Guaranteed loans; accommodations and subordination of liens; interest rates; assignability of guaranteed loans and related guarantees

The Secretary may provide financial assistance to borrowers for purposes provided in this chapter by guaranteeing loans, in the full amount thereof, made by the National Rural Utilities Cooperative Finance Corporation and any other legally organized lending agency, or by accommodating or subordinating liens or mortgages in the fund held by the Secretary as owner or as trustee or custodian for purchases of notes from the fund, or by any combination of such guarantee, accommodation, or subordination. The Secretary shall not provide such assistance to any borrower of a telephone loan under this chapter unless the borrower specifically applies for such assistance. No fees or charges shall be assessed for any such accommodation or subordination. Guaranteed loans shall bear interest at the rate agreed upon by the borrower and the lender. Guaranteed loans, and accommodation and subordination of liens or mortgages, may be made concurrently with an insured loan. The amount of guaranteed loans shall be subject only to such limitations as to amounts as may be authorized from time to time by the Congress of the United States: Provided, That any amounts guaranteed hereunder shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States. As used in this subchapter a guaranteed loan is one which is initially made, held, and serviced by a legally organized lending agency and which is guaranteed by the Secretary hereunder. A guaranteed loan, including the related guarantee, may be assigned to the extent provided in the contract of guarantee executed by the Secretary under this subchapter; the assignability of such loan and guarantee

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Federal law — U.S. Code and appendices · legal_authorities

7 U.S.C. § 936a — Prepayment of loans

Page 539 TITLE 7—AGRICULTURE § 936a 1 So in original. Probably should be ‘‘transferred’’. Editorial Notes CODIFICATION Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246. AMENDMENTS 2018—Pub. L. 115–334 substituted ‘‘the National Rural Utilities Cooperative Finance Corporation’’ for ‘‘the Rural Telephone Bank, National Rural Utilities Coop- erative Finance Corporation,’’. 2008—Pub. L. 110–246, § 6102(b), substituted ‘‘No fees or charges shall be assessed for any such accommodation or subordination.’’ for ‘‘No fees or charges shall be as- sessed for any such guarantee, accommodation, or sub- ordination. With respect to guarantees issued by the Secretary under this section, on the request of the bor- rower of any such loan so guaranteed, the loan shall be made by the Federal Financing Bank and at a rate of interest that is not more than the rate of interest ap- plicable to other similar loans then being made or pur- chased by the Bank.’’ 1994—Pub. L. 103–354 substituted ‘‘Secretary’’ for ‘‘Ad- ministrator’’ wherever appearing. 1990—Pub. L. 101–624 inserted provisions prohibiting Administrator from providing assistance to telephone borrower unless borrower specifically applies therefor. 1981—Pub. L. 97–35 inserted provisions relating to loans made by Federal Financing Bank with respect to guarantees issued under this section, and substituted ‘‘an insured loan’’ for ‘‘a loan insured at the standard rate’’. 1975—Pub. L. 94–124 authorized assignment of guaran- teed loans and their related guarantees and inserted ‘‘initially’’ before ‘‘made, held, and serviced’’ in provi- sion defining guaranteed loans as that term is used in this subchapte

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