§ 1988. — Appropriations.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1988]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER IV--ADMINISTRATIVE PROVISIONS
Sec. 1988. Appropriations
(a) Authorization
There is authorized to be appropriated to the Secretary such sums as
the Congress may from time to time determine to be necessary to enable
the Secretary to carry out the purposes of this chapter and for the
administration of assets transferred to the Farmers Home Administration
or the Rural Development Administration.
(b) Sale by lender and any holder of guaranteed portion of loan pursuant
to regulations governing such sales; limitations; issuance of
pool certificates representing ownership of guaranteed portion
of guaranteed loan; terms and conditions, etc.; reporting
requirements
(1)(A) The guaranteed portion of any loan made under this chapter
may be sold by the lender, and by any subsequent holder, in accordance
with regulations governing such sales as the Secretary shall establish,
subject to the following limitations:
(i) All fees due the Secretary with respect to a guaranteed loan
are to be paid in full before any sale.
(ii) The loan is to have been fully disbursed to the borrower
before the sale.
(B) After a loan is sold in the secondary market, the lender shall
remain obligated under its guarantee agreement with the Secretary, and
shall continue to service the loan in accordance with the terms and
conditions of such agreement.
(C) The Secretary shall develop such procedures as are necessary for
the facilitation, administration, and promotion of secondary market
operations, and for determining the increase of farmers' access to
capital at reasonable rates and terms as a result of secondary market
operations.
(D) This subsection shall not be interpreted to impede or extinguish
the right of the borrower or the successor in interest to such borrower
to prepay (in whole or in part) any loan made under this chapter, or to
impede or extinguish the rights of any party under any provision of this
chapter.
(2)(A) The Secretary may, directly or through a market maker
approved by the Secretary, issue pool certificates representing
ownership of part or all of the guaranteed portion of any loan
guaranteed by the Secretary under this chapter. Such certificates shall
be based on and backed by a pool established or approved by the
Secretary and composed solely of the entire guaranteed portion of such
loans.
(B) The Secretary may, on such terms and conditions as the Secretary
deems appropriate, guarantee the timely payment of the principal and
interest on pool certificates issued on behalf of the Secretary by
approved market makers for purposes of this subsection. Such guarantee
shall be limited to the extent of principal and interest on the
guaranteed portions of loans that compose the pool. If a loan in such
pool is prepaid, either voluntarily or by reason of default, the
guarantee of timely payment of principal and interest on the pool
certificates shall be reduced in proportion to the amount of principal
and interest such prepaid loan represents in the pool. Interest on
prepaid or defaulted loans shall accrue and be guaranteed by the
Secretary only through the date of payment on the guarantee. During the
term of the pool certificate, the certificate may be called for
redemption due to prepayment or default of all loans constituting the
pool.
(C) The full faith and credit of the United States is pledged to the
payment of all amounts that may be required to be paid under any
guarantee of such pool certificates issued by approved market makers
under this subsection. The Secretary may expend amounts in the
Agricultural Credit Insurance Fund to make payments on such guarantees.
(D) The Secretary shall not collect any fee for any guarantee under
this subsection. The preceding sentence shall not preclude the Secretary
from collecting a fee for the functions described in paragraph (3).
(E) Within 30 days after a borrower of a guaranteed loan is in
default of any principal or interest payment due for 60 days or more,
the Secretary shall--
(i) purchase the pool certificates representing ownership of the
guaranteed portion of the loan; and
(ii) pay the registered holder of the certificates an amount
equal to the guaranteed portion of the loan represented by the
certificate.
(F)(i) If the Secretary pays a claim under a guarantee issued under
this subsection, the claim shall be subrogated fully to the rights
satisfied by such payment, as may be provided by the Secretary.
(ii) No State or local law, and no Federal law, shall preclude or
limit the exercise by the Secretary of the Secretary's ownership rights
in the portions of loans constituting the pool against which the
certificates are issued.
(3) On the adoption of final rules and regulations, the Secretary
shall do the following:
(A) Provide for the central collection of registration
information from all participating market makers for all loans and
pool certificates sold under paragraphs (1) and (2). Such
information shall include, with respect to each original sale and
any subsequent sale, identification of the interest rate paid by the
borrower to the lender, the lender's servicing fee, whether interest
on the loan is at a fixed or variable rate, identification of each
purchaser of a pool certificate, the interest rate paid on the
certificate, and such other information as the Secretary deems
appropriate.
(B) Before any sale, require the seller to disclose to each
prospective purchaser of the portion of a loan guaranteed under this
chapter and to each prospective purchaser of a pool certificate
issued under paragraph (2), information on the terms, conditions,
and yield of such instrument. As used in this subparagraph, if the
instrument being sold is a loan, the term ``seller'' does not
include (i) the person who made the loan or (ii) any person who
sells three or fewer guaranteed loans per year.
(C) Provide for adequate custody of any pooled guaranteed loans.
(D) Take such actions as are necessary, in restructuring pools
of the guaranteed portion of loans, to minimize the estimated costs
of paying claims under guarantees issued under this subsection.
(E) Require each market maker--
(i) to service all pools formed, and participations sold, by
the market maker; and
(ii) to provide the Secretary with information relating to
the collection and disbursement of all periodic payments,
prepayments, and default funds from lenders, to or from the
reserve fund that the Secretary shall establish to enable the
timely payment guarantee to be self-funding, and from all
beneficial holders.
(F) Regulate market makers in pool certificates sold under this
subsection.
(4) The Secretary may contract for goods and services to be used for
the purposes of this subsection without regard to the provisions of
titles 5, 40, and 41, and any regulations issued thereunder.
(Pub. L. 87-128, title III, Sec. 338, Aug. 8, 1961, 75 Stat. 316; Pub.
L. 89-429, Sec. 5, May 24, 1966, 80 Stat. 167; Pub. L. 100-233, title
VII, Sec. 711(a), Jan. 6, 1988, 101 Stat. 1707; Pub. L. 100-399, title
VI, Sec. 605, Aug. 17, 1988, 102 Stat. 1006; Pub. L. 101-624, title
XXIII, Sec. 2303(d), Nov. 28, 1990, 104 Stat. 3981; Pub. L. 104-127,
title VII, Sec. 749(a), Apr. 4, 1996, 110 Stat. 1129; Pub. L. 105-362,
title I, Sec. 101(a), Nov. 10, 1998, 112 Stat. 3281.)
References in Text
For definition of ``this chapter'', referred to in text, see note
set out under section 1921 of this title.
Amendments
1998--Subsec. (b)(4), (5). Pub. L. 105-362 redesignated par. (5) as
(4) and struck out former par. (4) which provided that not later than
March 31 of each year, Secretary was to transmit to Congress a report on
secondary market operations under subsec. (b) during preceding calendar
year, and described contents of reports.
1996--Subsecs. (b) to (f). Pub. L. 104-127 redesignated subsec. (f)
as (b) and struck out former subsecs. (b) to (e) which provided for: in
subsec. (b), form and denomination of notes to obtain funds for making
direct loans under this chapter as well as maturities, terms and
conditions, interest rate, purchase by Treasury, and public debt
transaction; in subsec. (c), establishment of Farmers Home
Administration direct loan account as well as deposits into account,
liabilities, obligations, expenditures, and net expenditure basis of
budgeting; in subsec. (d), sale of notes and mortgages; and in subsec.
(e), distribution of real estate loans among States.
1990--Subsec. (a). Pub. L. 101-624 inserted ``or the Rural
Development Administration'' after ``Farmers Home Administration''.
1988--Subsec. (f)(5). Pub. L. 100-399 added par. (5).
Subsec. (f). Pub. L. 100-233 added subsec. (f).
1966--Subsec. (c). Pub. L. 89-429 inserted references to section 8
of the Watershed Protection and Flood Prevention Act, as amended, and
section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended.
Effective Date of 1988 Amendment
Amendment by Pub. L. 100-399 effective as if enacted immediately
after enactment of Pub. L. 100-233, which was approved Jan. 6, 1988, see
section 1001(a) of Pub. L. 100-399, set out as a note under section 2002
of Title 12, Banks and Banking.
Regulations
Section 711(b) of Pub. L. 100-233 provided that: ``Within 180 days
after the date of the enactment of this Act [Jan. 6, 1988], the
Secretary shall develop and promulgate final regulations to implement
this section and the amendment made by this section [amending this
section and enacting provisions set out below].''
Pool Certificates Not To Be Issued Until Final Regulations Take Effect
Section 711(c) of Pub. L. 100-233 provided that: ``The Secretary of
Agriculture shall not implement paragraph (2) of section 338(f) [now
338(b)] of the Consolidated Farm and Rural Development Act [7 U.S.C.
1988(f) [now 1988(b)]], as added by subsection (a), until the final
regulations governing the administration of such paragraph take
effect.''
Loans to Indians
Authority of the Secretary of Agriculture to make loans to Indian
tribes and tribal corporations to acquire land within reservations, see
sections 488 to 492 of Title 25, Indians.
Section Referred to in Other Sections
This section is referred to in sections 1929, 1991 of this title;
title 25 section 488.
