7 U.S.C. § 1927 — Repayment requirements

Page 1078 TITLE 7—AGRICULTURE § 1926f (4) Ground well water contamination In the event of ground well water contami- nation, the Secretary shall allow a loan or subgrant to be made with grant funds under this section for the installation of water treat- ment where needed beyond the point of entry, with or without the installation of a new water well system. (c) Priority in awarding grants In awarding grants under this section, the Sec- retary shall give priority to an applicant that has substantial expertise and experience in pro- moting the safe and effective use of individually owned household water well systems, individ- ually owned household decentralized wastewater systems, and ground water. (d) Authorization of appropriations There is authorized to be appropriated to carry out this section $20,000,000 for each of fis- cal years 2019 through 2023. (Pub. L. 87–128, title III, § 306E, as added Pub. L. 107–171, title VI, § 6012(a), May 13, 2002, 116 Stat. 357; amended Pub. L. 110–234, title VI, § 6010, May 22, 2008, 122 Stat. 1163; Pub. L. 110–246, § 4(a), title VI, § 6010, June 18, 2008, 122 Stat. 1664, 1925; Pub. L. 113–79, title VI, § 6009, Feb. 7, 2014, 128 Stat. 843; Pub. L. 115–334, title VI, § 6409, Dec. 20, 2018, 132 Stat. 4761.) 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 L. 110–234 were repealed by section 4(a) of Pub.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, § 6409(1), substituted ‘‘Rural de- centralized water systems’’ for ‘‘Grants to nonprofit or- ganizations to finance the construction, refurbishing, and servicing of individually-owned household water well systems in rural areas for individuals with low or moderate incomes’’ in section catchline. Subsec. (a). Pub. L. 115–334, § 6409(2), substituted ‘‘60’’ for ‘‘100’’. Subsec. (b)(1). Pub. L. 115–334, § 6409(3)(A), inserted ‘‘and subgrants’’ after ‘‘loans’’ and ‘‘and individually owned household decentralized wastewater systems’’ after ‘‘well systems’’. Subsec. (b)(2). Pub. L. 115–334, § 6409(3)(B), added par. (2) and struck out former par. (2). Prior to amendment, text read as follows: ‘‘A loan made with grant funds under this section— ‘‘(A) shall have an interest rate of 1 percent; ‘‘(B) shall have a term not to exceed 20 years; and ‘‘(C) shall not exceed $11,000 for each water well sys- tem described in paragraph (1).’’ Subsec. (b)(4). Pub. L. 115–334, § 6409(3)(C), added par. (4). Subsec. (c). Pub. L. 115–334, § 6409(4), substituted ‘‘ef- fective use of individually owned household water well systems, individually owned household decentralized wastewater systems,’’ for ‘‘productive use of individ- ually-owned household water well systems’’. Subsec. (d). Pub. L. 115–334, § 6409(5), substituted ‘‘$20,000,000’’ for ‘‘$5,000,000’’ and ‘‘2019 through 2023’’ for ‘‘2014 through 2018’’. 2014—Subsec. (d). Pub. L. 113–79 substituted ‘‘$5,000,000 for each of fiscal years 2014 through 2018’’ for ‘‘$10,000,000 for each of fiscal years 2008 through 2012’’. 2008—Subsec. (b)(2)(C). Pub. L. 110–246, § 6010(1), sub- stituted ‘‘$11,000’’ for ‘‘$8,000’’. Subsec. (d). Pub. L. 110–246, § 6010(2), substituted ‘‘2008 through 2012’’ for ‘‘2003 through 2007’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2008 AMENDMENT Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of this title. EFFECTIVE DATE Pub. L. 107–171, title VI, § 6012(b), May 13, 2002, 116 Stat. 358, provided that: ‘‘The amendment made by sub- section (a) [enacting this section] takes effect on Octo- ber 1, 2002.’’ § 1926f. Contracts with not-for-profit third par- ties On and after November 10, 2005, notwith- standing the provisions of the Consolidated Farm and Rural Development Act [7 U.S.C. 1921 et seq.] (including the associated regulations) governing the Community Facilities Program, the Secretary may allow all Community Facil- ity Program facility borrowers and grantees to enter into contracts with not-for-profit third parties for services consistent with the require- ments of the Program, grant, and/or loan: Pro- vided, That the contracts protect the interests of the Government regarding cost, liability, main- tenance, and administrative fees. (Pub. L. 109–97, title VII, § 756, Nov. 10, 2005, 119 Stat. 2157.) Editorial Notes REFERENCES IN TEXT The Consolidated Farm and Rural Development Act, referred to in text, is title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, which is classified principally to this chapter. For complete classification of the Act to the Code, see Short Title note set out under section 1921 of this title and Tables. CODIFICATION Section was enacted as part of the Agriculture, Rural Development, Food and Drug Administration, and Re- lated Agencies Appropriations Act, 2006, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter. PRIOR PROVISIONS Provisions similar to those in this section were con- tained in the following prior appropriation acts: Pub. L. 108–447, div. A, title VII, § 770, Dec. 8, 2004, 118 Stat. 2848. Pub. L. 108–199, div. A, title VII, § 775, Jan. 23, 2004, 118 Stat. 40. § 1927. Repayment requirements (a) Period of repayment; interest rates (1) The period for repayment of loans under this subchapter shall not exceed forty years. (2) Except as otherwise provided in paragraphs (3), (4), (5), and (6) of this subsection, the inter- est rates on loans under this subchapter shall be as determined by the Secretary, but not in ex- cess of the current average market yield on out- standing marketable obligations of the United States with remaining periods to maturity com- parable to the average maturities of such loans, Page 1079 TITLE 7—AGRICULTURE § 1927 plus not to exceed 1 per centum, as determined by the Secretary, and adjusted to the nearest one-eighth of 1 per centum. (3)(A) Notwithstanding the provisions of the constitution or laws of any State limiting the rate or amount of interest that may be charged, taken, received, or reserved, except as provided in paragraph (6), the interest rates on loans (other than guaranteed loans), to public bodies or nonprofit associations (including Indian tribes on Federal and State reservations and other federally recognized Indian tribal groups) for water and waste disposal facilities and essen- tial community facilities shall be set by the Secretary at rates not to exceed the current market yield for outstanding municipal obliga- tions with remaining periods to maturity com- parable to the average maturity for such loans, and adjusted to the nearest one-eighth of 1 per centum; and not in excess of 5 per centum per annum for any such loans which are for the up- grading of existing facilities or construction of new facilities as required to meet applicable health or sanitary standards in areas where the median household income of the persons to be served by such facility is below the higher of 80 per centum of the statewide nonmetropolitan median household income or the poverty line es- tablished by the Office of Management and Budget, as revised under section 9902(2) of title 42 and in other areas as the Secretary may des- ignate where a significant percentage of the per- sons to be served by such facilities are of low in- come, as determined by the Secretary; and not in excess of 7 per centum per annum on loans for such facilities that do not qualify for the 5 per centum per annum interest rate but are located in areas where the median household income of the persons to be served by the facility does not exceed 100 per centum of the statewide non- metropolitan median household income. (B) Except as provided in subparagraph (D) and in paragraph (6), the interest rate on loans (other than guaranteed loans) under section 1934 of this title shall not be— (i) greater than the sum of— (I) an amount that does not exceed one- half of the current average market yield on outstanding marketable obligations of the United States with maturities of 5 years; and (II) an amount not exceeding 1 percent per year, as the Secretary determines is appro- priate; or (ii) less than 5 percent per year. (C) Notwithstanding subparagraph (A), the Secretary shall establish loan rates for health care and related facilities based solely on the in- come of the area to be served, and such rates shall be otherwise consistent with such subpara- graph. (D) JOINT FINANCING ARRANGEMENTS.—If a di- rect farm ownership loan is made under this subchapter as part of a joint financing arrange- ment and the amount of the direct farm owner- ship loan does not exceed 50 percent of the total principal amount financed under the arrange- ment, the interest rate on the direct farm own- ership loan shall be a rate equal to the greater of— (i) the difference between— (I) 2 percent; and (II) the interest rate for farm ownership loans under this subchapter; or (ii) 2.5 percent. (E) INTEREST RATES FOR WATER AND WASTE DIS- POSAL FACILITIES LOANS.— (i) IN GENERAL.—Except as provided in clause (ii) and notwithstanding subparagraph (A), in the case of a direct loan for a water or waste disposal facility— (I) in the case of a loan that would be sub- ject to the 5 percent interest rate limitation under subparagraph (A), the Secretary shall establish the interest rate at a rate that is equal to 60 percent of the current market yield for outstanding municipal obligations with remaining periods to maturity com- parable to the average maturity of the loan, adjusted to the nearest 1⁄8 of 1 percent; and (II) in the case of a loan that would be sub- ject to the 7 percent limitation under sub- paragraph (A), the Secretary shall establish the interest rate at a rate that is equal to 80 percent of the current market yield for out- standing municipal obligations with remain- ing periods to maturity comparable to the average maturity of the loan, adjusted to the nearest 1⁄8 of 1 percent. (ii) EXCEPTION.—Clause (i) does not apply to a loan for a specific project that is the subject of a loan that has been approved, but not closed, as of the date of enactment of this sub- paragraph. (4) Except as provided in paragraph (6), the in- terest rates on loans under sections 1926(a)(1) and 1932 of this title (other than guaranteed loans and loans as described in paragraph (3) of this subsection) shall be as determined by the Secretary, but not less than such rates as deter- mined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to ma- turity comparable to the average maturities of such loans, adjusted in the judgment of the Sec- retary of the Treasury to provide for rates com- parable to the rates prevailing in the private market for similar loans and considering the Secretary’s insurance of the loans, plus an addi- tional charge, prescribed by the Secretary, to cover the Secretary’s losses and cost of adminis- tration, which charge shall be deposited in the Rural Development Insurance Fund, and further adjusted to the nearest one-eighth of 1 per cen- tum. (5)(A) Except as provided in subparagraph (B), the interest rate on any loan made under this subchapter as a guaranteed loan shall be such rate as may be agreed upon by the borrower and the lender, but not in excess of a rate as may be determined by the Secretary. (B) In the case of a loan made under section 1932 of this title as a guaranteed loan, subpara- graph (A) shall apply notwithstanding the provi- sions of the constitution or laws of any State limiting the rate or amount of interest that may be charged, taken, received, or reserved. (6)(A) Notwithstanding any other provision of this section, in the case of loans (other than Page 1080 TITLE 7—AGRICULTURE § 1927 1 So in original. The semicolon probably should be a comma. guaranteed loans) made or insured under the au- thorities of this chapter specified in subpara- graph (B) for activities that involve the use of prime farmland as defined in subparagraph (C), the interest rates shall be the interest rates oth- erwise applicable under this section increased by 2 per centum per annum. Wherever practicable, construction by a State, municipality, or other political subdivision of local government that is supported by loans described in the preceding sentence shall be placed on land that is not prime farmland, in order to preserve the max- imum practicable amount of prime farmlands for production of food and fiber. Where other op- tions exist for the siting of such construction and where the governmental authority still de- sires to carry out such construction on prime farmland, the 2 per centum interest rate in- crease provided by this clause shall apply, but such increased interest rate shall not apply where such other options do not exist. (B) The authorities referred to in subpara- graph (A) are— (i) the provisions of section 1926(a)(1) of this title relating to loans for recreational develop- ments and essential community facilities, (ii) section 1932(a)(2)(A) of this title; 1 and (iii) section 1932(d) of this title. (C) For purposes of this paragraph, the term ‘‘prime farmland’’ means prime farmlands and unique farmland as those terms are defined in sections 657.5(a) and (b) of title 7, Code of Fed- eral Regulations (1980). (b) Payment of charges; prepayment of taxes and insurance The borrower shall pay such fees and other charges as the Secretary may require, and bor- rowers under this chapter shall prepay to the Secretary such taxes and insurance as the Sec- retary may require, on such terms and condi- tions as the Secretary may prescribe. (c) Mortgages, liens, and other security The Secretary shall take as security for the obligations entered into in connection with loans, mortgages on farms with respect to which such loans are made or such other security as the Secretary may require, and for obligations in connection with loans to associations under section 1926 of this title, shall take liens on the facility or such other security as he may deter- mine to be necessary. Such security instruments may constitute liens running to the United States notwithstanding the fact that the notes may be held by lenders other than the United States. A borrower may use the same collateral to secure two or more loans made, insured, or guaranteed under this subchapter, except that the outstanding amount of such loans may not exceed the total value of the collateral so used. (d) Additional collateral The Secretary may not— (1) require any borrower to provide addi- tional collateral to secure a farmer program loan made or insured under this chapter, if the borrower is current in the payment of prin- cipal and interest on the loan; or (2) bring any action to foreclose, or other- wise liquidate, any such loan as a result of the failure of a borrower to provide additional col- lateral to secure a loan, if the borrower was current in the payment of principal and inter- est on the loan at the time the additional col- lateral was requested. (Pub. L. 87–128, title III, § 307, Aug. 8, 1961, 75 Stat. 308; Pub. L. 92–419, title I, §§ 113, 114, 128(b), Aug. 30, 1972, 86 Stat. 660, 666; Pub. L. 95–334, title I, § 108, Aug. 4, 1978, 92 Stat. 422; Pub. L. 97–35, title I, § 160(a), Aug. 13, 1981, 95 Stat. 376; Pub. L. 99–198, title XIII, §§ 1304A, 1305, Dec. 23, 1985, 99 Stat. 1521; Pub. L. 100–233, title VI, §§ 603, 604, Jan. 6, 1988, 101 Stat. 1665, 1666; Pub. L. 101–624, title XVIII, § 1803(a), title XXIII, § 2383, Nov. 28, 1990, 104 Stat. 3818, 4050; Pub. L. 102–552, title V, § 516(c)(1), Oct. 28, 1992, 106 Stat. 4137; Pub. L. 103–328, title I, § 113(a), Sept. 29, 1994, 108 Stat. 2366; Pub. L. 104–127, title VI, §§ 604, 661(a), title VII, § 747(b)(1), Apr. 4, 1996, 110 Stat. 1086, 1106, 1128; Pub. L. 110–234, title VI, §§ 6011, 6012(b)(1), May 22, 2008, 122 Stat. 1163, 1165; Pub. L. 110–246, § 4(a), title VI, §§ 6011, 6012(b)(1), June 18, 2008, 122 Stat. 1664, 1925, 1927; Pub. L. 113–79, title V, §§ 5003, 5004, Feb. 7, 2014, 128 Stat. 834.) Editorial Notes REFERENCES IN TEXT The date of enactment of this subparagraph, referred to in subsec. (a)(3)(E)(ii), is the date of enactment of Pub. L. 110–246, which was approved June 18, 2008. This chapter, referred to in subsecs. (a)(6)(A), (b), and (d)(1), 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. 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 2014—Subsec. (a)(3)(D). Pub. L. 113–79, § 5003, added subpar. (D) and struck out former subpar. (D). Prior to amendment, text read as follows: ‘‘If a direct farm own- ership loan is made under this subchapter as part of a joint financing arrangement and the amount of the di- rect farm ownership loan does not exceed 50 percent of the total principal amount financed under the arrange- ment, the interest rate on the direct farm ownership loan shall be at least 4 percent annually.’’ Subsecs. (d), (e). Pub. L. 113–79, § 5004, redesignated subsec. (e) as (d) and struck out former subsec. (d). Prior to amendment, text read as follows: ‘‘With re- spect to a farm ownership loan made after December 23, 1985, unless appraised values of the rights to oil, gas, or other minerals are specifically included as part of the appraised value of collateral securing the loan, the rights to oil, gas, or other minerals located under the property shall not be considered part of the collateral securing the loan. Nothing in this subsection shall pre- vent the inclusion of, as part of the collateral securing the loan, any payment or other compensation the bor- rower may receive for damages to the surface of the collateral real estate resulting from the exploration for or recovery of minerals.’’ 2008—Subsec. (a)(3)(E). Pub. L. 110–246, § 6011, added subpar. (E). Subsec. (a)(6)(B)(ii). Pub. L. 110–246, § 6012(b)(1), added cl. (ii) and struck out former cl. (ii) which read as fol- lows: ‘‘clause (1) of section 1932(a) of this title, and’’. Page 1081 TITLE 7—AGRICULTURE § 1927 1996—Subsec. (a)(3)(B). Pub. L. 104–127, § 604(1), in- serted ‘‘subparagraph (D) and in’’ after ‘‘Except as pro- vided in’’. Subsec. (a)(3)(D). Pub. L. 104–127, § 604(2), added sub- par. (D). Subsec. (a)(4). Pub. L. 104–127, § 661(a)(1), substituted ‘‘1926(a)(1) and 1932 of this title’’ for ‘‘1924(b), 1926(a)(1), and 1932 of this title’’. Subsec. (a)(6)(B). Pub. L. 104–127, § 661(a)(2), inserted ‘‘and’’ at end of cl. (v), substituted a period for ‘‘, and’’ at end of cl. (vi), redesignated cls. (iii), (v), and (vi) as (i), (ii), and (iii), respectively, and struck out cls. (i), (ii), (iv), and (vii) which read as follows: ‘‘(i) clauses (2) and (3) of section 1923(a) of this title, ‘‘(ii) section 1924(b) of this title, ‘‘(iv) section 1926(a)(15) of this title, ‘‘(vii) section 1934(a) of this title as it relates to the making or insuring of loans under clauses (2) and (3) of section 1923(a) of this title.’’ Subsec. (a)(6)(B)(iii). Pub. L. 104–127, § 747(b)(1), sub- stituted ‘‘section 1932(d) of this title’’ for ‘‘subsections (d) and (e) of section 1932 of this title’’. 1994—Subsec. (a)(3)(A). Pub. L. 103–328, § 113(a)(1), sub- stituted ‘‘Notwithstanding the provisions of the con- stitution or laws of any State limiting the rate or amount of interest that may be charged, taken, re- ceived, or reserved, except’’ for ‘‘Except’’. Subsec. (a)(5). Pub. L. 103–328, § 113(a)(2), substituted ‘‘(5)(A) Except as provided in subparagraph (B), the’’ for ‘‘(5) The’’ and added subpar. (B). 1992—Subsec. (a)(6)(B)(ii) to (viii). Pub. L. 102–552 re- designated cls. (iii) to (viii) as (ii) to (vii) and struck out former cl. (ii) which read as follows: ‘‘the provi- sions of section 1924(a) of this title, relating to the fi- nancing of outdoor recreational enterprises or the con- version of farming or ranching operations to rec- reational uses,’’. 1990—Subsec. (a)(3)(A). Pub. L. 101–624, § 2383(1), sub- stituted ‘‘guaranteed’’ for ‘‘guranteed’’. Subsec. (a)(3)(B). Pub. L. 101–624, § 1803(a), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘‘Except as provided in paragraph (6), the interest rates on loans (other than guaranteed loans) under section 1934 of this title shall be as deter- mined by the Secretary, but not in excess of one-half of the current average market yield on outstanding mar- ketable obligations of the United States with remain- ing periods to maturity comparable to the average ma- turities of such loans, nor less than 5 per centum per annum.’’ Subsec. (a)(3)(C). Pub. L. 101–624, § 2383(2), added sub- par. (C). 1988—Subsec. (c). Pub. L. 100–233, § 603, inserted provi- sions at end relating to use of same collateral to secure two or more loans made, insured, or guaranteed under this subchapter. Subsec. (e). Pub. L. 100–233, § 604, added subsec. (e). 1985—Subsec. (a)(3)(A). Pub. L. 99–198, § 1304A, sub- stituted ‘‘where the median household income of the persons to be served by such facility is below the higher of 80 per centum of the statewide nonmetropolitan me- dian household income or the poverty line established by the Office of Management and Budget, as revised under section 9902(2) of title 42’’ for ‘‘where the median family income of the persons to be served by such facil- ity is below the poverty line prescribed by the Office of Management and Budget as adjusted under section 2971d of title 42’’ and prescribed a 7 per centum per annum ceiling on loans for facilities that do not qualify for the 5 per centum per annum interest rate but are lo- cated in areas where the median household income of the persons to be served by the facility does not exceed 100 per centum of the statewide nonmetropolitan me- dian household income. Subsec. (d). Pub. L. 99–198, § 1305, added subsec. (d). 1981—Subsec. (a). Pub. L. 97–35 in par. (2) inserted ref- erence to par. (6), in par. (3) designated existing provi- sions as subpar. (A), expanded provisions to take into account provisions of par. (6) and revised criteria for determination of applicable interest rates, and added subpar. (B), in par. (4) inserted exception for par. (6), and added par. (6). 1978—Subsec. (a). Pub. L. 95–334, § 108(1), substituted provisions relating to determination of interest rates on loans, except as provided in pars. (3) to (5), as not in excess of the current average market yield on out- standing marketable obligations of the United States, with comparable remaining periods of maturity to the average maturities of such loans plus additional ad- justed amounts, for provisions relating to establish- ment of interest rates on loans, except as specifically provided, but not in excess of 5 per centum per annum. Subsecs. (b), (c). Pub. L. 95–334, § 108(2), (3), added sub- sec. (b) and redesignated former subsec. (b) as (c). 1972—Subsec. (a). Pub. L. 92–419, §§ 113, 114, prescribed interest rates on rural development other than guaran- teed and guaranteed loans and escrow payment of taxes and insurance, respectively. Subsec. (b). Pub. L. 92–419, § 128(b), substituted ‘‘may’’ for ‘‘shall’’ in second sentence. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2008 AMENDMENT Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Pub. L. 103–328, title I, § 113(b), Sept. 29, 1994, 108 Stat. 2366, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) and (3), the amendments made by subsection (a) [amending this section] shall apply to a loan made, in- sured, or guaranteed under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) in a State on or after the date of enactment of this Act [Sept. 29, 1994]. ‘‘(2) STATE OPTION.—Except as provided in paragraph (3), the amendments made by subsection (a) shall not apply to a loan made, insured, or guaranteed under the Consolidated Farm and Rural Development Act in a State after the date (that occurs during the 3-year pe- riod beginning on the date of enactment of this Act) on which the State adopts a law or certifies that the vot- ers of the State have voted in favor of a provision of the constitution or law of the State that states that the State does not want the amendments made by sub- section (a) to apply with respect to loans made, in- sured, or guaranteed under such Act in the State. ‘‘(3) TRANSITIONAL PERIOD.—In any case in which a State takes an action described in paragraph (2), the amendments made by subsection (a) shall continue to apply to a loan made, insured, or guaranteed under the Consolidated Farm and Rural Development Act in the State after the date the action was taken pursuant to a commitment for the loan that was entered into dur- ing the period beginning on the date of enactment of this Act, and ending on the date on which the State takes the action.’’ EFFECTIVE DATE OF 1992 AMENDMENT Pub. L. 102–552, title V, § 516(c)(2), Oct. 28, 1992, 106 Stat. 4137, provided that: ‘‘The amendments made by paragraph (1) of this subsection [amending this section] shall take effect at the same time as the amendments made by section 501(a) of the Food, Agriculture, Con- servation, and Trade Act Amendments of 1991 (Public Law 102–237; 105 Stat. 1865) [amending section 1924 of this title] took effect. EFFECTIVE DATE OF 1981 AMENDMENT Pub. L. 97–35, title I, § 160(c), Aug. 13, 1981, 95 Stat. 378, provided that: ‘‘The amendments made by this section [amending this section and section 1946 of this title] shall apply to loans approved after September 30, 1981.’’ Page 1082 TITLE 7—AGRICULTURE § 1927a § 1927a. Loan interest rates charged by Farmers Home Administration; grant funds associated with loans Effective October 1, 1981, and thereafter, in the case of water and waste disposal and community facility borrowers, and effective November 12, 1983, and thereafter, in the case of housing and farm borrowers, upon request of the borrower, the interest rate charged by the Farmers Home Administration to such borrowers shall be the lower of the rates in effect at either the time of loan approval or loan closing and any Farmers Home Administration grant funds associated with such loans shall be set in amount based on the interest rate in effect at the time of loan ap- proval. (Pub. L. 99–88, title I, § 100, Aug. 15, 1985, 99 Stat. 296; Pub. L. 100–233, title VI, § 615(b)(1)(A), Jan. 6, 1988, 101 Stat. 1681.) Editorial Notes CODIFICATION Section was enacted as part of the Supplemental Ap- propriations Act, 1985, and not as part of the Consoli- dated Farm and Rural Development Act which com- prises this chapter. AMENDMENTS 1988—Pub. L. 100–233 substituted ‘‘Effective October 1, 1981, and thereafter, in the case of water and waste dis- posal and community facility borrowers, and effective November 12, 1983, and thereafter, in the case of hous- ing and farm borrowers’’ for ‘‘Effective November 12, 1983, and thereafter’’ and ‘‘to such borrowers’’ for ‘‘to housing, farm, water and waste disposal, and commu- nity facility borrowers’’. Statutory Notes and Related Subsidiaries APPLICABILITY OF 1988 AMENDMENT Pub. L. 100–233, title VI, § 615(b)(1)(B), Jan. 6, 1988, 101 Stat. 1682, provided that: ‘‘The amendment made by subparagraph (A) [amending this section] shall not apply to any note or other obligation sold under sec- tion 1001 of the Omnibus [Budget] Reconciliation Act of 1986 [Pub. L. 99–509, 7 U.S.C. 1929a note] on or before the date of the enactment of this paragraph [Jan. 6, 1988].’’ § 1928. Full faith and credit (a) In general A contract of insurance or guarantee executed by the Secretary under this chapter shall be an obligation supported by the full faith and credit of the United States. (b) Contestability A contract of insurance or guarantee executed by the Secretary under this chapter shall be in- contestable except for fraud or misrepresenta- tion that the lender or any holder— (1) has actual knowledge of at the time the contract or guarantee is executed; or (2) participates in or condones. (Pub. L. 87–128, title III, § 308, Aug. 8, 1961, 75 Stat. 308; Pub. L. 87–798, Oct. 11, 1962, 76 Stat. 908; Pub. L. 89–240, § 2(a), Oct. 7, 1965, 79 Stat. 932; Pub. L. 90–488, § 6, Aug. 15, 1968, 82 Stat. 770; Pub. L. 92–133, Oct. 5, 1971, 85 Stat. 364; Pub. L. 101–624, title XXIII, § 2388(a), Nov. 28, 1990, 104 Stat. 4052; Pub. L. 104–127, title VI, § 605, Apr. 4, 1996, 110 Stat. 1086.) 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 1996—Pub. L. 104–127 amended section generally. Prior to amendment, section read as follows: ‘‘Loans under this subchapter may be insured by the Secretary when- ever funds are advanced or a loan is purchased by a lender other than the United States. In connection with insurance of loans, the Secretary— ‘‘(1) is authorized to make agreements with respect to the servicing of loans insured hereunder and to purchase such loans on such terms and conditions as he may prescribe; and ‘‘(2) may retain out of payments by the borrower a charge at a rate specified in the insurance agreement applicable to the loan. Any contract of insurance executed by the Secretary under this subchapter shall be an obligation supported by the full faith and credit of the United States and in- contestable except for fraud or misrepresentation of which the holder has actual knowledge.’’ 1990—Pub. L. 101–624 redesignated pars. (a) and (b) as pars. (1) and (2), respectively, and in par. (1), sub- stituted ‘‘prescribe;’’ for ‘‘prescribe,;’’. 1971—Pub. L. 92–133 eliminated October 1, 1971, as time limitation for insurance of loans. 1968—Pub. L. 90–488 authorized insurance of loans until Oct. 1, 1971, without the $450,000,000 limitation on aggregate amount in any one year. 1965—Pub. L. 89–240 substituted ‘‘$450,000,000’’ for ‘‘$200,000,000’’, ‘‘may retain’’ for ‘‘shall retain’’, and ‘‘specified in the insurance agreement applicable to the loan’’ for ‘‘determined by the Secretary from time to time equivalent to not less than one-half of 1 per cen- tum per annum on the principal unpaid balance of the loan’’, and struck out ‘‘except that no agreement shall provide for purchase by the Secretary at a date sooner than three years from the date of the note’’ after ‘‘he may prescribe’’. 1962—Pub. L. 87–798 increased aggregate amount of loans that may be insured in any one year from $150,000,000 to $200,000,000. § 1929. Agricultural Credit Insurance Fund (a) Revolving fund The fund established pursuant to section 11(a) of the Bankhead-Jones Farm Tenant Act, as amended, shall hereafter be called the Agricul- tural Credit Insurance Fund and is hereinafter in this subchapter referred to as the ‘‘fund’’. The fund shall remain available as a revolving fund for the discharge of the obligations of the Sec- retary under agreements insuring loans under this subchapter and loans and mortgages insured under prior authority. (b) Deposits of funds; investments; purchase of notes Moneys in the fund not needed for current op- erations shall be deposited in the Treasury of the United States to the credit of the fund or in- vested in direct obligations of the United States or obligations guaranteed by the United States. The Secretary may purchase with money in the fund any notes issued by the Secretary to the Secretary of the Treasury for the purpose of ob- taining money for the fund.