7 U.S.C. § 1999 — Interest rate reduction program

Page 1162 TITLE 7—AGRICULTURE § 1999 process, of guarantee proceeds on loans in de- fault. (Pub. L. 87–128, title III, § 350, as added Pub. L. 99–198, title XIII, § 1319, Dec. 23, 1985, 99 Stat. 1531.) 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. § 1999. Interest rate reduction program (a) Establishment of program The Secretary shall establish and carry out in accordance with this section an interest rate re- duction program for loans guaranteed under this chapter. (b) Contracts with lenders Under such program, the Secretary shall enter into a contract with, and make payments to, a legally organized institution to reduce during the term of such contract the interest rate paid by a borrower on a guaranteed loan made by such institution if— (1) the borrower— (A) is unable to obtain sufficient credit elsewhere to finance the actual needs of the borrower at reasonable rates and terms, tak- ing into consideration private and coopera- tive rates and terms for a loan for a similar purpose and period of time in the commu- nity in or near which the borrower resides; (B) is otherwise unable to make payments on such loan in a timely manner; and (C) has a total estimated cash income dur- ing the 24-month period beginning on the date such contract is entered into (including all farm and nonfarm income) that will equal or exceed the total estimated cash ex- penses to be incurred by the borrower during such period (including all farm and nonfarm expenses); and (2) the lender reduces during the term of such contract the annual rate of interest pay- able on such loan by a minimum percentage specified in such contract. (c) Payments to lenders In return for a contract entered into by a lend- er under subsection (b) for the reduction of the interest rate paid on a loan, the Secretary shall make payments to the lender in an amount equal to not more than 100 percent of the cost of reducing the annual rate of interest payable on such loan, except that such payments may not exceed the cost of reducing such rate by more than 4 percent. (d) Duration of contracts The term of a contract entered into under this section to reduce the interest rate on a guaran- teed loan may not exceed the outstanding term of such loan. (e) Agricultural Credit Insurance Fund use limi- tation (1) Notwithstanding any other provision of this chapter, the Agricultural Credit Insurance Fund established under section 1929 of this title may be used by the Secretary to carry out this section. (2) MAXIMUM AMOUNT OF FUNDS.— (A) IN GENERAL.—The total amount of funds used by the Secretary to carry out this section for a fiscal year shall not exceed $750,000,000. (B) BEGINNING AND VETERAN FARMERS AND RANCHERS.— (i) IN GENERAL.—The Secretary shall re- serve not less than 15 percent of the funds used by the Secretary under subparagraph (A) to make payments for guaranteed loans made to beginning farmers and ranchers or veteran farmers and ranchers (as defined in section 2279(a) of this title). (ii) DURATION OF RESERVATION OF FUNDS.— Funds reserved for farmers or ranchers under clause (i) for a fiscal year shall be re- served only until March 1 of the fiscal year. (f) List of lender participants in guaranteed loan program The Secretary shall make available to farm- ers, on request, a list of lenders in the area that participate in guaranteed farm loan programs and other lenders in the area that express a de- sire to participate in such programs and that re- quest inclusion in the list. (g) Foreclosure action provision in farm loan guarantees Notwithstanding any other provision of law, each contract of guarantee on a farm loan en- tered into under this chapter after January 6, 1988, shall contain a condition that the lender of the guaranteed loan may not initiate fore- closure action on the loan until 60 days after a determination is made with respect to the eligi- bility of the borrower thereof to participate in the program under this section. (Pub. L. 87–128, title III, § 351, as added Pub. L. 99–198, title XIII, § 1320, Dec. 23, 1985, 99 Stat. 1532; amended Pub. L. 100–233, title VI, § 613(b), (c), Jan. 6, 1988, 101 Stat. 1674; Pub. L. 101–508, title I, § 1202(b)(1), (c), Nov. 5, 1990, 104 Stat. 1388–10, 1388–11; Pub. L. 104–105, title II, § 220, Feb. 10, 1996, 110 Stat. 184; Pub. L. 104–127, title VI, § 643(a), Apr. 4, 1996, 110 Stat. 1102; Pub. L. 107–171, title V, § 5313, May 13, 2002, 116 Stat. 347; Pub. L. 115–334, title XII, § 12306(d), Dec. 20, 2018, 132 Stat. 4970.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a)(1), (e)(1), and (g), 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 2018—Subsec. (e)(2)(B). Pub. L. 115–334, § 12306(d)(1), in- serted ‘‘and veteran’’ after ‘‘Beginning’’ in heading. Subsec. (e)(2)(B)(i). Pub. L. 115–334, § 12306(d)(2), in- serted before period at end ‘‘or veteran farmers and ranchers (as defined in section 2279(a) of this title)’’. Page 1163 TITLE 7—AGRICULTURE § 2000 1 So in original. Probably should be ‘‘subchapter’’. Subsec. (e)(2)(B)(ii). Pub. L. 115–334, § 12306(d)(3), struck out ‘‘beginning’’ before ‘‘farmers or ranchers’’. 2002—Subsec. (a). Pub. L. 107–171, § 5313(1), struck out par. (1) designation and heading and struck out heading and text of par. (2). Text read as follows: ‘‘The author- ity provided by this subsection shall terminate on Sep- tember 30, 2002.’’ Subsec. (e)(2). Pub. L. 107–171, § 5313(2), added par. (2) and struck out former par. (2) which read as follows: ‘‘The total amount of funds used by the Secretary to carry out this section may not exceed $490,000,000.’’ 1996—Subsec. (a). Pub. L. 104–105 inserted heading, designated existing provisions as par. (1) and inserted heading, and added par. (2). Subsec. (f). Pub. L. 104–127, § 643(a)(1), substituted ‘‘The Secretary’’ for ‘‘Each Farmers Home Administra- tion county supervisor’’ and ‘‘list of lenders’’ for ‘‘list of approved lenders’’ and struck out ‘‘the Farmers Home Administration’’ before ‘‘guaranteed farm loan programs’’. Subsec. (h). Pub. L. 104–127, § 643(a)(2), struck out sub- sec. (h) which established a demonstration project dur- ing 4-year period beginning Jan. 6, 1988, for purchase of Farm Credit System land. 1990—Subsec. (c). Pub. L. 101–508, § 1202(b)(1)(A), sub- stituted ‘‘100 percent’’ for ‘‘50 percent’’ and ‘‘4 percent’’ for ‘‘2 percent’’. Subsec. (d). Pub. L. 101–508, § 1202(b)(1)(B), struck out ‘‘, or 3 years, whichever is less’’ after ‘‘term of such loan’’. Subsec. (h)(1). Pub. L. 101–508, § 1202(c), substituted ‘‘4-year’’ for ‘‘3-year’’. 1988—Subsec. (b)(1)(C). Pub. L. 100–233, § 613(b)(1), sub- stituted ‘‘24-month’’ for ‘‘12-month’’. Subsecs. (f), (g). Pub. L. 100–233, § 613(b)(2), added sub- secs. (f) and (g). Subsec. (h). Pub. L. 100–233, § 613(c), added subsec. (h). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101–508 effective Nov. 29, 1990, see section 1301 of Pub. L. 101–508, set out as an Effec- tive Date note under section 1994 of this title. EFFECTIVE AND TERMINATION DATES That part of section 1320 of Pub. L. 99–198, as amended by Pub. L. 100–233, title VI, § 613(a), Jan. 6, 1988, 101 Stat. 1674; Pub. L. 101–508, title I, § 1202(b)(2), Nov. 5, 1990, 104 Stat. 1388–11, which provided that this section was effective only for the period beginning Dec. 23, 1985, and ending Sept. 30, 1995, was repealed by Pub. L. 104–127, title VI, § 643(b), Apr. 4, 1996, 110 Stat. 1103. § 2000. Homestead protection (a) Definitions As used in this section: (1) The term ‘‘Administrator’’ means the Ad- ministrator of the Small Business Administra- tion. (2) The term ‘‘borrower-owner’’ means— (A) a borrower of a loan made or insured by the Secretary or the Administrator who meets the eligibility requirements of sub- section (c)(1); or (B) in any case in which an owner of home- stead property pledged the property to se- cure the loan and the owner is different than the borrower, the owner. (3) The term ‘‘farm program loan’’ means any loan made by the Administrator under the Small Business Act (15 U.S.C. 631 et seq.) for any of the purposes authorized for loans under subchapters 1 I or II. (4) The term ‘‘homestead property’’ means the principal residence and adjoining property possessed and occupied by a borrower-owner specified in paragraph (2) of this subsection, including a reasonable number of farm out- buildings located on the adjoining land that are useful to the occupants of the homestead, and no more than 10 acres of adjoining land that is used to maintain the family of the in- dividual. (5) The term ‘‘Secretary’’ means the Sec- retary of Agriculture. (b) Occupancy of homestead upon foreclosure, bankruptcy, or liquidation; appraisal; period of occupancy (1) The Secretary or the Administrator shall, on application by a borrower-owner who meets the eligibility requirements of subsection (c)(1), permit the borrower-owner to retain possession and occupancy of homestead property under the terms set forth, and until the action described in this section has been completed, if— (A) the Secretary forecloses, holds in inven- tory on January 6, 1988, or takes into inven- tory, property securing a loan made or insured under this chapter; (B) the Administrator forecloses, holds in in- ventory on January 6, 1988, or takes into in- ventory, property securing a farm program loan made under the Small Business Act (15 U.S.C. 631 et seq.); or (C) the borrower-owner of a loan made or in- sured by the Secretary or the Administrator files a petition in bankruptcy that results in the conveyance of the homestead property to the Secretary or the Administrator, or agrees to voluntarily liquidate or convey such prop- erty in whole or in part. (2) The value of the homestead property shall be determined insofar as possible by an inde- pendent appraisal made within six months from the date of the borrower-owner’s application to retain possession and occupancy of the home- stead property. (3) The period of occupancy of homestead prop- erty under this subsection may not exceed five years, but in no case shall the Secretary or the Administrator grant a period of occupancy less than three years, subject to compliance with the requirements of subsection (c). (c) Terms and conditions (1) To be eligible to occupy homestead prop- erty, a borrower-owner of a loan made or insured by the Secretary or the Administrator shall— (A) apply for such occupancy not later than 30 days after the property is acquired by the Secretary or Administrator, or for property in inventory on January 6, 1988, the borrower- owner shall apply for occupancy not later than 30 days after January 6, 1988; (B) have received from farming or ranching operations gross farm income reasonably com- mensurate with— (i) the size and location of the farming unit of the borrower-owner; and (ii) local agricultural conditions (including natural and economic conditions), in at least 2 calendar years during the 6-year period preceding the calendar year in which the ap- plication is made;