§ 1927. — Repayment requirements.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1927]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER I--REAL ESTATE LOANS
Sec. 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 interest rates on loans under this
subchapter shall be as determined by the Secretary, but not in excess of
the current average market yield on outstanding marketable obligations
of the United States with remaining periods to maturity comparable to
the average maturities of such loans, 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 essential community facilities
shall be set by the Secretary at rates not to exceed the current market
yield for outstanding municipal obligations with remaining periods to
maturity comparable 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 upgrading 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 established by the Office of
Management and Budget, as revised under section 9902(2) of title 42 and
in other areas as the Secretary may designate where a significant
percentage of the persons to be served by such facilities are of low
income, 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 nonmetropolitan 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 appropriate; 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
income of the area to be served, and such rates shall be otherwise
consistent with such subparagraph.
(D) Joint financing arrangement.--If a direct farm ownership loan is
made under this subchapter as part of a joint financing arrangement and
the amount of the direct farm ownership loan does not exceed 50 percent
of the total principal amount financed under the arrangement, the
interest rate on the direct farm ownership loan shall be at least 4
percent annually.
(4) Except as provided in paragraph (6), the interest 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
determined 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 maturity comparable to
the average maturities of such loans, adjusted in the judgment of the
Secretary of the Treasury to provide for rates comparable to the rates
prevailing in the private market for similar loans and considering the
Secretary's insurance of the loans, plus an additional charge,
prescribed by the Secretary, to cover the Secretary's losses and cost of
administration, which charge shall be deposited in the Rural Development
Insurance Fund, and further adjusted to the nearest one-eighth of 1 per
centum.
(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, subparagraph (A) shall apply 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.
(6)(A) Notwithstanding any other provision of this section, in the
case of loans (other than guaranteed loans) made or insured under the
authorities of this chapter specified in subparagraph (B) for activities
that involve the use of prime farmland as defined in subparagraph (C),
the interest rates shall be the interest rates otherwise 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 maximum practicable amount of prime
farmlands for production of food and fiber. Where other options exist
for the siting of such construction and where the governmental authority
still desires to carry out such construction on prime farmland, the 2
per centum interest rate increase 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 subparagraph (A) are--
(i) the provisions of section 1926(a)(1) of this title relating
to loans for recreational developments and essential community
facilities,
(ii) clause (1) of section 1932(a) of this title, 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 Federal 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 borrowers under this chapter shall prepay to the
Secretary such taxes and insurance as the Secretary may require, on such
terms and conditions 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 determine 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) Mineral rights as collateral
With respect 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 prevent the
inclusion of, as part of the collateral securing the loan, any payment
or other compensation the borrower may receive for damages to the
surface of the collateral real estate resulting from the exploration for
or recovery of minerals.
(e) Additional collateral
The Secretary may not--
(1) require any borrower to provide additional collateral to
secure a farmer program loan made or insured under this chapter, if
the borrower is current in the payment of principal and interest on
the loan; or
(2) bring any action to foreclose, or otherwise liquidate, any
such loan as a result of the failure of a borrower to provide
additional collateral to secure a loan, if the borrower was current
in the payment of principal and interest on the loan at the time the
additional collateral was requested.
(Pub. L. 87-128, title III, Sec. 307, Aug. 8, 1961, 75 Stat. 308; Pub.
L. 92-419, title I, Secs. 113, 114, 128(b), Aug. 30, 1972, 86 Stat. 660,
666; Pub. L. 95-334, title I, Sec. 108, Aug. 4, 1978, 92 Stat. 422; Pub.
L. 97-35, title I, Sec. 160(a), Aug. 13, 1981, 95 Stat. 376; Pub. L. 99-
198, title XIII, Secs. 1304A, 1305, Dec. 23, 1985, 99 Stat. 1521; Pub.
L. 100-233, title VI, Secs. 603, 604, Jan. 6, 1988, 101 Stat. 1665,
1666; Pub. L. 101-624, title XVIII, Sec. 1803(a), title XXIII,
Sec. 2383, Nov. 28, 1990, 104 Stat. 3818, 4050; Pub. L. 102-552, title
V, Sec. 516(c)(1), Oct. 28, 1992, 106 Stat. 4137; Pub. L. 103-328, title
I, Sec. 113(a), Sept. 29, 1994, 108 Stat. 2366; Pub. L. 104-127, title
VI, Secs. 604, 661(a), title VII, Sec. 747(b)(1), Apr. 4, 1996, 110
Stat. 1086, 1106, 1128.)
References in Text
For definition of ``this chapter'', referred to in subsecs.
(a)(6)(A) and (e)(1), see note set out under section 1921 of this title.
Amendments
1996--Subsec. (a)(3)(B). Pub. L. 104-127, Sec. 604(1), inserted
``subparagraph (D) and in'' after ``Except as provided in''.
Subsec. (a)(3)(D). Pub. L. 104-127, Sec. 604(2), added subpar. (D).
Subsec. (a)(4). Pub. L. 104-127, Sec. 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, Sec. 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, Sec. 747(b)(1), substituted
``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, Sec. 113(a)(1),
substituted ``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'' for ``Except''.
Subsec. (a)(5). Pub. L. 103-328, Sec. 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 redesignated
cls. (iii) to (viii) as (ii) to (vii) and struck out former cl. (ii)
which read as follows: ``the provisions of section 1924(a) of this
title, relating to the financing of outdoor recreational enterprises or
the conversion of farming or ranching operations to recreational
uses,''.
1990--Subsec. (a)(3)(A). Pub. L. 101-624, Sec. 2383(1), substituted
``guaranteed'' for ``guranteed''.
Subsec. (a)(3)(B). Pub. L. 101-624, Sec. 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
determined by the Secretary, but not in excess of one-half of the
current average market yield on outstanding marketable obligations of
the United States with remaining periods to maturity comparable to the
average maturities of such loans, nor less than 5 per centum per
annum.''
Subsec. (a)(3)(C). Pub. L. 101-624, Sec. 2383(2), added subpar. (C).
1988--Subsec. (c). Pub. L. 100-233, Sec. 603, inserted provisions 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, Sec. 604, added subsec. (e).
1985--Subsec. (a)(3)(A). Pub. L. 99-198, Sec. 1304A, substituted
``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 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 facility 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 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 nonmetropolitan median household income.
Subsec. (d). Pub. L. 99-198, Sec. 1305, added subsec. (d).
1981--Subsec. (a). Pub. L. 97-35 in par. (2) inserted reference to
par. (6), in par. (3) designated existing provisions 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, Sec. 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 outstanding marketable obligations of the United States,
with comparable remaining periods of maturity to the average maturities
of such loans plus additional adjusted amounts, for provisions relating
to establishment 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, Sec. 108(2), (3), added subsec.
(b) and redesignated former subsec. (b) as (c).
1972--Subsec. (a). Pub. L. 92-419, Secs. 113, 114, prescribed
interest rates on rural development other than guaranteed and guaranteed
loans and escrow payment of taxes and insurance, respectively.
Subsec. (b). Pub. L. 92-419, Sec. 128(b), substituted ``may'' for
``shall'' in second sentence.
Effective Date of 1994 Amendment
Section 113(b) of Pub. L. 103-328 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, insured, 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 period
beginning on the date of enactment of this Act) on which the State
adopts a law or certifies that the voters 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 subsection (a) to
apply with respect to loans made, insured, 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 during 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
Section 516(c)(2) of Pub. L. 102-552 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, Conservation, 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
Section 160(c) of Pub. L. 97-35 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.''
Section Referred to in Other Sections
This section is referred to in sections 935, 1926, 1929, 1991 of
this title; title 25 section 492.
