§ 1923. — Purposes of loans.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1923]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER I--REAL ESTATE LOANS
Sec. 1923. Purposes of loans
(a) Allowed purposes
(1) Direct loans
A farmer or rancher may use a direct loan made under this
subchapter only for--
(A) acquiring or enlarging a farm or ranch;
(B) making capital improvements to a farm or ranch;
(C) paying loan closing costs related to acquiring,
enlarging, or improving a farm or ranch;
(D) paying for activities to promote soil and water
conservation and protection described in section 1924 of this
title on a farm or ranch; or
(E) refinancing a temporary bridge loan made by a commercial
or cooperative lender to a farmer or rancher for the acquisition
of land for a farm or ranch, if--
(i) the Secretary approved an application for a direct
farm ownership loan to the farmer or rancher for acquisition
of the land; and
(ii) funds for direct farm ownership loans under section
1994(b) of this title were not available at the time at
which the application was approved.
(2) Guaranteed loans
A farmer or rancher may use a loan guaranteed under this
subchapter only for--
(A) acquiring or enlarging a farm or ranch;
(B) making capital improvements to a farm or ranch;
(C) paying loan closing costs related to acquiring,
enlarging, or improving a farm or ranch;
(D) paying for activities to promote soil and water
conservation and protection described in section 1924 of this
title on a farm or ranch; or
(E) refinancing indebtedness.
(b) Preferences
In making or guaranteeing a loan under this subchapter for purchase
of a farm or ranch, the Secretary shall give preference to a person
who--
(1) has a dependent family;
(2) to the extent practicable, is able to make an initial down
payment on the farm or ranch; or
(3) is an owner of livestock or farm or ranch equipment that is
necessary to successfully carry out farming or ranching operations.
(c) Hazard insurance requirement
(1) In general
After the Secretary makes the determination required by
paragraph (2), the Secretary may not make a loan to a farmer or
rancher under this subchapter unless the farmer or rancher has, or
agrees to obtain, hazard insurance on any real property to be
acquired or improved with the loan.
(2) Determination
Not later than 180 days after April 4, 1996, the Secretary shall
determine the appropriate level of insurance to be required under
paragraph (1).
(Pub. L. 87-128, title III, Sec. 303, Aug. 8, 1961, 75 Stat. 307; Pub.
L. 87-703, title IV, Sec. 401(1), Sept. 27, 1962, 76 Stat. 631; Pub. L.
90-488, Sec. 1, Aug. 15, 1968, 82 Stat. 770; Pub. L. 95-113, title XIV,
Sec. 1448(a), Sept. 29, 1977, 91 Stat. 1011; Pub. L. 96-438, Sec. 1(1),
Oct. 13, 1980, 94 Stat. 1871; Pub. L. 97-98, title XVI, Sec. 1602, Dec.
22, 1981, 95 Stat. 1346; Pub. L. 104-127, title VI, Sec. 602(a), Apr. 4,
1996, 110 Stat. 1085; Pub. L. 107-171, title V, Sec. 5002, May 13, 2002,
116 Stat. 341.)
Amendments
2002--Subsec. (a)(1)(E). Pub. L. 107-171 added subpar. (E).
1996--Pub. L. 104-127 amended section generally, substituting
present provisions for provisions outlining preferences for loans made
or insured under this subchapter and defining terms ``improving farms''
and ``qualified non-fossil energy system''.
1981--Subsec. (a). Pub. L. 97-98 substituted ``who have dependent
families'' for ``who are married or have dependent families''.
1980--Subsec. (b)(1). Pub. L. 96-438 substituted ``the acquisition,
installation, and modification'' for ``the acquisition and
installation'' and struck out ``in any residential structure'' after
``energy system''.
1977--Pub. L. 95-113 designated existing provisions as subsec. (a)
and added subsec. (b).
1968--Pub. L. 90-488 designated existing provisions as cls. (1),
(2), (4), (5), and added cl. (3).
1962--Pub. L. 87-703 authorized loans to be made or insured for
recreational uses and facilities.
Effective Date of 1996 Amendment
Section 602(b) of Pub. L. 104-127 provided that: ``Section 303(c)(1)
of the Consolidated Farm and Rural Development Act [7 U.S.C. 1923(c)(1)]
shall not apply until the Secretary of Agriculture makes the
determination required by section 303(c)(2) of the Act.'' [The
Secretary's determination relating to hazard insurance under this
provision was contained in interim rules published Mar. 3, 1997, and
effective Mar. 24, 1997, see 62 F.R. 9351.]
Effective Date of 1981 Amendment
Amendment by Pub. L. 97-98 effective Dec. 22, 1981, see section 1801
of Pub. L. 97-98, set out as an Effective Date note under section 4301
of this title.
Effective Date of 1977 Amendment
Amendment by Pub. L. 95-113 effective Oct. 1, 1977, see section 1901
of Pub. L. 95-113, set out as a note under section 1307 of this title.
Transfer of Functions
Powers, duties, and assets of agencies, offices, and other entities
within Department of Agriculture relating to rural development functions
transferred to Rural Development Administration by section 2302(b) of
Pub. L. 101-624.
Section Referred to in Other Sections
This section is referred to in sections 1925, 1934, 1991, 2008f of
this title.
