7 U.S.C. § 1988 — Appropriations

Page 1147 TITLE 7—AGRICULTURE § 1988 § 1986. Conflicts of interests (a) Acceptance of fees, commissions, gifts, or other considerations prohibited No officer, attorney, or other employee of the Secretary shall, directly or indirectly, be the beneficiary of or receive any fee, commission, gift, or other consideration for or in connection with any transaction or business under this chapter other than such salary, fee, or other compensation as he may receive as such officer, attorney, or employee. (b) Acquisition of interest in land by certain offi- cers or employees of Department of Agri- culture prohibited; 3-year period Except as otherwise provided in this sub- section, no officer or employee of the Depart- ment of Agriculture who acts on or reviews an application made by any person under this chap- ter for a loan to purchase land may acquire, di- rectly or indirectly, any interest in such land for a period of three years after the date on which such action is taken or such review is made. This prohibition shall not apply to a former member of a county committee upon a determination by the Secretary, prior to the ac- quisition of such interest, that such former member acted in good faith when acting on or reviewing such application. (c) Certifications on loans to family members prohibited No member of a county committee shall know- ingly make or join in making any certification with respect to a loan to purchase any land in which he or any person related to him within the second degree of consanguinity or affinity has or may acquire any interest or with respect to any applicant related to him within the sec- ond degree of consanguinity or affinity. (d) Penalties Any persons violating any provision of this section shall, upon conviction thereof, be pun- ished by a fine of not more than $2,000 or impris- onment for not more than two years, or both. (Pub. L. 87–128, title III, § 336, Aug. 8, 1961, 75 Stat. 316; Pub. L. 98–258, title VI, § 606, Apr. 10, 1984, 98 Stat. 140; Pub. L. 107–171, title V, § 5501(b), May 13, 2002, 116 Stat. 351.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a) and (b), was in the original ‘‘this title’’, meaning title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, known as the Consoli- dated Farm and Rural Development Act, which is clas- sified principally to this chapter. For complete classi- fication of title III to the Code, see Short Title note set out under section 1921 of this title and Tables. AMENDMENTS 2002—Subsec. (b). Pub. L. 107–171 struck out ‘‘provided for in section 1982 of this title’’ after ‘‘former member of a county committee’’. 1984—Pub. L. 98–258 designated first, second, and third sentences of existing provisions as subsecs. (a), (c), and (d), respectively, and added subsec. (b). § 1987. Debt adjustment and credit counseling; ‘‘summary period’’ defined; loan summary statements (a) The Secretary may provide voluntary debt adjustment assistance between farmers and their creditors and may cooperate with State, territorial, and local agencies and committees engaged in such debt adjustment, and may give credit counseling. (b)(1) As used in this subsection, the term ‘‘summary period’’ means— (A) the period beginning on December 23, 1985, and ending on the date on which the first loan summary statement is issued after De- cember 23, 1985; or (B) the period beginning on the date of issuance of the preceding loan summary state- ment and ending on the date of issuance of the current loan summary statement. (2) On the request of a borrower of a loan made or insured (but not guaranteed) under this chap- ter, the Secretary shall issue to such borrower a loan summary statement that reflects the ac- count activity during the summary period for each loan made or insured under this chapter to such borrower, including— (A) the outstanding amount of principal due on each such loan at the beginning of the sum- mary period; (B) the interest rate charged on each such loan; (C) the amount of payments made on and their application to each such loan during the summary period and an explanation of the basis for the application of such payments; (D) the amount of principal and interest due on each such loan at the end of the summary period; (E) the total amount of unpaid principal and interest on all such loans at the end of the summary period; (F) any delinquency in the repayment of any such loan; (G) a schedule of the amount and date of payments due on each such loan; and (H) the procedure the borrower may use to obtain more information concerning the sta- tus of such loans. (Pub. L. 87–128, title III, § 337, Aug. 8, 1961, 75 Stat. 316; Pub. L. 99–198, title XIII, § 1316, Dec. 23, 1985, 99 Stat. 1528.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (b)(2), 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 1985—Pub. L. 99–198 designated existing provisions as subsec. (a) and added subsec. (b). § 1988. Appropriations (a) Authorization There is authorized to be appropriated to the Secretary such sums as the Congress may from Page 1148 TITLE 7—AGRICULTURE § 1988 time to time determine to be necessary to en- able the Secretary to carry out the purposes of this chapter and for the administration of assets transferred to the Farmers Home Administra- tion or the Rural Development Administration. (b) Sale by lender and any holder of guaranteed portion of loan pursuant to regulations gov- erning such sales; limitations; issuance of pool certificates representing ownership of guaranteed portion of guaranteed loan; terms and conditions, etc.; reporting require- ments (1)(A) The guaranteed portion of any loan made under this chapter may be sold by the lender, and by any subsequent holder, in accord- ance with regulations governing such sales as the Secretary shall establish, subject to the fol- lowing limitations: (i) All fees due the Secretary with respect to a guaranteed loan are to be paid in full before any sale. (ii) The loan is to have been fully disbursed to the borrower before the sale. (B) After a loan is sold in the secondary mar- ket, the lender shall remain obligated under its guarantee agreement with the Secretary, and shall continue to service the loan in accordance with the terms and conditions of such agree- ment. (C) The Secretary shall develop such proce- dures as are necessary for the facilitation, ad- ministration, and promotion of secondary mar- ket operations, and for determining the increase of farmers’ access to capital at reasonable rates and terms as a result of secondary market oper- ations. (D) This subsection shall not be interpreted to impede or extinguish the right of the borrower or the successor in interest to such borrower to prepay (in whole or in part) any loan made under this chapter, or to impede or extinguish the rights of any party under any provision of this chapter. (2)(A) The Secretary may, directly or through a market maker approved by the Secretary, issue pool certificates representing ownership of part or all of the guaranteed portion of any loan guaranteed by the Secretary under this chapter. Such certificates shall be based on and backed by a pool established or approved by the Sec- retary and composed solely of the entire guaran- teed portion of such loans. (B) The Secretary may, on such terms and conditions as the Secretary deems appropriate, guarantee the timely payment of the principal and interest on pool certificates issued on behalf of the Secretary by approved market makers for purposes of this subsection. Such guarantee shall be limited to the extent of principal and interest on the guaranteed portions of loans that compose the pool. If a loan in such pool is prepaid, either voluntarily or by reason of de- fault, the guarantee of timely payment of prin- cipal and interest on the pool certificates shall be reduced in proportion to the amount of prin- cipal and interest such prepaid loan represents in the pool. Interest on prepaid or defaulted loans shall accrue and be guaranteed by the Sec- retary only through the date of payment on the guarantee. During the term of the pool certifi- cate, the certificate may be called for redemp- tion due to prepayment or default of all loans constituting the pool. (C) The full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guar- antee of such pool certificates issued by ap- proved market makers under this subsection. The Secretary may expend amounts in the Agri- cultural Credit Insurance Fund to make pay- ments on such guarantees. (D) The Secretary shall not collect any fee for any guarantee under this subsection. The pre- ceding sentence shall not preclude the Secretary from collecting a fee for the functions described in paragraph (3). (E) Within 30 days after a borrower of a guar- anteed loan is in default of any principal or in- terest payment due for 60 days or more, the Sec- retary shall— (i) purchase the pool certificates rep- resenting ownership of the guaranteed portion of the loan; and (ii) pay the registered holder of the certifi- cates an amount equal to the guaranteed por- tion of the loan represented by the certificate. (F)(i) If the Secretary pays a claim under a guarantee issued under this subsection, the claim shall be subrogated fully to the rights sat- isfied by such payment, as may be provided by the Secretary. (ii) No State or local law, and no Federal law, shall preclude or limit the exercise by the Sec- retary of the Secretary’s ownership rights in the portions of loans constituting the pool against which the certificates are issued. (3) On the adoption of final rules and regula- tions, the Secretary shall do the following: (A) Provide for the central collection of reg- istration information from all participating market makers for all loans and pool certifi- cates sold under paragraphs (1) and (2). Such information shall include, with respect to each original sale and any subsequent sale, identi- fication of the interest rate paid by the bor- rower to the lender, the lender’s servicing fee, whether interest on the loan is at a fixed or variable rate, identification of each purchaser of a pool certificate, the interest rate paid on the certificate, and such other information as the Secretary deems appropriate. (B) Before any sale, require the seller to dis- close to each prospective purchaser of the por- tion of a loan guaranteed under this chapter and to each prospective purchaser of a pool certificate issued under paragraph (2), infor- mation on the terms, conditions, and yield of such instrument. As used in this subpara- graph, if the instrument being sold is a loan, the term ‘‘seller’’ does not include (i) the per- son who made the loan or (ii) any person who sells three or fewer guaranteed loans per year. (C) Provide for adequate custody of any pooled guaranteed loans. (D) Take such actions as are necessary, in restructuring pools of the guaranteed portion of loans, to minimize the estimated costs of paying claims under guarantees issued under this subsection. (E) Require each market maker— (i) to service all pools formed, and partici- pations sold, by the market maker; and 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