§ 1935. — Down payment loan program.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1935]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER I--REAL ESTATE LOANS
Sec. 1935. Down payment loan program
(a) In general
(1) Establishment
Notwithstanding any other section of this subchapter, the
Secretary shall establish, within the farm ownership loan program
established under this subchapter, a program under which loans shall
be made under this section to qualified beginning farmers and
ranchers for down payments on farm ownership loans.
(2) Administration
The Secretary shall be the primary coordinator of credit
supervision for the down payment loan program established under this
section, in consultation with the commercial or cooperative lender
and, if applicable, the contracting credit counseling service
selected under section 2006b(c) of this title.
(b) Loan terms
(1) Principal
Each loan made under this section shall be in an amount equal to
40 percent of the purchase price or appraisal value, whichever is
lower, of the farm or ranch to be acquired, unless the borrower
requests a lesser amount.
(2) Interest rate
The interest rate on any loan made by the Secretary under this
section shall be 4 percent.
(3) Duration
Each loan under this section shall be made for a period of 15
years or less, at the option of the borrower.
(4) Repayment
Each borrower of a loan under this section shall repay the loan
to the Secretary in equal annual installments.
(5) Nature of retained security interest
The Secretary shall retain an interest in each farm or ranch
acquired with a loan made under this section that shall--
(A) be secured by the farm or ranch;
(B) be junior only to such interests in the farm or ranch as
may be conveyed at the time of acquisition to the person
(including a lender) from whom the borrower obtained a loan used
to acquire the farm or ranch; and
(C) require the borrower to obtain the permission of the
Secretary before the borrower may grant an additional security
interest in the farm or ranch.
(c) Limitations
(1) Borrowers required to make minimum down payment
The Secretary shall not make a loan under this section to any
borrower with respect to a farm or ranch if the contribution of the
borrower to the down payment on the farm or ranch will be less than
10 percent of the purchase price of the farm or ranch.
(2) Maximum price of property to be acquired
The Secretary shall not make a loan under this section with
respect to a farm or ranch for which the purchase price or appraisal
value, whichever is lower, exceeds $250,000.
(3) Prohibited types of financing
The Secretary shall not make a loan under this section with
respect to a farm or ranch if the farm or ranch is to be acquired
with other financing that contains any of the following conditions:
(A) The financing is to be amortized over a period of less
than 30 years.
(B) A balloon payment will be due on the financing during
the 15-year period beginning on the date the loan is to be made
by the Secretary.
(d) Administration
In carrying out this section, the Secretary shall, to the maximum
extent practicable--
(1) facilitate the transfer of farms and ranches from retiring
farmers and ranchers to persons eligible for insured loans under
this subchapter;
(2) make efforts to widely publicize the availability of loans
under this section among--
(A) potentially eligible recipients of the loans;
(B) retiring farmers and ranchers; and
(C) applicants for farm ownership loans under this
subchapter;
(3) encourage retiring farmers and ranchers to assist in the
sale of their farms and ranches to qualified beginning farmers and
ranchers by providing seller financing; and
(4) coordinate the loan program established by this section with
State programs that provide farm ownership or operating loans for
beginning farmers and ranchers.
(Pub. L. 87-128, title III, Sec. 310E, as added Pub. L. 102-554,
Sec. 7(a), Oct. 28, 1992, 106 Stat. 4144; amended Pub. L. 107-171, title
V, Sec. 5005, May 13, 2002, 116 Stat. 342.)
Amendments
2002--Subsec. (b)(1). Pub. L. 107-171, Sec. 5005(1)(A), substituted
``40 percent'' for ``30 percent''.
Subsec. (b)(3). Pub. L. 107-171, Sec. 5005(1)(B), substituted ``15
years'' for ``10 years''.
Subsec. (c)(3)(B). Pub. L. 107-171, Sec. 5005(2), substituted ``15-
year'' for ``10-year''.
Section Referred to in Other Sections
This section is referred to in sections 1925, 1929, 1991, 1994 of
this title.
