7 U.S.C. § 1989 — Rules and regulations

Page 1149 TITLE 7—AGRICULTURE § 1989 (ii) to provide the Secretary with informa- tion relating to the collection and disburse- ment of all periodic payments, prepayments, and default funds from lenders, to or from the reserve fund that the Secretary shall es- tablish to enable the timely payment guar- antee to be self-funding, and from all bene- ficial holders. (F) Regulate market makers in pool certifi- cates sold under this subsection. (4) The Secretary may contract for goods and services to be used for the purposes of this sub- section without regard to the provisions of titles 5, 40, and 41, and any regulations issued there- under. (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; Pub. L. 104–127, title VII, § 749(a), Apr. 4, 1996, 110 Stat. 1129; Pub. L. 105–362, title I, § 101(a), Nov. 10, 1998, 112 Stat. 3281.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, 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. AMENDMENTS 1998—Subsec. (b)(4), (5). Pub. L. 105–362 redesignated par. (5) as (4) and struck out former par. (4) which pro- vided that not later than March 31 of each year, Sec- retary was to transmit to Congress a report on sec- ondary market operations under subsec. (b) during pre- ceding calendar year, and described contents of reports. 1996—Subsecs. (b) to (f). Pub. L. 104–127 redesignated subsec. (f) as (b) and struck out former subsecs. (b) to (e) which provided for: in subsec. (b), form and denomi- nation of notes to obtain funds for making direct loans under this chapter as well as maturities, terms and conditions, interest rate, purchase by Treasury, and public debt transaction; in subsec. (c), establishment of Farmers Home Administration direct loan account as well as deposits into account, liabilities, obligations, expenditures, and net expenditure basis of budgeting; in subsec. (d), sale of notes and mortgages; and in subsec. (e), distribution of real estate loans among States. 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 Pre- vention Act, as amended, and section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended. Statutory Notes and Related Subsidiaries 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 Pub. L. 100–233, title VII, § 711(b), Jan. 6, 1988, 101 Stat. 1709, 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 im- plement 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 Pub. L. 100–233, title VII, § 711(c), Jan. 6, 1988, 101 Stat. 1709, provided that: ‘‘The Secretary of Agriculture shall not implement paragraph (2) of section 338(f) [now 338(b)] of the Consolidated Farm and Rural Develop- ment Act [7 U.S.C. 1988(f) [now 1988(b)]], as added by subsection (a), until the final regulations governing the administration of such paragraph take effect.’’ LOANS TO INDIANS Authority of the Secretary of Agriculture to make loans to Indian tribes and tribal corporations to ac- quire land within reservations, see sections 5136 to 5143 of Title 25, Indians. § 1989. Rules and regulations (a) In general The Secretary is authorized to make such rules and regulations, prescribe the terms and conditions for making or insuring loans, secu- rity instruments and agreements, except as oth- erwise specified herein, and make such delega- tions of authority as he deems necessary to carry out this chapter. (b) Debt service margin requirements Notwithstanding subsection (a), in providing farmer program loan guarantees under this chapter, the Secretary shall consider the income of the borrower adequate if the income is equal to or greater than the income necessary— (1) to make principal and interest payments on all debt obligations of the borrower, in a timely manner; (2) to cover the necessary living expenses of the family of the borrower; and (3) to pay all other obligations and expenses of the borrower not financed through debt ob- ligations referred to in paragraph (1). (c) Certified Lenders Program (1) In general The Secretary shall establish a program under which the Secretary shall guarantee loans for any purpose specified in subchapter II that are made by lending institutions cer- tified by the Secretary. (2) Certification requirements The Secretary shall certify a lending insti- tution that meets such criteria as the Sec- retary may prescribe in regulations, including the ability of the institution to properly make, service, and liquidate the loans of the institution. (3) Condition of certification As a condition of the certification, the Sec- retary shall require the institution to under- take to service the loans guaranteed by the Secretary under this subsection, using stand- ards that are not less stringent than generally accepted banking standards concerning loan servicing employed by prudent commercial or cooperative lenders. The Secretary shall, at least annually, monitor the performance of Page 1150 TITLE 7—AGRICULTURE § 1989 each certified lender to ensure that the condi- tions of the certification are being met. (4) Effect of certification Notwithstanding any other provision of law: (A) The Secretary shall guarantee 80 per- cent of a loan made under this subsection by a certified lending institution as described in paragraph (1), subject to county com- mittee certification that the borrower of the loan meets the eligibility requirements and such other criteria as may be applicable to loans guaranteed by the Secretary under other provisions of this chapter. (B) With respect to loans to be guaranteed by the Secretary under this subsection, the Secretary shall permit certified lending in- stitutions to make appropriate certifi- cations (as provided by regulations issued by the Secretary)— (i) relating to issues such as credit- worthiness, repayment ability, adequacy of collateral, and feasibility of farm oper- ation; and (ii) that the borrower is in compliance with all requirements of law, including regulations issued by the Secretary. (C) The Secretary shall approve or dis- approve a guarantee not later than 14 cal- endar days after the date that the lending institution applied to the Secretary for the guarantee. If the Secretary rejects the loan application within the 14-day period, the Secretary shall state, in writing, all of the reasons the application was rejected. (5) Relationship to other requirements Neither this subsection nor subsection (d) shall affect the responsibility of the Secretary to certify eligibility, review financial informa- tion, and otherwise assess an application. (d) Preferred Certified Lenders Program (1) In general Commencing not later than two years after October 28, 1992, the Secretary shall establish a Preferred Certified Lenders Program for lenders who establish their— (A) knowledge of, and experience under, the program established under subsection (c); (B) knowledge of the regulations con- cerning the guaranteed loan program; and (C) proficiency related to the certified lender program requirements. The Secretary shall certify any lending insti- tution as a Preferred Certified Lender that meets such criteria as the Secretary may pre- scribe by regulation. (2) Revocation of designation The designation of a lender as a Preferred Certified Lender shall be revoked at any time that the Secretary determines that such lend- er is not adhering to the rules and regulations applicable to the program or if the loss experi- ences of a Preferred Certified Lender are ex- cessive as compared to other Preferred Cer- tified Lenders, except that such suspension or revocation shall not affect any outstanding guarantee. (3) Condition of certification As a condition of such preferred certifi- cation, the Secretary shall require the institu- tion to undertake to service the loans guaran- teed by the Secretary under this subsection using generally accepted banking standards concerning loan servicing employed by pru- dent commercial or cooperative lenders. The Secretary shall, at least annually, monitor the performance of each Preferred Certified Lend- er to ensure that the conditions of such cer- tification are being met. (4) Effect of preferred lender certification Notwithstanding any other provision of law, the Secretary shall— (A) guarantee 80 percent of an approved loan made by a certified lending institution as described in this subsection, subject to county committee certification that the bor- rower meets the eligibility requirements or such other criteria as may be applicable to loans guaranteed by the Secretary under other provisions of this chapter; (B) permit certified lending institutions to make all decisions, with respect to loans to be guaranteed by the Secretary under this subsection relating to credit worthiness, the closing, monitoring, collection and liquida- tion of loans, and to accept appropriate cer- tifications, as provided by regulations issued by the Secretary, that the borrower is in compliance with all requirements of law or regulations promulgated by the Secretary; and (C) be deemed to have guaranteed 80 per- cent of a loan made by a preferred certified lending institution as described in paragraph (1), if the Secretary fails to approve or reject the application of such institution within 14 calendar days after the date that the lending institution presented the application to the Secretary. If the Secretary rejects the appli- cation within the 14-day period, the Sec- retary shall state, in writing, the reasons the application was rejected. (e) Administration of Certified Lenders and Pre- ferred Certified Lenders programs The Secretary may administer the loan guar- antee programs under subsections (c) and (d) through central offices established in States or in multi-State areas. (Pub. L. 87–128, title III, § 339, Aug. 8, 1961, 75 Stat. 318; Pub. L. 102–554, § 18, Oct. 28, 1992, 106 Stat. 4155; Pub. L. 106–31, title III, § 3019(a), May 21, 1999, 113 Stat. 99; Pub. L. 107–171, title V, § 5309, May 13, 2002, 116 Stat. 346; Pub. L. 115–334, title V, § 5401(d), Dec. 20, 2018, 132 Stat. 4674.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, 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. Page 1151 TITLE 7—AGRICULTURE § 1990a AMENDMENTS 2018—Subsec. (d)(3). Pub. L. 115–334 substituted ‘‘Pre- ferred Certified Lender’’ for ‘‘preferred certified lend- er’’. 2002—Subsec. (e). Pub. L. 107–171 added subsec. (e). 1999—Subsec. (b)(3). Pub. L. 106–31 struck out ‘‘, including expenses of replacing capital items (deter- mined after taking into account depreciation of the items)’’ after ‘‘paragraph (1)’’. 1992—Pub. L. 102–554, inserted section catchline, des- ignated existing provisions as subsec. (a), inserted heading, and added subsecs. (b) to (d). Statutory Notes and Related Subsidiaries REGULATIONS Pub. L. 102–554, § 23, Oct. 28, 1992, 106 Stat. 4161, pro- vided that: ‘‘(a) INTERIM REGULATIONS.—Not later than 180 days after the date of enactment of this Act [Oct. 28, 1992], the Secretary of Agriculture shall issue such interim regulations as are necessary to implement this Act [see Short Title of 1992 Amendment note set out under sec- tion 1921 of this title] and the amendments made by this Act. ‘‘(b) FINAL REGULATIONS.—Not later than October 1, 1993, the Secretary of Agriculture shall issue such final regulations as are necessary to implement this Act and the amendments made by this Act.’’ Pub. L. 100–233, title VI, § 624, Jan. 6, 1988, 101 Stat. 1685, provided that: ‘‘Within 150 days after the date of the enactment of this title [Jan. 6, 1988], and after con- sidering public comment obtained under section 553 of title 5, United States Code, the Secretary shall issue final regulations to carry out the amendments made by this title [enacting sections 1981d, 1981e, 1983c, and 2001 to 2005 of this title, amending sections 1927, 1927a, 1981, 1982, 1983b, 1985, 1991, 1997, 1999, and 2000 of this title, and amending provisions set out as a note under sec- tion 1999 of this title].’’ STUDY AND REPORT TO CONGRESS BEFORE ISSUANCE OF CERTAIN FINAL REGULATIONS Pub. L. 100–233, title VI, § 621, Jan. 6, 1988, 101 Stat. 1684, provided that: ‘‘Not later than 60 days before the Secretary of Agriculture issues final regulations pro- viding for the use of ratios and standards as part of loan applications or preapplications, for determining the degree of potential loan risk on loans insured or guaranteed under the Consolidated Farm and Rural De- velopment Act [7 U.S.C. 1921 et seq.], the Secretary shall complete a study and report to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Rep- resentatives on the effects of such regulations on a rep- resentative sample of persons who, as of the date of the enactment of this Act [Jan. 6, 1988], are borrowers or potential borrowers of such loans, and shall dem- onstrate in such study that the implementation of such final regulations will not result in a portfolio of bor- rowers that is inconsistent with the purposes of the Consolidated Farm and Rural Development Act.’’ AVAILABILITY OF FUNDS FOR CONTINUING ASSISTANCE TO DELINQUENT BORROWERS; PROHIBITION ON USE OF FUNDS Pub. L. 100–71, title I, July 11, 1987, 101 Stat. 429, pro- vided in part that: ‘‘Hereafter, funds appropriated or available to the Farmers Home Administration under this or any other Act to make or to service farm loans shall be available for continuing assistance to delinquent borrowers on the basis of the policies contained in Farmers Home Administration Announcement Number 1113–1960, dated November 30, 1984. ‘‘Hereafter, none of the funds appropriated or made available by this or any other Act, or otherwise made available to the Secretary of Agriculture or the Farm- ers Home Administration, may be used to implement section 1944.16(c)(1) of title 7, Code of Federal Regula- tions, as published in 52 Federal Register 11983 (April 14, 1987) or any other regulation that would have the same effect as such regulation.’’ COORDINATED FINANCIAL STATEMENTS; USE OF SUBMISSION REQUIREMENT PROHIBITED Pub. L. 99–198, title XIII, § 1325, Dec. 23, 1985, 99 Stat. 1540, provided that: ‘‘The Secretary of Agriculture shall not use or require the submission of the coordinated fi- nancial statement referred to in the proposed regula- tions of the Farmers Home Administration published in the Federal Register of November 8, 1983 (48 F.R. 51312–51317) in connection with an application sub- mitted on or after the date of the enactment of this Act [Dec. 23, 1985] for any loan under any program of the Department of Agriculture carried out by the Farmers Home Administration.’’ § 1990. Transfer of lands to Secretary The President may at any time in his discre- tion transfer to the Secretary any right, inter- est, or title held by the United States in any lands acquired in the program of national de- fense and no longer needed therefor, which the President shall find suitable for the purposes of this chapter, and the Secretary shall dispose of such lands in the manner and subject to the terms and conditions of the chapter. (Pub. L. 87–128, title III, § 340, Aug. 8, 1961, 75 Stat. 318.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, 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. Executive Documents DELEGATION OF FUNCTIONS Authority of President under this section in his dis- cretion to transfer to Secretary of Agriculture any right, interest or title held by United States in any lands acquired in program of national defense and no longer needed for that program, and to determine suit- ability of lands to be transferred, for purposes referred to in this section, delegated to Administrator of Gen- eral Services, provided, that exercise by Administrator of authority delegated to him herein shall require con- currence of Secretary of Defense as to absence of fur- ther need of lands for national defense program, see section 1(15) of Ex. Ord. No. 11609, July 22, 1971, 36 F.R. 13747, set out as a note under section 301 of Title 3, The President. § 1990a. Refinancing of certain rural hospital debt Assistance under section 1926(a) of this title for a community facility, or under section 1932 of this title, may include the refinancing of a debt obligation of a rural hospital as an eligible loan or loan guarantee purpose if the assistance would help preserve access to a health service in a rural community, meaningfully improve the financial position of the hospital, and otherwise meet the financial feasibility and adequacy of security requirements of the Rural Development Agency.