12 U.S.C. § 2018 — Security; terms

Page 1296 TITLE 12—BANKS AND BANKING § 2016 Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2016. Interest rates and other charges (a) In general Loans and discounts made by a Farm Credit Bank shall bear such rate or rates of interest or discount, and be on such terms and conditions, as may be determined by the board of directors of the bank from time to time. (b) Setting rates and charges In setting rates and charges, it shall be the ob- jective to provide the types of credit needed by eligible borrowers at the lowest reasonable costs on a sound business basis taking into consider- ation the cost of money to the bank, necessary reserve and expenses of the bank and associa- tions, and providing services to members. The loan documents or discounting and financing agreements, may provide for the interest rate or rates to vary from time to time during the re- payment period of the loan or agreement. (Pub. L. 92–181, title I, § 1.8, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1626; amended Pub. L. 100–399, title IV, § 401(g), Aug. 17, 1988, 102 Stat. 996.) Editorial Notes PRIOR PROVISIONS A prior section 2016, Pub. L. 92–181, title I, § 1.8, Dec. 10, 1971, 85 Stat. 586; Pub. L. 96–592, title I, § 105, Dec. 24, 1980, 94 Stat. 3438, related to eligibility, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1988—Subsec. (a). Pub. L. 100–399 substituted ‘‘such rate or rates of interest or discount, and be’’ for ‘‘inter- est at a rate or rates, and’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2017. Eligibility The credit and financial services authorized in this subchapter may be made available to per- sons who are or become stockholders or mem- bers of the bank or associations in the district, and who are— (1) bona fide farmers, ranchers, or producers or harvesters of aquatic products; (2) persons furnishing to farmers and ranch- ers farm-related services directly related to their on-farm operating needs; or (3) owners of rural homes. (Pub. L. 92–181, title I, § 1.9, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1626.) Editorial Notes PRIOR PROVISIONS A prior section 2017, Pub. L. 92–181, title I, § 1.9, Dec. 10, 1971, 85 Stat. 586; Pub. L. 96–592, title I, § 106, Dec. 24, 1980, 94 Stat. 3438; Pub. L. 100–233, title IV, § 426, title VIII, § 802(d), Jan. 6, 1988, 101 Stat. 1657, 1710; Pub. L. 100–399, title IV, § 412, title VII, § 701, Aug. 17, 1988, 102 Stat. 1004, 1006, related to security, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2018. Security; terms (a) Real estate loans (1) Maximum level of loans (A) In general Real estate mortgage loans originated by a Farm Credit Bank, or in which a Farm Cred- it Bank participates in with a lender that is not a System institution, shall not exceed 85 percent of the appraised value of the real es- tate security, except as provided for in sub- paragraphs (C) and (D). (B) Regulation The Farm Credit Administration may, by regulation, require that loans not exceed 75 percent of the appraised value of the real es- tate security. (C) Guaranteed loans If the loan is guaranteed by Federal, State, or other governmental agencies, the loan may not exceed 97 percent of the appraised value of the real estate security, as may be authorized under regulations of the Farm Credit Administration. (D) Private mortgage insurance A loan on which private mortgage insur- ance is obtained may exceed 85 percent of the appraised value of the real estate secu- rity to the extent that the loan amount in excess of such 85 percent is covered by the insurance. (2) Security All loans originated or participated in by a bank under this section shall be secured by first liens on interests in real estate of such classes as may be prescribed by regulations of the Farm Credit Administration. (3) Value of security To adequately secure the loan, the value of security shall be determined by appraisal under standards prescribed by the bank in ac- Page 1297 TITLE 12—BANKS AND BANKING § 2019 cordance with regulations of the Farm Credit Administration. (4) Additional security Additional security for any loan may be re- quired by the bank to supplement real estate security. Credit factors, other than the ratio between the amount of the loan and the secu- rity value, shall be given due consideration. (b) Intermediate credit Loans, other than real estate loans, and dis- counts made under the provisions of this sub- chapter shall be repayable in not more than 7 years (15 years if made to producers or har- vesters of aquatic products) from the time that such are made or discounted by the Farm Credit Bank, except that the Board of Directors, under regulations of the Farm Credit Administration, may approve policies permitting loans, ad- vances, or discounts (other than those made to producers or harvesters of aquatic products) to be repayable in not more than 10 years from the time that such are made or discounted by such bank. (Pub. L. 92–181, title I, § 1.10, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1627; amended Pub. L. 100–399, title IV, § 401(h), (i), Aug. 17, 1988, 102 Stat. 996; Pub. L. 104–105, title II, §§ 202, 203, Feb. 10, 1996, 110 Stat. 172.) Editorial Notes PRIOR PROVISIONS A prior section 2018, Pub. L. 92–181, title I, § 1.10, Dec. 10, 1971, 85 Stat. 586; Pub. L. 96–592, title I, § 107, Dec. 24, 1980, 94 Stat. 3438, related to purposes, prior to the gen- eral amendment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1996—Subsec. (a)(1)(A). Pub. L. 104–105, § 202(b), sub- stituted ‘‘subparagraphs (C) and (D)’’ for ‘‘paragraphs (2) and (3)’’. Subsec. (a)(1)(D). Pub. L. 104–105, § 202(a), added sub- par. (D). Subsec. (a)(5). Pub. L. 104–105, § 203, struck out head- ing and text of par. (5). Text read as follows: ‘‘Each Farm Credit Bank shall require a financial statement from each borrower at least once every 3 years, or dur- ing such shorter period of time as may be required under regulations of the Farm Credit Administration.’’ 1988—Subsec. (a)(2). Pub. L. 100–399, § 401(h)(1), sub- stituted ‘‘prescribed by regulations of’’ for ‘‘approved by’’. Subsec. (a)(3). Pub. L. 100–399, § 401(h)(2), substituted ‘‘under standards’’ for ‘‘under appraisal standards’’ and ‘‘in accordance with regulations of’’ for ‘‘and approved by’’. Subsec. (b). Pub. L. 100–399, § 401(i), substituted ‘‘har- vesters of aquatic products) from’’ for ‘‘harvester of aquatic products) from’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. § 2019. Purposes for extensions of credit (a) Agricultural or aquatic purposes (1) In general Loans made by a Farm Credit Bank to farm- ers, ranchers, and producers or harvesters of aquatic products may be for any agricultural or aquatic purpose and other credit needs of the applicant, including financing for basic processing and marketing directly related to the applicant’s operations and those of other eligible farmers, ranchers, and producers or harvesters of aquatic products, except that the operations of the applicant shall supply some portion of the total processing or marketing for which financing is extended. (2) Limitation on loans for basic processing and marketing operations The aggregate of the financing provided by any Farm Credit Bank for basic processing and marketing directly related to the oper- ations of farmers, ranchers, and producers or harvesters of aquatic products, if the oper- ations of the applicant supply less than 20 per- cent of the total processing or marketing for which financing is extended, shall not exceed 15 percent of the total of all outstanding loans of such bank. (b) Rural housing financing (1) In general Loans and discounts may be made to rural residents for rural housing financing under regulations of the Farm Credit Administra- tion. (2) Limitations Rural housing financed under this sub- chapter shall be for single-family, moderate- priced dwellings and their appurtenances not inconsistent with the general quality and standards of housing existing in, or planned or recommended for, the rural area where it is lo- cated, except that a Farm Credit Bank may not at any one time have a total amount of loans outstanding for such rural housing to persons other than farmers or ranchers in amounts exceeding 15 percent of the total of all loans outstanding in such bank. (3) Rural areas For rural housing purposes under this sec- tion the term ‘‘rural areas’’ shall not be de- fined to include any city or village having a population in excess of 2,500 inhabitants. (c) Farm-related services (1) In general Loans to persons furnishing farm-related services to farmers and ranchers directly re- lated to their on-farm operating needs may be made for the necessary capital structures and equipment and initial working capital for such services. (2) Facilities The banks may own and lease, or lease with option to purchase, to persons eligible for credit under this subchapter or subchapter II, equipment or facilities needed in the oper- ations of such persons.